Securities and Exchange Commission
450 5 Street, N.W.
Washington, DC 20549
RE: Midland National Life Separate Account C
File Number 33-64016
Commissioners:
Enclosed for filing is a copy, including exhibits, excluding financials,
of Post-Effective Amendment Number 5 to the above referenced Form
N-4 Registration Statement.
This amendment is being filed under 485(a) because of changes made to
the Contingent Deferred Sales Charge, Death Benefit and commissions
as well as other changes. Please note this amendment contains two
prospectuses. The old version of the variable annuity will be phased out
during 1998 as state insurance departments approve the new version.
If you have any comments or questions concerning the materials filed,
herewith, please contact Frederick R. Bellamy of Sutherland, Asbill and
Brennan at 202-383-0126.
Sincerely,
Paul M. Phalen, CLU, FLMI
Assistant Vice President - Product Implementation
REVVA SECCVR
<PAGE>
Registration No. 33-64016
811-7772
FORM N-4
--------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 ___
___
Pre-Effective Amendment No. ___ ___
___
Post-Effective Amendment No. _5_ _X_
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 ___
___
Amendment No. _5_ _X_
MIDLAND NATIONAL LIFE SEPARATE ACCOUNT C
________________________________________
(Exact Name of Registrant)
MIDLAND NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
One Midland Plaza
Sioux Falls, SD 57193
(Address of Depositor's Principal Executive Office)
_________________________
(Depositor's Telephone Number, including Area Code:
(605) 335-5700
_________________________
Jack L. Briggs, Vice President, Secretary and General Counsel
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
(Name and Address of Agent for Service)
Copy to:
Frederick R. Bellamy
Sutherland, Asbill & Brennan, LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
It is proposed that this filing will become effective (check appropriate
line):
___ immediately upon filing pursuant to paragraph (b)
___ on May 01, 1998 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a) (i)
_X_ on _May_01,_1998____ pursuant to paragraph (a) (i)
___ 75 days after filing pursuant to paragraph (a) (ii)
___ on _________________ pursuant to paragraph (a) (ii) of Rule 485
If appropriate, check the following line:
___ the Post-Effective Amendment designates a new effective date
for a previously filed Post-Effective Amendment.
REVVA N-4CVR
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Summary
4. Condensed Financial Information Financial Information
5. General
(a) Depositor Midland National Life Insurance
Company; Our Parent;
(b) Registrant Our Separate Account and It's
Investment Divisions
(c) Portfolio Company The Funds
(d) Fund Prospectus The Funds
(e) Voting Rights Your Voting Rights as an Owner
6. Deductions and Expenses
(a) General Charges, Fees, and Deductions
(b) Sales Load % Sales Charges on Withdrawals
(c) Special Purchase Plan Discount for Midland Employees
(d) Commissions Sales Agreements
(e) Fund Expenses Charges Against the Separate
Account
(f) Operating Expenses Fee Table
7. Contracts
(a) Persons with Rights Withdrawals; Death Benefit;
Your Voting Rights as an
Owner
(b) (i) Allocation of Premium Payments Allocation of Premiums
(ii) Transfers Transfers of Contract Value
(iii)Exchanges Not Applicable
(c) Changes Our Right to Change How We
Operate Our Separate Account
(d) Inquiries Face Page
8. Annuity Period Effecting An Annuity
9. Death Benefit Death Benefit
10. Purchase and Contract Value
(a) Purchases Requirements for Issuance of
a Contract; Valuation of
Owner's Contract Value
(b) Valuation Valuation of Owner's
Contract Value
(c) Daily Calculation How We Determine the Unit Value
(d) Underwriter Sales Agreements
11. Redemptions
(a) By Contract Owners Withdrawals
By Annuitant Not Applicable
(b) Texas ORP Withdrawals
(c) Check Delay Withdrawals
(d) Lapse Not Applicable
(e) Free Look Free Look
12. Taxes Federal Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents for the Statement
of Additional Information Statement of Additional
Information
PART B
Item of Form N-4 Statement of Additional
Information Caption
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History (Prospectus) Midland
National
Life Insurance Company;
(Prospectus) Our Parent
18. Services
(a) Fees and Expenses of Registrant (Prospectus) Fee Table;
(Prospectus) Charges in
the Funds
(b) Management Contracts Not Applicable
(c) Custodian Records and Reports;
Safekeeping of Account Assets
Independent Auditors Experts
(d) Assets of Registrant Not Applicable
(e) Affiliated Person Not Applicable
(f) Principal Underwriter Not Applicable
19. Purchase of Securities Being Offered (Prospectus) Detailed
Information About
the Contract
Offering Sales Load (Prospectus) Sales
Charges on Withdrawals
20. Underwriters Distribution of the Contract
21. Calculation of Performance Data Calculation of Yields and
Total Returns
22. Annuity Payments Annuity Payments
23. Financial Statements Financial Statements
PART C - OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements and Exhibits Financial Statements and
Exhibits
(a) Financial Statements Financial Statements
(b) Exhibits Exhibits
25. Directors and Officers of the Depositor Management of Midland
26. Persons Controlled By or Under Common Persons Controlled By
or
Control with the Depositor or Registrant Under Command Control
with
the Depositor
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Relationship of Principal
Underwriter to Other
Investment Companies;
Principal Underwriters;
Compensation of North American
Management
30. Location of Accounts and Records Location of Accounts and
Records
31. Management Services Management Services
32. Undertakings Undertakings
Signature Page Signatures
REVVA N4CROS
<PAGE>
Flexible Premium Deferred Variable Annuity Contract
(Variable Annuity 2)
Issued By:
Midland National Life Insurance Company Through Midland National
Life Separate Account C
One Midland Plaza Sioux Falls, SD 57193 (605) 335-5700
The Individual Flexible Premium Deferred Variable Annuity Contracts
described in this Prospectus provide for accumulation of the Contract
Value and payment of annuity payments on a fixed or variable basis.
Variable payment options are not available in certain states. The Contracts
are designed to aid individuals in long term planning for retirement or
other long term purposes.
The Contracts are available for retirement plans which do not qualify for
the special federal tax advantages available under the Internal Revenue
Code (Non-Qualified Plans) and for retirement plans which do qualify for
the federal tax advantages available under the Internal Revenue Code
(Qualified Plans).
This Prospectus generally describes only the variable portion of the
Contract, except where the General Account is specifically mentioned.
The Variable Annuity 2 pays a Death Benefit when the Annuitant dies
before the Maturity Date if the Contract is still In Force. The Death
Benefit is equal to the greater of the Contract Value, or premiums paid
less withdrawals ,. or the Guaranteed Minimum Death Benefit.
You may withdraw part of the Contract Value, or completely surrender
Your Contract for its Cash Surrender Value prior to the Maturity Date.
You may incur a deferred sales charge, taxes and/or a tax penalty if You
surrender Your Contract or make a partial withdrawal.
You may allocate amounts in Your Contract Fund to either Our General
Account, which pays interest at a declared rate, or up to ten of the
investment divisions of Our Separate Account C. In certain states,
allocations to and transfers to and from the General Account are not
permitted.
We invest each of the Investment Divisions of Our Separate Account in
shares of a corresponding portfolio of Fidelity's Variable Insurance
Products Fund (VIP), Fidelity's Variable Insurance Products Fund II (VIP
II), Fidelity's Variable Insurance Products Fund III (VIP III), or the
American Century Variable Portfolios, Inc. (collectively called the
"Funds"), mutual funds with a choice of portfolios.
The Prospectuses for the Funds, which accompany this Prospectus,
describe the invetment objectives, policies and risks of the Funds'
portfolios associated with the eighteen divisions of our Separate Account:
VIP Money Market Portfolio
VIP High Income Portfolio
VIP Equity-Income Portfolio
VIP Growth Portfolio
VIP Overseas Portfolio
VIP II Asset Manager Portfolio
VIP II Investment Grade Bond Portfolio
VIP II Contrafund Portfolio
VIP II Asset Manager: Growth Portfolio
VIP II Index 500 Portfolio
VIP III Growth & Income Portfolio
VIP III Balanced Portfolio
VIP III Growth Opportunities Portfolio
American Century VP Capital Appreciation Portfolio
American Century VP Value Portfolio
American Century VP Balanced Portfolio
American Century VP International Portfolio
American Century VP Income & Growth Portfolio
The prospectuses for the Funds, which accompany this Prospectus,
describes the investment objectives, policies, and risks of the Funds'
portfolios associated with the seventeen divisions of Our Separate
Account: VIP Money Market Portfolio, VIP High Income Portfolio, VIP
Equity-Income Portfolio, VIP Growth Portfolio, VIP Overseas Portfolio,
VIP II Asset Manager Portfolio, VIP II Investment Grade Bond Portfolio,
VIP II Contrafund Portfolio, VIP II Asset Manager: Growth Portfolio, VIP
II Index 500 Portfolio, VIP III Growth & Income Portfolio, VIP III
Balanced Portfolio, VIP III Growth Opportunities Portfolio, American
Century VP Capital Appreciation Portfolio, American Century VP Value
Portfolio, American Century VP Balanced Portfolio, and American
Century VP International Portfolio.
You bear the investment risk of this Contract for all amounts allocated to
Separate Account C. To the extent that Your Contract Value is in Separate
Account C, Your Contract Value will vary with the investment
performance of the corresponding portfolios of the Funds; there is no
minimum guaranteed fund value for amounts allocated to the Investment
Divisions of Our Separate Account. An investment in the portfolios,
including the VIP Money Market Portfolio, is neither insured nor
guaranteed by the U.S. Government, and there is no assurance that the VIP
Money Market Portfolio will be able to maintain a stable net asset value.
After the first premium, You may decide how much Your premium
payments will be and how often You wish to make them, within limits.
You have a limited right to examine this Contract and return it to Us for a
refund.
This Prospectus sets forth the information that a prospective investor
should know before investing. A Statement of Additional Information
about the Contract and Separate Account C is available free by writing
Midland at the address above or by checking the appropriate box on the
application form. The Statement of Additional Information, which has the
same date as this Prospectus, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The table
of contents of the Statement of Additional Information is included at the
end of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PLEASE READ THIS PROSPECTUS FOR DETAILS ON THE
CONTRACT BEING OFFERED TO YOU, AND KEEP IT FOR
FUTURE REFERENCE. THIS PROSPECTUS IS VALID ONLY WHEN
ACCOMPANIED BY CURRENT PROSPECTUSES FOR FIDELITY'S
VARIABLE INSURANCE PRODUCTS FUND, FIDELITY'S
VARIABLE INSURANCE PRODUCTS FUND II, FIDELITY'S
VARIABLE INSURANCE PRODUCTS FUND III, AND AMERICAN
CENTURY VARIABLE PORTFOLIOS, INC.
The date of this prospectus is May 1, 199 78.
The Contracts Are Not A Deposit Of, Or Guaranteed Or Endorsed By,
Any Bank Or Depository Institution, And The Contract Is Not Federally
Insured By The Federal Deposit Insurance Corporation, The Federal
Reserve Board, Or Any Other Agency. The Contracts involve investment
risk, including possible loss of principal.
Table of Contents
Definitions
FEE TABLE
PORTFOLIO ANNUAL EXPENSES (1)
EXAMPLES
SUMMARY
CONDENSED FINANCIAL INFORMATION
GENERAL INFORMATION ABOUT MIDLAND, SEPARATE
ACCOUNT C AND THE FUNDS
The Company That Issues Variable Annuity 2
Midland National Life Insurance Company
Our Parent
Separate Account Investment Choices
Our Separate Account And Its Investment Divisions
The Funds
Investment Policies Of The Funds' Portfolios
We Own The Assets Of Our Separate Account
Our Right To Change How We Operate Our Separate Account
DETAILED INFORMATION ABOUT THE CONTRACT
Requirements for Issuance of a Contract
Free Look
Allocation of Premiums
Transfers of Contract Value
Dollar Cost Averaging
Portfolio Rebalancing
Systematic Withdrawals
Withdrawals
Loans
Death Benefit
Your Contract Value
Amounts In Our Separate Account
How We Determine The Accumulation Unit Value
CHARGES, FEES AND DEDUCTIONS
Sales Charges on Withdrawals
Free Withdrawal Option
Charges Against The Separate Account
Administrative Charge
Contract Maintenance Charge
Transfer Charge
Charges In The Funds
Changing Your Premium Allocation Percentages
The General Account
Amounts In The General Account
Adding Interest To Your Amounts In The General Account
Transfers
Additional Information About Variable Annuities
Contract Periods, Anniversaries
Inquiries
FEDERAL TAX STATUS
Introduction
Diversification
Taxation of Annuities in General
Our Income Taxes
Withholding
MATURITY DATE
EFFECTING AN ANNUITY
Fixed Options
Variable Options
Transfers after the Maturity Date
ADDITIONAL INFORMATION
Your Voting Rights As an Owner
Fund Voting Rights
How We Determine Your Voting Shares
Voting Privileges Of Participants In Other Companies
Our Reports to Owners
Performance
Your Beneficiary
Assigning Your Contract
When We Pay Proceeds From This Contract
Dividends
Midland's Sales And Other Agreements
Sales Agreements
Regulation
Year 2000 Compliance Issues
Discount for Midland Employees
Legal Matters
Legal Proceedings
Experts
Statement of Additional Information
Definitions
Accumulation Unit means the units credited to each Investment Division
in the Separate Account before the Maturity Date.
Annuitant means the person, designated by the Owner, upon whose life
annuity payments are intended to be based on the Maturity Date.
Annuity Unit means the units in the Separate Account after the Maturity
Date which are used to determine the amount of the annuity payment.
Attained Age means the Issue Age plus the number of complete Contract
Years since the Contract Date.
Beneficiary means the person or persons to whom the Death Benefit is
paid if the Annuitant dies before the Maturity Date.
Business Day means any day We are open and the New York Stock
Exchange is open for trading. The holidays We currently observe are New
Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and the day after, Christmas Eve day and Christmas Day
and the day after.
Cash Surrender Value means the Contract Value on the date of surrender,
less the Contract Maintenance Charge and any Contingent Deferred Sales
Charge.
Contract means a contract designed to provide an Annuitant with an
income, which may be a lifetime income, beginning on the Maturity Date.
Contract Anniversary - The same month and day of the Contract Date in
each year following the Contract Date.
Contract Date means the date from which Contract Anniversaries and
Contract Years are determined.
Contract Value means the total amount of monies in Our Separate Account
C attributable to Your Contract and the monies in Our General Account
for Your Contract.
Contract Year means a year that starts on the Contract Date or on each
anniversary thereafter.
Death Benefit means the amount payable under Your Contract if the
Annuitant dies before the Maturity Date.
Funds mean the Investment Companies more commonly referred to as
mutual funds available for investment by Separate Account C on the
Contract Date or as later changed by Us. The Funds available as of the
date of the prospectus are the Fidelity Variable Insurance Products Fund
(VIP), the Fidelity Variable Insurance Products Fund II (VIP II), the
Fidelity Variable Insurance Products Fund III (VIP III), and American
Century Variable Portfolios, Inc. (American Century VP).
Home Office means where You write to Us to pay premiums, request
transfers, or other action regarding Your Contract. The address is:
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
In Force means the Contract has not been terminated.
Investment Division means a division of Separate Account C which
invests exclusively in the shares of a specified Portfolio of the Funds.
Issue Age means the age of the Annuitant on his/her birthday which is
nearest to the Contract Date.
Maturity Date means the date, specified in the Contract, when annuity
payments are to begin.
Owner means the person who purchases an Individual Variable Annuity
Contract and makes the premium payments. The Owner will usually be an
Annuitant, but need not be. The Owner has all rights in the Contract before
the Maturity Date, including the right to make withdrawals or surrender
the Contract, to designate and change the Beneficiaries who will receive
the proceeds at the death of the Annuitant before the Maturity Date, to
transfer funds among the Investment Divisions, and to designate a mode of
settlement for the Annuitant on the Maturity Date.
Payee means the person who is entitled to receive annuity payments after
an annuity is effected. On or after the Maturity Date, the Annuitant will be
the Payee. Before the Maturity Date, You will be the Payee.
Separate Account means Our Separate Account C which receives and
invests Your premiums under the Contract.
FEE TABLE
This information is intended to assist You in understanding the various
costs and expenses that an Owner will bear directly or indirectly. It reflects
expenses of the Separate Account as well as the Portfolios. See
CHARGES, FEES AND DEDUCTIONS on page 19 of the prospectus for
additional information.
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge imposed on Premiums 0.00%
Maximum Contingent Deferred Sales Charge (as a percentage of
premiums) (1) 7.00%
Transfer Fee (after 15 free transfers per year) $25.00
ANNUAL CONTRACT MAINTENANCE CHARGE $33.00
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees 1.25%
Administrative Charge .15%
Total Separate Account Annual Expenses 1.40%
(1) The Maximum Contingent Deferred Sales Charge decreases each year
so there is no charge after 6 Contract Years. Each year, after the first year,
10% of total premiums may be withdrawn without a Contingent Deferred
Sales Charge. The Contingent Deferred Sales Charge is based solely on
the Contract Year - additional premiums do not cause the Contingent
Deferred Sales Charge percentages to start over.
Contract Owner Transaction Expenses (All Investment Divisions)
Sales Load Imposed on Purchases (as a percentage of premium payments)
None
Transfer Fee $0.00
Deferred Sales Load (as a percentage of premiums withdrawn)
Years 0-1 (1) 8.00%
Years 1-2 8.00%
Years 2-3 7.00%
Years 3-4 7.00%
Years 4-5 6.00%
Years 5-6 5.00%
Years 6-7 4.00%
Years 7-8 2.00%
Eighth Year 0.00%
Contract Maintenance Charge (2) $35.00
Annual Expenses - Separate Account (as a percentage of average Contract
Value)
Mortality and Expense Risk 1.25%
Administration Fees 0.15%
Total 1.40%
(1) Length of time between premium payments and withdrawal.
(2) The Contract Maintenance Charge is a single $35 charge on a Contract.
It is deducted proportionally from the Investment Divisions in use at the
time of the charge. The Contract Maintenance Charge has been reflected in
the Examples by a method intended to show the "average" impact of the
Contract Maintenance Charge on an investment in the Separate Account.
The Contract Maintenance Charge is deducted only when the accumulated
value is less than $50,000. In the Example, the Contract Maintenance
Charge is approximated as a 0.13% annual asset charge based on the
experience of the Contracts.
PORTFOLIO ANNUAL EXPENSES (1)(2)
(as a percentage of Portfolio average net assets)
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES(2)
VIP Money Market 0.21% 0.10% 0.31%
VIP High Income 0.59% 0.12% 0.71%
VIP Equity-Income (3) 0.50% 0.08% 0.58%
VIP Growth (3) 0.60% 0.09% 0.69%
VIP Overseas (3) 0.75% 0.17% 0.92%
VIP II Investment Grade Bond 0.44% 0.14% 0.58%
VIP II Asset Manager (3) 0.55% 0.10% 0.65%
VIP II Index 500 (4) 0.24% 0.04% 0.28%
VIP II Contrafund (3) 0.60% 0.11% 0.71%
VIP II Asset Manager: Growth (3) 0.60% 0.17% 0.77%
VIP III Balanced (3) 0.45% 0.16% 0.61%
VIP III Growth Opportunities (3) 0.60% 0.14% 0.74%
VIP III Growth & Income (4) 0.49% 0.21% 0.70%
American Century VP Capital Appreciation 1.00% 0.00% 1.00%
American Century VP Balanced 1.00% 0.00% 1.00%
American Century VP Value 1.00% 0.00% 1.00%
American Century VP International 1.50% 0.00% 1.50%
American Century VP Income & Growth (5) 1.00% 0.00% 1.00%
(1)(2) The fund data was provided by Fidelity Management & Research
Company and American Century Investment Management, Inc. Midland
has not independently verifiedguaranteed the accuracy of the Fund datae.
(2) With the exception of the American Century VP Income & Growth
Portfolio as described in (5), the annual expenses shown are based on
actual expenses for 1997.
(3) A portion of the brokerage commissions the fund paid was used to
reduce its expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby credits
realized as a result ofinterest earned on uninvested cash balances werewas
used to reduce custodian and transfer agent expenses. IncludingWithout
these reductions, total operating expenses would have been as follows:for
0.56% for VIP Equity-Income, 0.67% for VIP Growth, 0.92% for VIP
Overseas, 0.73% for VIP II Asset Manager, 0.71% for VIP II Contrafund,
0.85% for VIP II Asset Manager: Growth, 0.76% for VIP III Growth
Opportunities, and 0.71% for VIP III Balanced.
VIP Equity-Income 0.57%
VIP Growth 0.67%
VIP Overseas 0.90%
VIP II Asset Manager 0.64%
VIP II Contrafund 0.68%
VIP II Asset Manager: Growth 0.76%
VIP III Balanced 0.60%
VIP III Growth Opportunities 0.71%
(4) The fund's expenses were voluntarily reduced by the Fund's investment
advisor. Absent reimbursement, the management fee, other expenses, and
total expenses for the VIP II Index 500 would have been 0.27%, 0.13%
and 0.40% respectively. 0.28%, 0.15% and 0.43% for VIP II Index 500,
and0.50%, 195.78% and 196.29% for VIP III Growth & Income.
(5) The American Century VP Income & Growth portfolio was established
on 10/30/1997. The annual expenses shown in the table and reflected in
the examples are estimated 1998 expenses as provided to Midland by
American Century Investment Management, Inc.
EXAMPLES
If You surrender or annuitize Your Contract at the end of the applicable
time period, You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
VIP Money Market $89 $108 $130 $217
VIP High Income 93 121 151 260
VIP Equity-Income (3) 92 117 144 246
VIP Growth (3) 93 120 150 257
VIP Overseas 95 127 162 282
VIP II Investment Grade Bond 92 117 144 246
VIP II Asset Manager (3) 93 122 153 263
VIP II Index 500 (4) 89 108 129 215
VIP II Contrafund (3) 93 122 153 263
VIP II Asset Manager: Growth (3) 95 125 159 276
VIP III Balanced (3) 93 121 152 261
VIP III Growth Opportunities (3) 94 122 154 266
VIP III Growth & Income (4) 96 129 166 289
American Century VP Capital Appreciation 96 129 166 289
American Century VP Balanced 96 129 165 288
American Century VP Value 96 129 166 289
American Century VP International 101 144 190 336
VIP Money Market 99 128 160 216
VIP High Income 103 140 180 257
VIP Equity-Income (3) 101 136 173 243
VIP Growth (3) 102 139 178 253
VIP Overseas (3) 105 146 190 277
VIP II Investment Grade Bond 101 136 173 244
VIP II Asset Manager (3) 102 138 176 250
VIP II Index 500 (4) 98 127 158 213
VIP II Contrafund (3) 102 139 178 254
VIP II Asset Manager: Growth (3) 103 142 183 263
VIP II Balanced (3) 102 137 174 246
VIP II Growth Opportunities (3) 103 141 181 260
VIP III Growth & Income 103 140 179 256
American Century VP Capital Appreciation 106 149 195 287
American Century VP Balanced 106 149 195 287
American Century VP Value 106 149 195 287
American Century VP International 111 164 219 335
American Century VP Income & Growth (5) 106 149 195 287
If You annuitize at the end of the applicable time period, You would pay
the following expenses on a $1,000 investment, assuming 5% annual
return on Your assets.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
VIP Money Market $89 $108 $130 $217
VIP High Income 93 121 151 260
VIP Equity-Income (3) 92 117 144 246
VIP Growth (3) 93 120 150 257
VIP Overseas 95 127 162 282
VIP II Investment Grade Bond 92 117 144 246
VIP II Asset Manager (3) 93 122 153 263
VIP II Index 500 (4) 89 108 129 215
VIP II Contrafund (3) 93 122 153 263
VIP II Asset Manager: Growth (3) 95 125 159 276
VIP III Balanced (3) 93 121 152 261
VIP III Growth Opportunities (3) 94 122 154 266
VIP III Growth & Income (4) 96 129 166 289
American Century VP Capital Appreciation 96 129 166 289
American Century VP Balanced 96 129 165 288
American Century VP Value 96 129 166 289
American Century VP International 101 144 190 336
If You do not surrender Your Contract, You would pay the following
expenses on a $1,000 investment, assuming 5% annual return on Your
assets:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
VIP Money Market $19 $58 $100 $217
VIP High Income 23 71 121 260
VIP Equity-Income (3) 22 67 114 246
VIP Growth (3) 23 70 120 257
VIP Overseas (3) 25 77 132 282
VIP II Investment Grade Bond 22 67 114 246
VIP II Asset Manager (3) 23 72 123 263
VIP II Index 500 (4) 19 58 99 215
VIP II Contrafund (3) 23 72 123 263
VIP II Asset Manager: Growth (3) 25 75 129 276
VIP III Balanced (3) 23 71 122 261
VIP III Growth Opportunities (3) 24 72 124 266
VIP III Growth & Income (4) 26 79 136 289
American Century VP Capital Appreciation 26 79 136 289
American Century VP Balanced 26 79 135 288
American Century VP Value 26 79 136 289
American Century VP International 31 94 160 336
VIP Money Market 19 58 100 216
VIP High Income 23 70 120 257
VIP Equity-Income (3) 21 66 113 243
VIP Growth (3) 22 69 118 253
VIP Overseas (3) 25 76 130 277
VIP II Investment Grade Bond 21 66 113 244
VIP II Asset Manager (3) 22 68 116 250
VIP II Index 500 (4) 18 57 98 213
VIP II Contrafund (3) 22 69 118 254
VIP II Asset Manager: Growth (3) 23 72 123 263
VIP III Balanced (3) 22 67 114 246
VIP III Growth Opportunities (3) 23 71 121 260
VIP III Growth & Income 23 70 119 256
American Century VP Capital Appreciation 26 79 135 287
American Century VP Balanced 26 79 135 287
American Century VP Value 26 79 135 287
American Century VP International 31 94 159 335
American Century VP Income & Growth (5) 26 79 135 287
WITH THE EXCEPTION OF THE AMERICAN CENTURY VP
INCOME & GROWTH PORTFOLIO, THE EXAMPLES ARE BASED
ON ACTUAL EXPENSES FOR 1997. ACTUAL EXPENSES ARE AS
SHOWN ON PAGE 4 UNDER PORTFOLIO ANNUAL EXPENSES
AND ARE NET OF ANY FEE WAIVERS OR EXPENSE
REIMBURSEMENTS. THE EXPENSES FOR THE AMERICAN
CENTURY VP INCOME & GROWTH PORTFOLIO ARE BASED ON
ESTIMATED 1998 EXPENSES AS PROVIDED TO MIDLAND BY
AMERICAN CENTURY MANAGEMENT, INC.
THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL; PAST
OR FUTURE ANNUAL RETURNS MAY BE GREATER OR LESSER
THAN THE ASSUMED AMOUNT. THESE EXAMPLES REFLECT
THE $353 CONTRACT MAINTENANCE CHARGE AS AN ANNUAL
CHARGE OF 0.13%0.15% OF ASSETS BASED ON AN AVERAGE
CONTRACT VALUE OF $27,000$22,000.
SUMMARY
In this prospectus "We", "Our", and "Us" mean Midland National Life
Insurance Company.
"You" and "Your" mean the Owner of the Contract. We refer to the person
who is covered by the Contract as the "Annuitant", because the Annuitant
and the Owner may not be the same.
The following summary is qualified in its entirety by the detailed
information appearing later in this prospectus and this summary must be
read in conjunction with that detailed information. Unless otherwise
indicated, the description of the Contract in this prospectus assumes that
the Contract is In Force.
Features of the Variable Annuity 2
Your Contract Value - Your Contract Value is established after We receive
Your first premium payment.
Your Contract Value reflects the amount and frequency of premium
payments, the investment experience of amounts allocated to Our Separate
Account, interest earned on amounts allocated to the General Account,
withdrawals, and deduction of the Separate Account and Contract
Charges. You bear the investment risk under the Variable Annuity 2 as
Your Contract Value will vary according to the investment experience of
the Investment Divisions of Our Separate Account You have selected.
There is no minimum guaranteed Contract Value with respect to any
amounts allocated to the Separate Account. (See Your Contract Value on
page 18.)
Flexible Premium Payments You may pay premiums whenever You want
(prior to the Maturity Date), in whatever amount You want, within certain
limits. We require an initial minimum premium of at least $2,000 and
ongoing premium payments of at least $50. We currently waive the initial
minimum premium requirement of $2,000 for Qualified Contracts enrolled
in a bank draft investment program or payroll deduction plan if the
monthly premium is at least $100.
You will also choose a planned periodic premium. You need not pay
premiums of any set amount or according to the planned schedule.
Investment Choices of the Variable Annuity 2
You may allocate amounts in Your Contract Value to either Our General
Account, which pays interest at a declared rate, or after the Free Look
Period up to ten of the Investment Divisions of Our Separate Account.
Each of these Investment Divisions invests in shares of a corresponding
portfolio of Fidelity's Variable Insurance Products Fund, Fidelity's
Variable Insurance Products Fund II, Fidelity's Variable Insurance
Products Fund III, or the American Century Variable Portfolios, Inc.
"series" type mutual funds. The portfolios have different investment
objectives. Fidelity Management & Research Company receives fees from
the VIP, VIP II and VIP III portfolios for providing investment
management services and American Century Investment Management,
Inc. receives fees from the American Century Variable Portfolios for
providing investment management services. These fees are taken monthly
in proportion to the average daily net assets of each portfolio throughout
the month.
For a full description of the Funds, see the Funds' prospectuses, which
accompany this prospectus. (See The Funds on page 13.)
VIP High Income Portfolio
VIP Equity-Income Portfolio
VIP Growth Portfolio
VIP Overseas Portfolio
VIP II Asset Manager Portfolio
VIP II Investment Grade Bond Portfolio
VIP II Contrafund Portfolio
VIP II Asset Manager: Growth Portfolio
VIP II Index 500 Portfolio
VIP III Growth & Income Portfolio
VIP III Balanced Portfolio
VIP III Growth Opportunities Portfolio
American Century VP Capital Appreciation Portfolio
American Century VP Value Portfolio
American Century VP Balanced Portfolio
American Century VP International Portfolio
American Century VP Income & Growth Portfolio
The current Investment Divisions which invest in Portfolios of Fidelity's
Variable Insurance Products Fund are:
Money Market Portfolio
High Income Portfolio
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
The current Investment Divisions which invest in Portfolios of Fidelity's
Variable Insurance Products Fund II are:
Asset Manager Portfolio
Investment Grade Bond Portfolio
Index 500 Portfolio
Contrafund Portfolio
Asset Manager: Growth Portfolio
The current Investment Divisions which invest in Portfolios of Fidelity's
Variable Insurance Products Fund III are:
Growth & Income Portfolio
Balanced Portfolio
Growth Opportunities Portfolio
The current Investment Divisions which invest in Portfolios of the
American Century Variable Portfolios, Inc. are:
Capital Appreciation Portfolio
Value Portfolio
Balanced Portfolio
International Portfolio
Income & Growth Portfolio
Each portfolio charges a different investment advisory fee.The VIP, VIP
II, and VIP III Funds also charge an amount for other operating expenses.
The total expenses for the year ending December 31, 199 76 are shown on
page 4 under the table of Portfolio Annual Expenses.
See Investment Policies Of The Funds' Portfolios on page 13, Charges In
The Funds on page 20, and The General Account on page 20.
Withdrawals
Unless restricted by a retirement arrangement in connection with which
You have purchased a Contract, You may withdraw all or part of Your
Cash Surrender Value at any time. In addition, You may elect a
Systematic Withdrawal Option (See Systematic Withdrawals on page 16.)
A Contingent Deferred Sales Charge may be imposed on the withdrawal.
The amount You request plus any deferred sales charge, and, upon full
withdrawal, plus the Contract Maintenance Charge will be deducted from
Your Contract Value. You may withdraw this amount in a lump sum or
use it to purchase an annuity that will continue as long as You live or for
some other period You select. A withdrawal may also have tax
consequences including a 10% tax penalty on certain withdrawals prior to
age 59 1/2. After three years from the Contract Date, the Contingent
Ddeferred Ssales Ccharge , if any, will be waived upon the withdrawal of
funds to effect a life annuity. (See Sales Charges on Withdrawals on page
19, FEDERAL TAX STATUS on page 21, and EFFECTING AN
ANNUITY on page 24.) Withdrawals from Contracts used in connection
with tax-qualified retirement plans may be restricted or penalized by the
terms of the plan or applicable law.
Charges under the Contracts. The charges made by Midland are intended
to compensate Us for paying the various categories of expenses and taxes
incurred in maintaining and operating the Contracts and Separate Account
and for assuming mortality and expense risks under the Contracts. These
charges consist of a $33 annual Contract Maintenance Charge and a daily
charge at an effective annual rate of 1.40% of the assets held in the
Investment Divisions. For more information regarding these charges, see
CHARGES, FEES AND DEDUCTIONS on page 14.
A Contingent Deferred Sales Charge is imposed to reimburse Midland for
distribution expenses, such as commissions paid to sales personnel, costs
of advertising and sales promotions, prospectus costs, and costs of policy
administration. Many mutual funds, other than no-load funds, make this
charge by deducting a percentage of the investor's payment and investing
only the remainder. Under the Contracts described in this prospectus, no
sales charge is taken out when Your premium is invested in the Investment
Divisions designated by You or in the General Account if so directed. In
any Contract Year, after the first Contract Year, You may make a
withdrawal of 10% of the sum of premiums paid without charge. A
Contingent Deferred Sales Charge may be deducted on all other
withdrawals (including withdrawals to effect an annuity). The charge is
7% of the amount of the premiums withdrawn in the first Contract Year
and thereafter the charge decreases. (See Sales Charges on Withdrawals on
page 14.) Withdrawals made seven or more Contract Years after the
Contract Date are subject to no Contingent Deferred Sales Charge at all.
Withdrawals may be subject to tax consequences under the Internal
Revenue Code. (See Withdrawals on page 12 and FEDERAL TAX
STATUS on page 15.)
Charges Under the Contracts by Midland
Sales Expenses There is no deduction for sales expenses from premium
payments when made. However, a Contingent Deferred Sales Charge may
be assessed against Contract Values when they are withdrawn, including
withdrawals to effect an annuity and systematic withdrawals. (See Sales
Charges on Withdrawals on page 19.)
The length of time from receipt of each premium payment and the
withdrawal determines the Contingent Deferred Sales Charge. For this
purpose, premium payments will be deemed to be withdrawn in the order
in which they are received and all withdrawals will be first from premium
payments and then from other Contract Values. The charge is a percentage
of the premiums and is as follows:
Length of Time Contingent
from Premium Payment Deferred Sales
(Number of Years) Charge
0-1 8%
1-2 8%
2-3 7%
3-4 7%
4-5 6%
5-6 5%
6-7 4%
7-8 2%
8 or more 0%
No contingent deferred sales charge will be assessed upon (1) payment of
death proceeds under the Contract (2) exercise of the Free Withdrawal
Privilege or (3) Subject to approval of the state insurance authorities, after
the first Contract Anniversary, Midland will not assess a Contingent
Deferred Sales Charge on either a full or partial surrender if (a) written
proof is given to Us at Our Home Office that the Owner is confined in a
state licensed in-patient nursing facility for a total of 90 days, provided We
receive Your withdrawal request within 90 days after discharge from such
facilities or (b) A licensed Physician provides a written statement to Us
that the Owner is expected to die within the next twelve months due to a
non-correctable medical condition. The licensed Physician cannot be the
Owner or part of the Owner's immediate family. We reserve the right to
have a physician of Our choice examine the Owner.
Withdrawals may be subject to tax consequences under the Internal
Revenue Code. (See Withdrawals on page 16 and FEDERAL TAX
STATUS on page 21).
Free Withdrawal Privilege You may make a withdrawal from Your
Contract value of up to 10% of the total premiums paid (as determined on
the date of the requested withdrawal), less any withdrawals made in the
prior 12 months, without incurring a Contingent Deferred Sales Charge.
(See Free Withdrawal Option on page 19 for exact details.)
Mortality and Expense Risks For assuming the mortality and expense
risks under the Contract, Midland will impose a 1.25% per annum charge
against all Contract Values held in the Separate Account (See CHARGES,
FEES AND DEDUCTIONS on page 19.)
Annual Administration and Maintenance Fee The Contract provides for
administration and Contract maintenance charges. For administration, the
charge is 0.15% per annum against all Contract Values held in the
Separate Account. For maintenance, the charge is $35 annually. At the
current time, Contracts with a Contract Value of $50,000 or more at time
of Contract Anniversary will not be assessed the $35 Contract
Maintenance Charge. (See CHARGES, FEES AND DEDUCTIONS on
page 19.)
Premium Taxes At the current time, Midland does not impose a
deduction for Premium Taxes. Midland does, however, reserve the right to
impose a deduction for Premium taxes for Contracts sold in states that
charge a premium tax.
Using Your Contract Value
Transfers - On or before the Maturity Date, You may transfer amounts in
Your Contract Value between the General Account and after the Free
Look Period between Investment Divisions of the Separate Account and
among the Investment Divisions of the Separate Account. Transfers take
effect on the date We receive Your request. We also require minimum
amounts for each transfer, usually $200. Currently, We do not charge You
for making transfers. if You make more than fifteen transfers a year, an
administrative charge may be deducted from Your Contract Value ($25 for
each additional transfer). However, We reserve the right to assess a $25
Administrative Charge this charge after the fifteenth fourth transfer in a
Contract Year. There are other limitations on transfers to and from the
General Account.
Additional Information About Variable Annuity 2Annuities
Your Right To Examine This Contract - You have a right to examine the
Contract and, if You wish, return it to Us. Your request must be
postmarked no later than 10 days after You receive Your Contract. During
the Free Look Period Your premium will be allocated to the VIP Money
Market Investment Division. (See Free Look on page 15 for more details.)
CONDENSED FINANCIAL INFORMATION
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation
Investment at Beginning at End Units at End
Division of Period of Period of Period
VIP Money Market
1993(1) 10.00 10.02 3,675
1994 10.02 10.31 207,115
1995 10.31 10.76 30,841
1996 10.76 11.18 450,641
1997 11.18 11.63 534,936
VIP High Income
1993(1) 10.00 10.22 2.68
1994 10.22 9.93 70,977
1995 9.93 11.83 139,335
1996 11.83 13.26 221.760
1997 13.26 13.58 304,930
VIP Equity-Income
1993(1) 10.00 10.16 2,861
1994 10.16 10.71 163,874
1995 10.71 14.35 385,807
1996 14.35 16.09 696.083
1997 16.09 20.33 929,862
VIP Growth
1993(1) 10.00 10.09 2,539
1994 10.09 9.80 160,540
1995 9.80 13.32 347,738
1996 13.32 15.01 700,985
VIP Overseas
1993(1) 10.00 10.40 1,706
1994 10.40 10.37 147,456
1995 11.36 12.59 282,107
1996 12.59 13.85 336,988
VIP II Asset Manager
1993(1) 10.00 10.48 11,474
1994 10.48 9.67 280,056
1995 9.67 11.22 362,467
1996 11.22 12.65 447,842
1997 12.65 15.05 534,109
VIP II Investment
Grade Bond
1993(1) 10.00 10.06 124
1994 10.06 9.52 31,444
1995 9.52 11.03 52,431
1996 11.03 11.22 97,711
1997 11.22 12.06 136,067
VIP II Index 500
1993(1) 10.00 10.15 22
1994 10.15 10.11 32,675
1995 10.11 13.79 71,305
1996 13.79 16.57 256,789
1997 16.57 21.67 497,774
VIP II Asset Manager: Growth
1995(2) 10.00 11.48 13,682
1996 11.48 13.56 71,781
1997 13.56 16.72 176,790
VIP II Contrafund
1995(2) 10.00 11.84 35,906
1996 11.84 14.17 187,702
1997 14.17 17.34 397,591
VIP III Balanced
1997(3) 10.00 11.45 39,701
VIP III Growth Opportunities
1997(3) 10.00 12.28 75,926
VIP III Growth & Income
1997(3) 10.00 12.36 54,877
American Century VP
Capital Appreciation
1997(3) 10.00 11.35 13,870
American Century VP
Balanced
1997(3) 10.00 11.40 13,519
American Century VP
Value
1997(3) 10.00 12.26 44,666
American Century VP
International
1997(3) 10.00 10.93 34,973
(1)Period from 10/24/93 to 12/31/93
(2) Period From 5/1/95 to 12/31/95
(3)Period from 5/1/97 to 12/31/97
The American Century VP Income & Growth Investment Division became
available on May 1, 1998, and thus had no financial information to report
at 12/31/1997.
The following Investment Divisions were not available in 1996 and thus
have no financial information to report as of 12/31/96: VIP III Growth &
Income, VIP III Balanced, VIP III Growth Opportunities, American
Century VP Capital Appreciation, American Century VP Value Portfolio,
American Century VP Balanced and American Century VP International.
GENERAL INFORMATION ABOUT
MIDLAND, SEPARATE ACCOUNT C
AND THE FUNDS
The Company That Issues Variable Annuit yies 2
Midland National Life Insurance Company
We are Midland National Life Insurance Company, a stock life insurance
company. Midland was organized in 1906 in South Dakota as a mutual life
insurance company at that time named "The Dakota Mutual Life Insurance
Company". We were reincorporated as a stock life insurance company in
1909. Our name "Midland" was adopted in 1925. We are licensed to do
business in 49 states, the District of Columbia, and Puerto Rico.
Our Parent
Midland is a subsidiary of Sammons Enterprises, Inc., Dallas, Texas.
Sammons has controlling or substantial stock interests in a large number
of other companies engaged in the areas of insurance, corporate services,
and industrial distribution.
Separate Account Investment Choices
Premiums may be allocated to up to ten of the Investment Divisions of
Our Separate Account or to Our General Account according to the
instructionsdirections You provided on Your application. In certain states,
allocations to and transfers to and from the General Account are not
permitted. These instructions will apply to any subsequent premiums You
pay that do not include instructions as to how the premium is to be
allocated until You write to Our Home Office with new instructions.
Allocation percentages may be any whole number from 10 to 100, and the
sum must equal 100. You may choose not to allocate any premium to any
particular Investment Division. You may not have your Contract Value
Fund allocated to more than ten Investment Divisions of Our Separate
Account at any one point in time. (See, The General Account on page 20.)
Our Separate Account And Its Investment Divisions
The Separate Account is Our Separate Account C, established under the
Insurance Laws of the State of South Dakota in March, 1991, and is a unit
investment trust registered with the Securities and Exchange Commission
(SEC) under the Investment Company Act of 1940. This registration does
not involve any supervision by the SEC of the management or investment
contracts of the Separate Account. A unit investment trust is a type of
investment company. The Separate Account has a number of Investment
Divisions, each of which invests in shares of a corresponding portfolio of
the Funds. You may allocate part or all of Your premiums to no more than
ten of the eighteenseventeen Investment Divisions of Our Separate
Account. Our Separate Account divisions invest in the following
Investment Divisions: VIP Money Market Portfolio, the VIP High Income
Portfolio, the VIP Equity-Income Portfolio, the VIP Growth Portfolio, the
VIP II Asset Manager Portfolio, the VIP Overseas Portfolio, the VIP II
Investment Grade Bond Portfolio, the VIP II Contrafund Portfolio, the
VIP II Asset Manager: Growth Portfolio, the VIP II Index 500 Portfolio,
the VIP III Growth & Income Portfolio, the VIP III Balanced Portfolio,
the VIP III Growth Opportunities Portfolio, the American Century VP
Capital Appreciation Portfolio, the American Century VP Value Portfolio,
the American Century VP Balanced Portfolio, and the American Century
VP International Portfolio.
VIP Money Market Portfolio
VIP High Income Portfolio
VIP Equity-Income Portfolio
VIP Growth Portfolio
VIP Overseas Portfolio
VIP II Asset Manager Portfolio
VIP II Investment Grade Bond Portfolio
VIP II Contrafund Portfolio
VIP II Asset Manager: Growth Portfolio
VIP II Index 500 Portfolio
VIP III Growth & Income Portfolio
VIP III Balanced Portfolio
VIP III Growth Opportunities Portfolio
American Century VP Capital Appreciation Portfolio
American Century VP Value Portfolio
American Century VP Balanced Portfolio
American Century VP International Portfolio
American Century VP Income & Growth Portfolio
The Funds
Fidelity's Variable Insurance Product Fund, Fidelity's Variable Insurance
Product Fund II, Fidelity's Variable Insurance Product Fund III, and the
American Century Variable Portfolios, Inc. are open-end diversified
management investment companies, more commonly called mutual funds.
As a "series" type of mutual funds, they issue several different "series" of
portfolios. The Funds' shares are bought and sold by Our Separate
Account at net asset value. More detailed information about the Funds and
their investment policies, risks, expenses and all other aspects of their
operations, appears in their prospectuses, which accompany this
prospectus, and in the Funds' Statements of Additional Information. You
should read the Funds' prospectus carefully before allocating or
transferring money to any Fund.
The Funds sell their shares to separate accounts of various insurance
companies to support both variable life insurance contracts and variable
annuity contracts. We currently do not foresee any disadvantages to Our
Contract Owners arising out of this. If We believe that the Funds do not
sufficiently respond to protect Our Contract Owner's interests, We will see
to it that appropriate action is taken to protect Our Contract Owners. The
Funds will also monitor this possibility. Also, if We ever believe that any
of the Funds' Portfolios are so large as to materially impair its investment
performance of a Portfolio or the Fund, We will examine other investment
options.
Midland may from time to time receive revenue from Fidelity
Management & Research Company and/or American Century Investment
Management, Inc. The amounts of the revenue, if any, may be based on
the amount of investments by Midland contained in the Funds.
Investment Policies Of The Funds' Portfolios
Each portfolio has a different investment objective which it tries to
achieve by following separate investment policies. The objectives and
policies of each portfolio will affect its return and its risks. Remember that
the investment experience of the Investment Divisions of Our Separate
Account depends on the performance of the corresponding Funds'
portfolios. The investment advisor for the VIP I, VIP II, and VIP III funds
is Fidelity Management & Research Company. The investment advisor for
the American Century VP funds is American Century Investment
Management, Inc. The objectives of the Funds' portfolios are as follows:
Portfolio
Objective
VIP Money Market
Seeks to earn aobtain as high a level of current income by investing in
high quality money market instruments as is consistent with preserving
capital and providing liquidity. (An investment in the VIP Money Market
or any other Portfolio is neither insured nor guaranteed by the U.S.
Government, and there is no assurance that the Money Market Portfolio
will be able to maintain a constant net asset value.)
VIP High Income
Seeks to obtain a high level of current income by investing primarily in
high-yielding, lower-rated, fixed-income securities, while also considering
growth of capital.
VIP Equity-Income
Seeks to obtain reasonable income by investing primarily in income-
producing equity securities. In choosing these securities, the Manager will
consider the potential for capital appreciation. The Fund seeksPortfolio's
goal is to achieve a yield thatwhich exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500
Stocks.
VIP Growth
Seeks to achieve capital appreciation by investing in common sticks,
normally through the purchase of common stocks, although the Portfolio's
investments are not restricted to any one type of security. Capital
appreciation also may be found in other types of securities, including
bonds and preferred stocks.
VIP Overseas
Seeks long-term growth of capital, primarily through investments in
foreign securities.
VIP II Asset Manager
Seeks high total return with reduced risk over the long-term by allocating
its assets among stocks, bonds and short-term fixed- income instruments.
VIP II Investment Grade Bond
Seeks as high a level of current income as is consistent with the
preservation of capital by investing in a broad range of investment grade
fixed income securities.
VIP II Contrafund
Seeks to achieve capital appreciation over the long term by investing in
securities of companies that are undervalued or out-of-favor.
VIP II Asset Manager: Growth
Seeks to maximize total return over the long term through investments in
stocks, bonds, and short-term instruments. This portfolio has a heavier
emphasis on stocks than the Asset Manager Portfolio.
VIP II Index 500
Seeks to provide investment results that correspond to the total return of
common stocks publicly traded in the United States by duplicating the
composition and total return of Standard & Poor's Composite Index of 500
Stocks. This is designed as a long-term investment option.
VIP III Growth & Income
Seeks high total return, combining current income and capital
appreciation. Invests mainly in stocks that pay current dividends and show
earnings potential.
VIP III Balanced
Seeks to balance the growth potential of stocks with the possible income
cushion of bonds. Invests in broad selection of stocks, bonds and
convertible securities.
VIP III Growth Opportunities
Seeks long-term growth of capital. Invests primarily in common stocks
and securities convertible into common stocks, but it has the ability to
purchase other securities such as preferred stocks and bonds that may
produce capital growth.adjusts its mix between growth, value, cyclical and
other securities to take advantage of attractive valuations.
American Century VP Capital Appreciation
Seeks capital growth by investing in common stocks that management
considers to have better-than-average prospects for appreciation.
American Century VP Value
Seeks long-term capital growth with income as a secondary objective.
Invests primarily in equity securities of well-established companies that
management believes to be under-valued.
American Century VP Balanced
Seeks capital growth and current income. Invests approximately 60
percent of its assets in growth stocks and the rest in fixed income
securities.
American Century VP International
Seeks capital growth by investing in securities of foreign companies that
management believes to have potential for appreciation.
American Century
VP Income & Growth
Seeks dividend growth, current income and capital appreciation by
investing in common stocks.
We Own The Assets Of Our Separate Account
Under South Dakota law, We own the assets of Our Separate Account and
use them only to support Your Contract and other Variable Annuity
Contracts. The assets of the Separate Account may not be charged with
liabilities arising out of Midland's other business and the obligations under
the Contracts are obligations of Midland. The income, gains and losses
(realized and unrealized) of the Separate Account are credited to or
charged against the Separate Account without regard to other income,
gains, or losses of Midland. Under certain unlikely circumstances, one
Investment Division of the Separate Account may be liable for claims
relating to the operations of another division. We may also permit charges
owed to Us to stay in the Separate Account. Thus, We may also participate
proportionately in the Separate Account. These accumulated amounts
belong to Us and We may transfer them from the Separate Account to Our
General Account.
Our Right To Change How We Operate Our Separate Account
In addition to changing or adding investment companies, We have the
right to modify how We or Our Separate Account operate. We intend to
comply with applicable law in making any changes and, if necessary, We
will seek approval of Contract Owners. We have the right to:
add Investment Divisions to, or remove Investment Divisions from Our
Separate Account, combine two or more divisions within Our Separate
Account, or withdraw assets relating to Our Variable Annuities from one
Investment Division and put them into another;
eliminate the shares of the portfolio and substitute shares of another
portfolio of the Funds or another open-end, registered investment
company, if the shares of the portfolio are no longer available for
investment or, if in Our judgment, further investment in the portfolio
should become inappropriate in view of the purposes of Separate Account
C;
register or end the registration of Our Separate Account under the
Investment Company Act of 1940;
operate Our Separate Account under the direction of a committee or
discharge such a committee at any time (the committee may be composed
entirely of persons who are "interested persons" of Midland under the
Investment Company Act of 1940);
disregard instructions from Owners that would otherwise require that a
Fund's shares be voted so as to cause a change in the investment objectives
of the portfolio of a Fund or approval or disapproval of an investment
advisory policy for the portfolio of a Fund. We would do so only if
required by state insurance regulatory authorities pursuant to insurance
law or regulation; or
operate Our Separate Account or one or more of the Investment Divisions
in any other form the law allows, including a form that allows Us to make
direct investments. We may make any legal investments We wish. In
choosing these investments, We will rely on Our own or outside counsel
for advice. In addition, We may disapprove any change in investment
advisers or in investment policy unless a law or regulation provides
differently.
If any changes are made that result in a material change in the underlying
investments of any Investment Division, You will be notified. We may,
for example, cause the Investment Division to invest in a mutual fund
other than or in addition to the current Funds.
If You then wish to transfer the amount You have in that Investment
Division to another division of Our Separate Account, or to Our General
Account, You may do so, without charge, by writing to Our Home Office.
At the same time, You may also change how Your premiums are allocated.
DETAILED INFORMATION ABOUT
THE CONTRACT
Requirements for Issuance of a Contract
To buy a Contract, You must complete an application form and send it,
together with Your initial premium payment of at least $2,000 (except for
Qualified Contracts enrolled in a bank draft investment program or payroll
deduction plan if the monthly premium is at least $100) to Midland
through a representative who is fully licensed and registered to sell the
Contract. You will then be issued a Contract that sets forth precisely Your
rights and Our obligations. Once Your Contract is issued, additional
premium payments may be made by check or money order payable to the
order of Midland and mailed to the Home Office. Any additional premium
payment must be at least $50.
If We receive and accept Your completed application for a Contract with
or before Your initial premium payment, We will, as of the day We
receive Your premium, invest the entire amount in the Money Market
Investment Division . If the application is complete, We will accept or
reject it within two business days of receipt. If the application is
incomplete, We will attempt to complete it within five business days. If it
is not complete at the end of this period, We will inform You of the reason
for the delay and the premium payment will be returned immediately,
unless You specifically consent to Us keeping the premium payment until
the application is complete. Each premium received after the Free Look
period will be allocated to Our Separate Account or General Account on
the day We receive Your premium.
Free Look
You have a 10-day "free look" period after You receive Your Contract to
review it and decide whether You wish to retain it. If You wish to cancel
the Contract, You may return it to the agent who sold it to You or to Our
office. If You return Your Contract, We will return the greater of: (1) the
premium paid; or (2) the Contract Value plus the sum of all charges
deducted from the Contract Value.
During the Free Look Period, Your premium will be allocated to the VIP
Money Market Investment Division. At the end of the Free Look Period
(which is administratively assumed to be 15 days after the Contract Date
for reallocation purposes), Your Contract Value will then be allocated
according to the instructions in Your application. (See Allocation of
Premiums below.)
In order to comply with regulations and legal requirements, in certain
states the length of the Free Look Period may vary.
Allocation of Premiums
The Owner determines how the premiums will be allocated among the
Investment Divisions, and between the Separate Account and the General
Account, by specifying the desired allocation on the application form of
the Contract. After the Free Look Period , You may change subsequent
premium allocations by providing Us with written instructions. If You
send Us an additional premium payment without instructions about how
the premium should be allocated, We will allocate the premium using the
premium allocations specified in the application form or subsequently
changed by You. You may not have Your Contract ValueFund allocated to
more than ten investment divisions of Our Separate Account at any point
in time.
Transfers of Contract Value
Currently, on or before the Maturity Date, You may make an unlimited
number ofup to fifteen transfers of Contract Value in each Contract Year
without charge. We charge $25 for each additional transfer in a single
Contract Year. We reserve the right to assess a $25this charge after
the fifteenthfourth transfer in a Contract Year. During the first two Contract
Years, if a transfer is all of Your Contract Value in Our Separate Account
to the General Account, We will not make a charge for that transfer. To
make a transfer, write to Our Home Office.
You may ask Us to transfer amounts between the General Account and
any Investment Divisions of Our Separate Account and among Investment
Divisions of Our Separate Account by writing to Us at Our Home Office.
The transfer will take effect as of the date We receive Your request. The
minimum amount We will transfer on any date is $200. A smaller transfer
may be made under special circumstances mentioned in Our Right To
Change How We Operate Our Separate Account on page 14. This
minimum need not come from any one Investment Division or be
transferred to any one Investment Division as long as the total net amount
transferred that day equals the minimum.
For limitations on transfers to and from the General Account, see The
General Account on page 20.
Dollar Cost Averaging
The Dollar Cost Averaging (DCA) program enables You to make monthly
transfers of a predetermined dollar amount from the DCA Source Account
(any one Investment Division or the General Account, subject to the
limitations from the General Account described on page 21)the VIP
Money Market Investment Division into one or more of the other
Investment Divisions, or the General Account , subject to the limitation
that the Contract Value may only be allocated in up to ten of the
Investment Divisions (not the General Account). By allocating monthly, as
opposed to allocating the total amount at one time, You may reduce the
impact of market fluctuations. This plan of investing, however, does not
assure a profit or protect against a loss in declining markets.
DCA can be elected at any time by completion of the proper request forms
(obtained by contacting Us at the Home Office)the DCA Request Form
(form number 5653) and by insuring that a sufficient amount is in the
DCA Source AccountVIP Money Market Investment Division, either
through payment of a premium with the DCA request form, allocation of
premiums, or through a transfer of amounts to the VIP Money Market
Investment Division. Copies of the DCA Request Formform 5653 can be
obtained by contacting Us at Our Home Office. The election will specify:
that any money received with the form is to be placed into the The DCA
Source Account. The DCA Source Account is the account from which
DCA transfers will be made.VIP Money Market Investment Division
That any money received with the form is to be placed into the DCA
Source Account.
The monthly amount to be transferred to the other Investment Divisions,
and
How that monthly amount is to be allocated among the Investment
Divisions
Since the DCA program is only suitable for substantial, infrequent
premium payments, DCA is only available when the premium payment
mode is annual or if the amount in the DCA Source AccountVIP Money
Market Investment Division is at least $2,400 at the time DCA is to begin.
The DCA Request Form must be received with any premium payment
You intend to apply to DCA.
The minimum monthly amount to be transferred using DCA is $200. In
order to begin the DCA program, the value in the VIP Money Market
Investment Division must be equal to at least 12 monthly transfers. When
DCA is elected, all amounts in the DCA Source AccountVIP Money
Market Investment Division will be available for transfer under the DCA
program. Once DCA is elected, additional premiums can be deposited into
the DCA Source Account the VIP Money Market Investment Division for
DCA by sending them in with a DCA request form.
You may change the DCA allocation percentages or DCA transfer
amounts twice each Contract Year. Any premium payments received while
the DCA program is in effect will be allocated using the allocation
percentages from the DCA request form, unless You specify otherwise.
If requested at issue, DCA will start at the beginning of the second
Contract Month. If requested after issue, DCA will start at the beginning
of the first Contract Month which occurs at least 30 days from the day the
request is received.
Transfers under the DCA program will count toward the number of free
transfers allowed each Contract Year.
DCA will last until the value in the DCA Source AccountVIP Money
Market Investment Division is exhausted or until a request for termination
is received in writing from You. DCA will automatically be terminated on
the Maturity Date.
We reserve the right to end the DCA program at any time by sending You
a notice one month in advance.
Portfolio Rebalancing
Midland currently offers an option which allows Contract Owners who are
not Dollar Cost Averaging to reset the percentage of Contract Value
allocated to each Investment Division to a pre-set level (for example, 30%
in the VIP Equity-Income Investment Division, 40% in the VIP High
Income Investment Division and 30% in the VIP II Asset Manager
Investment Division). If You elect this option, at the beginning of each
Contract Anniversary Midland will transfer the amounts needed to
"rebalance" the Contract Value to the percentages specified by You.
Rebalancing may result in transferring amounts from an Investment
Division earning a relatively higher return to one earning a relatively
lower return. The Portfolio Rebalancing Option is subject to the limitation
that the Contract Value may only be allocated in up to 10 Investment
Divisions. Midland reserves the right to terminate the portfolio
rebalancing option by sending You a notice one month in advance. The
transfer restrictions regarding the General Account discussed under
Transfers on page 21 are not applicable to the Portfolio Rebalancing
Option. However, Midland will not allow the owner to change the election
allocated to the General Account by more than 10% at any one time. To
elect the Portfolio Rebalancing option, please contact Us at the Home
Office address.
Systematic Withdrawals
The Systematic Withdrawal feature available in connection with the
Contract allows You to have a portion of the Contract Value withdrawn
automatically. Under this feature, a Contract Owner may elect to receive
preauthorized scheduled partial withdrawals while the Annuitant is living
before the Maturity Date and after the Free Look Period by sending a
properly completed Preauthorized Systematic Withdrawal Request Form
to Midland National Life at Our Home Office. A Contract Owner may
designate the systematic withdrawal amount or the period for systematic
withdrawal payments. You will also designate the desired frequency of the
systematic withdrawals, which may be monthly, quarterly, semi-annually
or annually. See Your Contract for details on Systematic Withdrawal
options and when each will begin.
Each systematic withdrawal will be effected as of the end of the Business
Day during which the withdrawal is scheduled. If the New York Stock
Exchange is closed on the day when the withdrawal is to be made, the
withdrawal will be processed on the next Business Day. Unless elected
otherwise, the deduction caused by the Systematic Withdrawal will be
allocated proportionately to the Contract Value in the Investment
Divisions and the General Account.
Systematic Withdrawals of a fixed amount may be stopped or modified
upon proper written request by the Contract Owner received by Midland
National Life at least 30 days in advance. A proper written request must
include the written consent of any effective assignee or irrevocable
Beneficiary, if applicable. Systematic Withdrawals over a fixed period or
over the Annuitant's life expectancy cannot be changed.
Each systematic withdrawal must be at least $100. Midland reserves the
right to change the required minimum systematic withdrawal amount.
Upon payment, the Contract Value will be reduced by any amount equal to
the payment proceeds plus any applicable Contingent Deferred Sales
Charge. (See Sales Charges on Withdrawals on page 19.) The Contingent
Deferred Sales Charge will apply to amounts withdrawn under the
Systematic Withdrawal program in the same manner as it applies to other
withdrawals of the Contract Value. However, Systematic Withdrawals
taken to satisfy IRS required minimum withdrawals and paid under a life
expectancy option will not be subject to a Contingent Deferred Sales
Charge. Any systematic withdrawal that equals or exceeds the Cash
Surrender Value will be treated as a complete withdrawal. In no event will
payment of a systematic withdrawal exceed the Cash Surrender Value.
The Contract will automatically terminate if a systematic withdrawal
causes the Contract's Cash Surrender Value to equal zero or less.
The Federal tax laws may include systematic withdrawals in the Contract
Owner's gross income in the year in which the withdrawal occurs and will
impose a penalty tax of 10% on certain systematic withdrawals which are
premature distributions. (See Taxation of Annuities in General on page
22.) Additional terms and conditions for the systematic withdrawal
program are set forth in Your Contract and in the application for the
program.
Withdrawals
Unless restricted by a retirement arrangement under which You are
covered, You may at any time withdraw all or part of Your Cash Surrender
Value by sending Us Your request in writing. Unscheduled Partial
withdrawals from an Investment Division or the General Account,
however, must be made in amounts of $500 or more and cannot reduce
Your Contract Value to less than $1,000. If a withdrawal results in less
than $1,000 remaining, the entire Contract Value must be withdrawn.
We will generally pay the amount of any withdrawal from the Separate
Account, less any applicable Contingent Deferred Sales Chargesales
charge and any required tax withholding, and upon full withdrawal, less
the Contract Maintenance Charge within seven days after We receive a
properly completed withdrawal request. We may defer payment for a
longer period only when trading on the New York Stock Exchange is
restricted as defined by the Securities and Exchange Commission; when
the New York Stock Exchange is closed (other than customary weekend
and holiday closing); when an emergency exists as defined by the
Securities and Exchange Commission as a result of which disposal of the
Separate Account's securities or determination of the net asset value of
each Investment Division is not reasonably practicable; or for such other
periods as the Securities and Exchange Commission may by order permit
for the protection of Owners. We expect to pay the amount of any
withdrawal from the General Account promptly, but have the right to
delay payment up to six months.
Unless You specify otherwise, Your withdrawal will, subject to minimum
amount requirements, be allocated among all Investment Divisions and the
General Account in the same proportion as the value of Your interest in
each Investment Division and in the General Account bears to Your total
Contract Value. The Contingent Deferred Sales Charge will be determined
without reference to the source of the withdrawal. The charge will be
based on the length of time between premium payments and withdrawals.
(See CHARGES, FEES AND DEDUCTIONS on page 19.)
A withdrawal will generally have federal income tax consequences, which
can include tax penalties and tax withholding. You should consult with tax
advisers before making a withdrawal. (See FEDERAL TAX STATUS on
page 21.)
Under certain types of retirement arrangements, the Retirement Equity Act
of 1984 provides that, in the case of a married Participant, a withdrawal
request must include the consent of the Participant's spouse. This consent
must contain the Participant's signature and the notarized or properly
witnessed signature of the Participant's spouse. These new spousal consent
requirements generallyrequirements were effective beginning January 1,
1985 and apply to married Participants in most qualified pension plans,
including plans for self-employed individuals, and those Section 403(b)
annuities which are considered employee pension benefit plans under the
Employee Retirement Income Security Act of 1974 (ERISA). You should
check the terms of Your retirement plan and consult a tax advisor before
making a withdrawal.
Participants in the Texas Optional Retirement Program may not receive
the proceeds of a withdrawal from a Contract or apply them to start an
annuity prior to retirement except in the case of termination of
employment in the Texas public institutions of higher education, death, or
total disability. Such proceeds may, however, be used to fund another
eligible vehicle.
Withdrawals from Section 403(b) plans are also severely restricted. (See
FEDERAL TAX STATUS on page 21.)
Loans
Prior to the Maturity Date, owners of contracts issued in connection with
Section 403(b) or Section 401(k) qualified plans may request a loan using
the Contract as security for the loan. Loans are subject to provisions of the
Code and the terms of the retirement program. A tax advisor should be
consulted prior to requesting a loan.
The amount of the loan must be at least $2,000 and must not exceed the
Contract Value less any applicable Contingent Deferred Sales Charge, less
any outstanding prior loans, less loan interest to the end of the next
Contract Year. Only one loan can be made within a 12 month period.
When a loan is requested, You may tell Us how much of the loan is to be
allocated to Your unloaned value in the General Account and to Your
value in each Investment Division of the Separate Account. If You fail to
specify, the loan will be allocated among all Investment Divisions and the
General Account in the same proportion as the value of Your interest in
each Investment Division and the General Account bears to Your total
Contract Value. We will redeem units from an Investment Division
sufficient to cover that part of the loan. That portion of the Contract Value
which is equal to the loan will be held in the General Account and will
earn interest at a rate of 3% per year.
We will charge interest on loans at the rate of 5% per year. Loan interest is
due and payable on each Contract Anniversary. Interest not paid will be
added to the loan and also bear interest. If the total loan plus loan interest
equals or exceeds the Contract Value, less any applicable Contingent
Deferred Sales Charge, less any applicable withholding taxes, the Contract
will terminate with no further value. In such case, We will give You at
least 31 days written notice.
The total loan plus loan interest will be deducted from any amount applied
under a payment option or otherwise payable under the Contract.
The loan agreement will describe the amount, duration, and restrictions on
the loan. In general, loans must be repaid in monthly or quarterly
installments within 5 years. You are allowed a 30-day grace from the
installment due date. If a quarterly installment is not received within the
grace period, a deemed distribution of the entire amount of the outstanding
principal, interest due, and any applicable charges under this Contract,
including any withdrawal charge, will be made. This deemed distribution
may be subject to income and penalty tax under the Code and may
adversely affect the treatment of the Contract under Internal Revenue
Code section 403(b).
You may be subject to income tax or penalty if the amount or duration of
the loan violates Internal Revenue Code requirements. In addition, IRS
authorities and the Department of Labor suggest that a loan may, at least
in certain circumstances, result in adverse tax and ERISA consequences
for Section 403(b) or Section 401(k) programs.
Requesting a loan will have a permanent affect on the Ccontract Vvalue
because the investment results of the Investment Divisions will apply only
to the unborrowed portion of the Contract Value. The longer a loan is
outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the net investment results are greater than 3%
while the loan is outstanding, the Contract Value will not increase as
rapidly as it would have if no debt were outstanding. If net investment
results are below 3% the Contract Value will be higher than it would have
been had no loan been outstanding.
Death Benefit
If the Annuitant is an Owner and dies before the Maturity Date, then the
Death Benefit, other than amounts payable to or for the benefits of the
surviving spouse of the Annuitant as the Contingent Owner, must be paid
out within 5 years of the death of the Annuitant. The value of the Death
Benefit (as described below) will be determined as of the Business Day
next following the date Midland receives at Our Home Office (1) due
proof of death and (2) an election form of how the Death Benefit is to be
paid. We receive due proof of death and the election of how the Death
Benefit is to be paid. The Death Benefit will be the greater of i) the
Contract Value and ii) the sum of all premiums paid less any prior
withdrawals. Unless a Payment Option is selected within 90 days after We
receive due proof of death, the Death Benefit will be paid as a lump sum.
If the Annuitant is not an Owner and any Owner dies before the Maturity
Date, the Contract Value will be paid as of the date We receive due proof
of death and an election form of how the Contract Valueit is to be
Paid if the surviving spouse has not been named as the Contingent Owner, the
Contract ends and the Contract Value (not the Death Benefit) must be paid
out within 5 years of the death of the Owner. Unless another choice is
made within 90 days of the date We have received both the due proof of
death and the election form, the Contract Value will be paid in a lump
sum. If the spouse is named as the Contingent Owner, the Contract will
continue with the spouse now being the Owner.
If any Owner dies on or after the Maturity Date, then any amounts
remaining to be paid, other than amounts payable to or for the benefit of
the surviving spouse of the Owner, must be paid out at least as rapidly as
benefits were being paid at the time of the Owner's death.
Other rules relating to distributions at death apply to Qualified Contracts.
Death Benefit on the Annuitant's Death Prior to the Maturity Date
Death Benefit - The Death Benefit paid to the Beneficiary will be the
greater of (a), (b) or (c) stated below. Death proceeds will be reduced by
the amount of any loan and loan accrued interest. (See loan provisions on
page 14 for certain qualified plans.)
(a) The current Contract Value. For this purpose, the current Contract
Value is the value on the Business Day next following the date We receive
at Our Home Office (1) Due proof of death and (2) An Election Form of
how the death proceeds are to be paid (or 90 days after We receive due
proof of death, if no election form is received), or
(b) 100% of the total premium payments made to Your Contract,
reduced by any prior withdrawals, or
(c) The Guaranteed Minimum Death Benefit as defined below.
Guaranteed Minimum Death Benefit - At the inception of the Contract, the
Guaranteed Minimum Death Benefit is zero. On the first Contract
Anniversary and every year thereafter until the Contract Anniversary
immediately preceding the Annuitant's 81st birthday, the Guaranteed
Minimum Death Benefit under the Contract is recalculated. The purpose
of the recalculation is to give you the benefit of any positive investment
experience under Your Contract. Your Contract's investment experience
can cause the Guaranteed Minimum Death Benefit to increase on the
recalculation date, but cannot cause it to decrease. The Guaranteed
Minimum Death Benefit determined on a recalculation date is the larger
of:
(a) the Guaranteed Minimum Death Benefit that applied to Your
Contract immediately prior to the recalculation date; and
(b) The Contract Value on the date of the recalculation.
The new Guaranteed Minimum Death Benefit applies to Your Contract
until the next Contract Anniversary, or until You make a premium
payment or withdrawal. Any subsequent premium payments will
immediately increase Your Guaranteed Minimum Death Benefit by the
amount of the premium payment. Any partial withdrawal will immediately
decrease Your Guaranteed Minimum Death Benefit by the percentage of
the Contract Value being withdrawn.
Example: Assume that a contract is issued with a $10,000 premium on
5/1/1998 to an owner at attained age 55. No further premiums are made
and no withdrawals are made during the first year. Assume that on the
Contract Anniversary on 5/1/1999 the Contract Value is $12,000. The
Guaranteed Minimum Death Benefit is reset on 5/1/1999 to $12,000.
Assume that the Contract Value increases to $15,000 on 5/1/2000 and
decreases to $13,000 on 5/1/2001. The Guaranteed Minimum Death
Benefit on 5/1/2001 is $15,000.
Assume that by 7/1/2001, the Contract Value increases to $14,000 and
You request a partial withdrawal of $2,800 or 20% of Your Contract
Value on that date. The Guaranteed Minimum Death Benefit immediately
following the partial withdrawal is $12,000 = [$15,000 - .20*($15,000)].
Assume that on 9/1/2001 the Contract Value decreases to $8,000. The
Guaranteed Minimum Death Benefit remains at $12,000 and the death
proceeds payable on 9/1/2001 are $12,000.
Your Contract Value
Your Contract Value is the sum of the amounts You have in the General
Account and in the various Investment Divisions of Our Separate Account.
Your Contract Value also reflects the various charges described below.
Transaction charges or sales charges are made as of the effective date of
the transaction. Charges against Our Separate Account are reflected daily.
The value of any amount allocated to an Investment Division of Our
Separate Account will go up or down depending on the investment
experience of that division. You bear this investment risk. For amounts
allocated to the Investment Divisions of Our Separate Account, there is no
guaranteed minimum value. However, We guarantee a minimum interest
rate of 3.0% a year on that portion of the Contract Value held under the
General Account. Excess interest on payments held under the General
Account may be credited in addition to the 3.0% guaranteed interest rate
(but there is no guarantee that any additional interest will ever be credited)
(see The General Account on page 20).
Amounts In Our Separate Account
Amounts allocated, transferred or added to the Investment Divisions of
Our Separate Account are used to purchase Accumulation Units. The
amount You have in each division is represented by the value of the
Accumulation Units credited to Your Contract Value for that division. The
number of Accumulation Units purchased or redeemed in an Investment
Division of Our Separate Account is calculated by dividing the dollar
amount of the transaction by the division's Accumulation Unit Value
calculated as of the close of business that day if that is a day on which the
New York Stock Exchange is open. If the New York Stock Exchange is
not open that day, the request will be processed on the next Business Day.
The number of Accumulation Units for an Investment Division at any time
is the number of Accumulation Units purchased less the number of
Accumulation Units redeemed. The value of Accumulation Units
fluctuates with the investment performance of the corresponding portfolios
of the Funds, which reflects the investment income and realized and
unrealized capital gains and losses of the portfolio and the expenses of the
Funds. The Accumulation Unit Values also reflect the daily asset charge
We make to Our Separate Account at an effective annual rate of 1.40%.
The number of Accumulation Units credited to You, however, will not
vary because of changes in Accumulation Unit Values. On any given day,
the value You have in an Investment Division of Our Separate Account is
the Accumulation Unit Value times the number of Accumulation Units
credited to You in that division. The Accumulation Units of each
Investment Division of Our Separate Account have different
Accumulation Unit Values.
Accumulation Units of an Investment Division are purchased when You
allocate premiums or transfer amounts to that division. Accumulation
Units are redeemed or sold when You make withdrawals or transfer
amounts from an Investment Division of the Separate Account and to pay
the Death Benefit when the Annuitant dies. We also redeem Accumulation
Units for other charges.
How We Determine The Accumulation Unit Value
We determine Accumulation Unit Values for the Investment Divisions of
Our Separate Account at the end of each Business Day. The Accumulation
Unit Value for each Investment Division was set at $10.00 on the first day
there were contract transactions in Our Separate Account.
Additional information on the Accumulation Unit Values is contained in
the Statement of Additional Information which can be obtained by writing
Our Home Office.
CHARGES, FEES AND DEDUCTIONS
Sales Charges on Withdrawals
A Contingent Deferred Sales Charge may be imposed on the withdrawal
of the premiums (including a withdrawal to effect an annuity and on
Systematic Withdrawals) . The charge compensates Us for paying the
expenses of selling and distributing the cContacts, including commissions,
preparation of sales literature, and other promotional activities. To the
extent that the Contingent Ddeferred Ssales Cc harge is insufficient to
recover all distribution expenses, the deficiency will be met from Our
surplus which may be, in part, derived from the charges for the assumption
of mortality and expense risks (described below). For the purpose of
determining the Contingent Ddeferred Ssales Cc harge, any amount that
You withdraw will be treated as being from premiums first, and then from
investment income. There is no sales charge on the investment income
withdrawn. The amount of any sales charge depends on the Contract Year
of the withdrawal. Your first Contract Year begins on the Contract Date. A
subsequent Contract Year begins on each anniversary of that date.
After the first Contract Year, You may make a withdrawal from Your
Contract Value of up to 10% of the sum of the premiums paid without
incurring a sales charge if the withdrawal is the first in the Contract Year.
This is only available on the first withdrawal in a Contract Year and
amounts not taken in a Contract Year are not carried over to the following
Contract Year. For the purpose of applying the sales charge, any premium
not subject to the sales charge will be withdrawn first.
The Table below shows the Contingent Deferred Sales Charge for each
Conmtract Year that will be applied to the premium withdrawn.
The Sales Charge
As A Percentage Of
Contract Year The Premium Withdrawn (a)
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and Beyond No Charge
(a) Subject to 10% free withdrawal described above.
The length of time between each premium payment and the withdrawal,
determines the amount of the Contingent Deferred Sales Charge. Premium
payments will be deemed to be withdrawn in the order in which they were
received.
The charge is a percentage of the premiums withdrawn and equals:
Length of Time Contingent
from Premium Payment Deferred Sales
(Number of Years) Charge
0-1 8%
1-2 8%
2-3 7%
3-4 7%
4-5 6%
5-6 5%
6-7 4%
7-8 2%
8 or more 0%
Subject to approval of the state insurance authorities, after the first
Contract Anniversary, Midland will not assess a Contingent Deferred
Sales Charge on either a full or partial surrender if (a) written proof is
given to Us at Our Home Office that the Owner is confined in a state
licensed in-patient nursing facility for a total of 90 days, provided We
receive Your withdrawal request within 90 days after discharge from such
facilities or (b) A licensed Physician provides awritten statement to Us that
the Owner is expected to die within the next twelve months due to a non-
correctable medical condition. The licensed Physician cannot be the
Owner or part of the Owner's immediate family. We reserve the right to
have a physician of Our choice examine the Owner.
After the Contract has been in force for three years, Midland will not
assess a Contingent Deferred Sales Charge if You make a full surrender
and use the proceeds to purchase a life income annuity option.
Amounts withdrawn under the Contract to comply with IRS minimum
distribution rules and paid under a life expectancy option will not be
subject to a Contingent Deferred Sales Charge. Amounts withdrawn to
comply with IRS minimum distribution rules will reduce the amount
available under the Free Withdrawal Option.
Free Withdrawal Option
You may make a withdrawal from Your Contract Value of up to 10% of
the total premiums paid (as determined on the date of the requested
withdrawal), less any withdrawals made in the prior 12 months, without
incurring a Contingent Deferred Sales Charge. The full 10% is available
only if no other withdrawals have been taken in the prior 12 month period.
Any withdrawal taken within the last 12 months (as determined on the
date of the requested withdrawal) will reduce the amount that can be taken
without incurring a Contingent Deferred Sales Charge. No more than 10%
of premiums paid will be available in any 12 month period without
incurring a Contingent Deferred Sales Charge.
Your withdrawal request may specify the source from which the
withdrawal is to be made. If You fail to specify, Your withdrawal will,
subject to minimum amount requirements, be allocated among all
Investment Divisions and the General Account in the same proportion as
the value of Your interest in each Investment Division and in the General
Account bears to Your total Contract Value. The Contingent Deferred
Sales Charge will be determined without reference to the source of the
withdrawal. The charge will be determined by reference to the Contract
Year at the time of the withdrawal.
Charges Against The Separate Account
The amount in Your Contract Value which is allocated to the Investment
Divisions of Our Separate Account will be reduced by any fees and
charges allocated to the Investment Divisions of Our Separate Account.
Administrative Charge
We make a daily charge to cover Our administrative expenses incurred to
operate the Separate Account. The effective annual rate of this charge is
.15% of the value of the assets in the Separate Account. This charge is
reflected in the unit values for the Investment Divisions of the Separate
Account and cannot be increased.
Charge for Assuming Mortality and Expense Risks.
A deduction is made daily from each Investment Division at an annual
rate of 1.25% of the assets held in the Investment Division. This charge is
reflected in the unit values and may not be increased by Midland. This
charge is not assessed against amounts invested under the General
Account or amounts effected as a fixed dollar annuity. We expect a profit
from this charge.
Contract Maintenance Charge
We will deduct a Contract Maintenance Charge of $35.00$33.00 on each
Contract Anniversary on or before the Maturity Date if Your Contract
Value is less than $50,000 on the Anniversary . This charge is intended to
cover Our recordkeeping and other expenses incurred to maintain the
Contracts. The charge is deducted from each Investment Division and the
General Account in the same proportion as the value of Your interest in
each Investment Division and in the General Account bears to the total
Contract Value. If the Contract is surrendered during a Contract Year, We
will deduct the full Contract Maintenance Charge for the current Contract
Year at that time if Your Contract Value is less than $50,000.
We may reduce the Contract Maintenance Charge for contracts issued in a
manner that results in savings of administrative expenses. The amounts of
reductions will be considered on a case-by-case basis and will reflect the
reduced administrative expenses we expect.
Transfer Charge
Currently, before the Maturity Date, You may make an unlimited number
of transfers of Contract Value in each Contract Year without charge. We
reserve the right to assess a charge of $25 after the fifteenth transfer in a
Contract Year. To make a transfer, contact Us at Our Home Office.if You
make more than fifteen transfers in any Contract Year We will charge You
a transfer fee of $25 for each additional transfer. There will be no charge
for the first fifteen transfers in any Contract Year. However, We reserve
the right to assess this charge after the fourth transfer in a Contract Year.
If We charge You for making a transfer, We will allocate the charge to the
Investment Divisions from which the transfer is being made in equal
proportion to such Investment Divisions. For example, if the transfer is
made from two Investment Divisions, the transfer charge allocated to each
of the Investment Divisions will be $12.50. All transfers included in one
transfer request count as one transfer for purposes of any fee.
Charges In The Funds
The Funds make a charge for managing investments and providing
services. These charges vary by portfolio.
The VIP, the VIP II, and the VIP III Portfolios have an annual
management fee that is the sum of an individual fund fee rate, and a group
fee rate which is based on the monthly average net assets of the mutual
funds advised by Fidelity Management & Research Company. In addition,
each of these portfolios' total operating expenses will include fees for
management, shareholder services and other expenses, such as custodial,
legal, accounting and other miscellaneous fees. See the VIP, VIP II and
VIP III prospectus for additional information on how these charges are
determined and on the minimum and maximum charges allowed. All
expenses for the year ending December 31, 1996 are shown on page 4
under Also see the table titled Portfolio Annual Expenses on page 4.
The American Century Variable Portfolios have annual management fees
that are based on the monthly average of the net assets in each of the
portfolios. See the American Century VP prospectus for details. The
expenses for the year ending December 31, 1996 are shown on page 4
under Also see the table titled Portfolio Annual Expenses on page 4.
Changing Your Premium Allocation Percentages
You may change the allocation percentages of Your premiums by writing
to Our Home Office and telling Us what changes You wish to make. These
changes will go into effect as of the date We receive Your request at Our
Home Office and will affect transactions on and after that date. While the
Dollar Cost Averaging program is in effect, the allocation percentages that
apply to any premiums received will be the Dollar Cost Averaging
allocation percentages unless you specify otherwise. (See Dollar Cost
Averaging, page 15).
The General Account
Subject to certain limitations described below, You may allocate some or
all of Your Contract Value to the General Account, which pays interest at
a declared rate. The principal is guaranteed by Us. The General Account
supports Our insurance and annuity obligations including Our obligations
under the General Account. In certain states, allocations to and transfers to
and from the General Account are not permitted. Because of applicable
exemptive and exclusionary provisions, interests in the General Account
have not been registered under the Securities Act of 1933, and the General
Account has not been registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the General
Account nor any interests therein are generally subject to regulation under
the 1933 Act or the 1940 Act. We have been advised that the staff of the
SEC has not made a review of the disclosures which are included in this
prospectus for Your information which relate to the General Account.
Amounts In The General Account
You may accumulate amounts in the General Account by:
allocating premium,
transferring amounts from the Investment Divisions of Our Separate
Account, or
earning interest on amounts You already have in the General Account.
The maximum amount that can be allocated to the General Account
through allocation of premiums and net transfers (amounts transferred in
less amounts transferred out) over the life of the Contract is $250,000.
The amount You have in the General Account at any time is the sum of all
premiums allocated to that account, all transfers and all earned interest.
This amount is reduced by amounts transferred out or withdrawn and
deductions allocated to the General Account.
Adding Interest To Your Amounts In The General Account
We pay interest on all amounts that You have in the General Account. The
annual interest rates will never be less than the minimum guaranteed
interest rate of 3.0%. We may, at the sole discretion of Our Board of
Directors, credit interest in excess of 3.0%. You assume the risk that
interest credited may not exceed 3.0%. We currently intend to guarantee
the interest rate for one year periods starting at the beginning of each
calendar year. Interest is compounded daily at an effective annual rate that
equals the annual rate declared by Our Board of Directors.
Transfers
You may request a transfer between the General Account and one or more
of the Investment Divisions of Our Separate Account. However, only two
transfers are allowed from the General Account per Contract Year and the
total amount transferred from the General Account in any Contract Year is
limited to the larger of:
25% of the amount in the General Account at the beginning of the
Contract year, or $1,000.
Additional Information About Variable Annuities
Contract Periods, Anniversaries
We measure Contract Years, Contract Months and Contract Anniversaries
(annual and monthly) from the Contract Date shown on the Contract
Information page of Your Contract. Each Contract Month begins on the
same day in each calendar month as the day of the month in the Contract
Date. The calendar days of 29, 30, and 31 are not used.
Generally, when We refer to the age of the Annuitant, We mean his or her
age on the birthday nearest to that particular date.
Inquiries
You can make any inquiries about Your Contract by writing or calling Us
at Our Home Office.
FEDERAL TAX STATUS
Introduction
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT
INTENDED AS TAX ADVICE.
This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may
receive a distribution under a Contract. Any person concerned about these
tax implications should consult a competent tax adviser before making a
premium payment. This discussion is based upon Midland's understanding
of the present federal income tax laws as they are currently interpreted by
the Internal Revenue Service. No representation is made as to the
likelihood of the continuation of the present federal income tax laws or of
the current interpretation by the Internal Revenue Service. Moreover, no
attempt has been made to consider any applicable state or other tax laws.
The Qualified Contracts are designed for use by individuals in connection
with retirement plans which are intended to qualify as plans qualified for
special income tax treatment under Sections 401, 403(a), 403(b) or 408 of
the Internal Revenue Code (the "Code"). The ultimate effect of federal
income taxes on the contributions, Contract Value, on annuity payments
and on the economic benefit to the Owner, the Annuitant or the
Beneficiary depends on the type of retirement plan, on the tax and
employment status of the individual concerned and on Our tax status. In
addition, certain requirements must be satisfied in purchasing a qualified
contract in connection with a tax qualified plan in order to receive
favorable tax treatment. 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 both may
result if this Contract 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 Contract.
With respect to qualified Contracts an endorsement of the Contract and/or
limitations or penalties imposed by the Internal Revenue Code may
impose limits on premiums, withdrawals, distributions or benefits, or on
other provisions of the Contracts. Some retirement plans are subject to
distribution and other requirements that are not incorporated into our
Contract administrative procedures. Owners, participants and beneficiaries
are responsible for determining that contributions, distributions and other
transactions with respect to the Contracts comply with applicable law.
Therefore, purchasers of Qualified Contracts should seek competent legal
and tax advice regarding the suitability of the Contract for their situation,
the applicable requirements and the tax treatment of the rights and benefits
of a Contract. The following discussion assumes the Qualified Contracts
are purchased in connection with retirement plans that qualify for special
federal income tax treatment described above.
Diversification
Section 817(h) of the Code imposes certain diversification standards on
the underlying assets of variable annuity contracts. The Code provides that
a variable annuity contract will not be treated as an annuity contract for
any period (and any subsequent period) for which the investments are not,
in accordance with regulations prescribed by the United States Treasury
Department (Treasury Department), adequately diversified.
Disqualification of the Contract as an annuity contract would result in
imposition of federal income tax to the Contract Owner with respect to
earnings allocable to the Contract prior to the receipt of payments under
the Contract.
We intend that all Funds underlying the Contracts will be managed in such
a manner as to comply with these diversification requirements.
In certain circumstances, owners of variable contracts may be considered
the owners, for federal income tax purposes, of the assets of the separate
account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published
rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise investment
control over the assets. The Treasury Department also announced, in
connection with the issuance of regulations concerning diversifications,
that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated
asset account may cause the investor (i.e., the Contract Owner), rather than
the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by
way of regulations or rulings on the "extent to which policyowners may
direct their investments to particular subaccounts without being treated as
owners of the underlying assets."
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 policy owners were not owners of separate account assets.
For example, the Owner has additional flexibility in allocating premium
payments and Contract Values. These differences could result in an Owner
being treated as the owner of a pro rata portion of the assets of the
Separate Account. In addition, We do not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department
has stated it expects to issue. We therefore reserve the right to modify the
Contract as necessary to attempt to prevent an Owner from being
considered the owner of a pro rata share of the assets of the Separate
Account.
Taxation of Annuities in General
Nonqualified Policies. The following discussion assumes that the Contract
will qualify as an annuity contract for federal income tax purposes.
"Investment in the Contract" refers to premiums paid less any prior
withdrawals of premiums where prior withdrawals are treated as being
earnings first.
Section 72 of the Code governs taxation of annuities in general. We
believe that the owner generally is not taxed on increases in the value of a
Contract until distribution occurs either in the form of a lump sum
received by withdrawing all or part of the Contract Value (i.e.,
"withdrawals") or as annuity payments under the annuity income option
elected. The exception to this rule is the treatment afforded to owners that
are not natural persons. Generally, an owner of a contract who is not a
natural person must include in income any increase in the excess of the
owner's contract value over the owner's Investment in the Contract during
the taxable year, even if no distribution occurs. There are, however,
exceptions to this rule which You may wish to discuss with Your tax
counsel. The following discussion applies to Contracts owned by natural
persons.
The taxable portion of a distribution (in the form of an annuity or lump
sum payment) is taxed as ordinary income. For this purpose, the
assignment, pledge, or agreement to assign or pledge any portion of the
Contract Value generally will be treated as a distribution.
Generally, in the case of a withdrawal under a nonqualified contract,
amounts received are first treated as taxable income to the extent that the
Contract Value immediately before the withdrawal exceeds the Investment
in the Contract at that time. Any additional amount is not taxable.
Although the tax consequences may vary depending on the annuity
income option elected under the Contract, in general, only the portion of
the annuity payment that represents the amount by which the Contract
Value exceeds the Investment in the Contract will be taxed. For fixed
annuity payments, in general, there is no tax on the amount of each
payment which represents the same ratio that the Investment in the
Contract bears to the total expected value of the annuity payment for the
term of the payment; however, the remainder of each annuity payment is
taxable. For variable annuity payments, in general, a specific dollar
amount of each payment is not taxed. The dollar amount is determined by
dividing the Investment in the Contract by the total number of expected
periodic payments. The remainder of each annuity payment is taxable.
Any distribution received subsequent to the investment in the Contract
being recovered will be fully taxable.
Amounts may be distributed from a Contract because of the death of the
Owner or an Annuitant. Generally, such amounts are includible in the
income of the recipient as follows: (i) if distributed in a lump sum, they
are taxed in the same manner as a withdrawal from the Contract; or (ii) if
distributed under a payment option, they are taxed in the same way as
annuity payments. For these purposes, the Investment in the Contract is
not affected by an Owner's or Annuitant's death. That is, the Investment
in the Contract remains the amount of any premiums paid which were not
excluded from gross income.
In the case of a distribution pursuant to a nonqualified contract, there may
be imposed a federal penalty tax equal to 10% of the amount treated as
taxable income. In general, however, there is no penalty tax on
distributions: (1) made on or after the date on which the owner is actual
age 59-1/2, (2) made as a result of death or disability of the owner, or (3)
received in substantially equal payments as a life annuity (subject to
special "recapture" rules if the series of payments is subsequently
modified). Other tax penalties may apply to certain distributions under a
Qualified Contract.
Possible Changes in Taxation. In past years, legislation has been proposed
in the U.S. Congress that would have adversely modified the federal
taxation of certain annuities. For example, one such proposal would have
changed that tax treatment of nonqualified annuities that did not have
"substantial life contingencies" by taxing income as it is credited to the
annuity. Although as of the date of this Prospectus Congress was not
actively considering any legislation regarding the taxation of annuities,
there is always the possibility that the tax treatment of annuities could
change by legislation or other means (such as IRS regulations, revenue
rulings, judicial decisions, etc.). Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change.)
Transfers, Assignments or Exchanges of a Contract. A transfer of
ownership of a Contract, the designation of an Annuitant, payee or other
beneficiary who is not also the Owner, the selection of certain Maturity
Dates or the exchange of a Contract may result in certain tax consequences
to the Owner that are not discussed herein. An Owner contemplating any
such transfer, assignment or exchange of a Contract should contact a
competent tax advisor with respect to the potential tax effects of such
transaction.
Multiple Contracts. All nonqualified deferred annuity contracts entered
into after October 12, 1988 that are issued by the Company (or its
affiliates) to the same Owner during any calendar year are treated as one
annuity Contract for purposes of determining the amount includible in
gross income under Code Section 72(e). The effects of this rule are not yet
clear; however, it could affect the time when income is taxable and the
amount that might be subject to the 10% penalty tax described above. In
addition, the Treasury Department has specific authority to issue
regulations that prevent the avoidance of Section 72(e) through the serial
purchase of annuity contracts or otherwise. There may also be other
situations in which the Treasury may conclude that it would be appropriate
to aggregate two or more annuity contracts purchased by the same Owner.
Accordingly, a Contract Owner should consult a competent tax advisor
before purchasing more than one annuity contract.
Qualified Policies. The rules governing the tax treatment of distributions
under qualified plans vary according to the type of plan and the terms and
conditions of the plan itself. Generally, in the case of a distribution to a
participant or beneficiary under a Contract purchased in connection with
these plans, only the portion of the payment in excess of the Investment in
the Contract allocated to that payment is subject to tax. The Investment in
the Contract equals the portion of premiums invested in the Contract that
were not excluded from Your gross income, and may be zero. In general,
for allowed withdrawals, a ratable portion of the amount received is
taxable, based on the ratio of the Investment in the Contract to the total
Contract Value. The amount excluded from a taxpayer's income will be
limited to an aggregate cap equal to the Investment in the Contract. The
taxable portion of annuity payments is generally determined under the
same rules applicable to nonqualified contracts. However, special
favorable tax treatment may be available for certain distributions
(including lump sum distributions). Adverse tax consequences may result
from distributions prior to age 59-1/2 (subject to certain exceptions),
distributions that do not conform to specified commencement and
minimum distribution rules, aggregate distributions in excess of a
specified annual amount, and in certain other circumstances. For qualified
plans under Section 401(a), 403(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 You (or the plan
participant) (i) reach age
70 1/2 or (ii) retire, 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 April 1 of the calendar
year following the calendar year in which You (or the plan participant)
reach 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 You (or the plan participant)
reach age 70 1/2. Roth IRAs under Section 408A do not require
distributions at any time prior to Your death.
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. A Qualified Contract issued as a tax-sheltered
annuity under section 403(b) will be amended as necessary to conform to
the requirements of the Code. Code section 403(b)(11) restricts the
distribution under Code section 403(b) annuity contracts of: (1) elective
contributions made in years beginning after December 31, 1988; (2)
earnings on those contributions; and (3) earnings in such years on amounts
held as of the last year beginning before January 1, 1989. Distribution of
those amounts may only occur upon death of the employee, attainment of
age 59-1/2, separation from service, disability, or financial hardship. In
addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Distributions from Qualified Contracts are generally subject to the same
withholding rules as distributions from nonqualified Contracts, except that
certain distributions are subject to mandatory federal income tax
withholding.
Code sections 219 and 408 permit individuals or their employers to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" or "IRA." Individual Retirement Annuities are
subject to limitations on the amount that may be contributed and deducted
and the time when distributions may commence. In addition, distributions
from certain other types of retirement plans may be placed into an
Individual Retirement Annuity on a tax deferred basis. Employers may
establish Simplified Employee Pension (SEP) Plans to provide IRA
contributions on behalf of their employees.
Code section 401(a) permits employers to establish various types of
retirement plans for employees, and permit 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 consequences to the plan,
to the participant, or to both may result if this Contract is assigned or
transferred to any individual as a means to provide benefit payments.
Our Income Taxes
The operations of Our Separate Account are included in Our federal
income tax return and We pay no tax on investment income and capital
gains reflected in Variable Annuity Contract reserves. However, the 1990
Tax Act requires a negative reserve, based on premiums, to be established.
This reserve will cause Our taxable income to increase. We reserve the
right to charge the Separate Account for this and any other such taxes in
the future if the tax law changes and We incur additional federal income
taxes which are attributable to Our Separate Account. This charge will be
set aside as a provision for taxes which We will keep in the Investment
Divisions rather than in Our General Account. We anticipate that Our
Owners would benefit from any investment earnings that are not needed to
maintain this provision.
We may have to pay state and local taxes (in addition to applicable taxes
based on premiums) in several states. At present, these taxes are not
substantial. If they increase, however, charges may be made for such taxes
when they are attributable to Our Separate Account.
Withholding
Unless You elect to the contrary, any amounts that are received under
Your Contract that We reasonably believe are includible in gross income
for tax purposes will be subject to withholding to meet federal income tax
obligations. The rate of withholding on payments under Your Contract,
such as withdrawals, will be 10%. Withholding is mandatory for certain
Qualified Contracts. Thus, in the absence of an election by You that We
should not do so, We will withhold from every withdrawal the appropriate
percentage of the amount of the payment that We reasonably believe is
includible in gross income. Midland will provide forms and instructions
concerning the right to elect that no amount be withheld from payments.
Generally there will be no withholding for taxes until payments are
actually received under Your Contract.
Distributions from Contracts generally are subject to withholding for Your
federal income tax liability. The withholding rate varies according to the
type of distribution and Your tax status. You will be provided the
opportunity to elect not to have tax withheld from distributions.
"Eligible rollover distributions" from section 401(a) plans and 403(b) tax-
sheltered annuities are subject to a mandatory federal income tax
withholding of 20%. An eligible rollover distribution is the taxable portion
of any distribution from such a plan, except certain distributions such as
distributions required by the Code or distributions in a specified annuity
form. The 20% withholding does not apply, however, if You choose a
"direct rollover" from the plan to another tax-qualified plan of IRA.
The Interest and Dividend Tax Compliance Act of 1983 requires
recipients, including those who have elected out of withholding, to supply
their Taxpayer Identification Number (Social Security Number) to payers
of distributions for tax reporting purposes. Failure to furnish this number
when required may result in the imposition of a tax penalty and will
subject the distribution to the withholding requirements of the law
described above.
MATURITY DATE
Unless restricted by the laws of the state in which this Contract is
delivered, the Maturity Date of the Contract is the Contract Anniversary
nearest Attained Age 90 of the Annuitant. for nonqualified Contracts and
is the Contract Anniversary nearest the Annuitant's 70th birthday for
Qualified Contracts. You may elect a different Maturity Date by filing a
written request to Us at least 31 days before the requested Maturity Date.
The requested Maturity Date must be a Contract Anniversary. For
nonqualified Contracts T the requested Maturity Date cannot be later than
the Annuitant's Attained Age 90 and cannot be earlier than the tenth
Contract Anniversary. For qualified Contracts the requested Maturity Date
cannot be earlier than the date the Annuitant attains age 59-1/2 or five
years from the Contract Date, whichever is later; and in no event can the
Maturity Date be later than April 1 of the calendar year immediately
following the calendar year in which the Annuitant attains age 70-1/2.
If You have not previously specified otherwise and if You have not elected
certain Systematic Withdrawal options , on the Maturity Date You may
take the Cash Surrender Value (in some states, the Contract Value) in one
sum or convert the Contract Value into an annuity payable to the
Annuitant under one or more of the payment options described below.
Unless You choose otherwise, the amount in the General Account will be
applied to a 10 Year Certain and Life fixed payout and the amount in the
Separate Account will be applied to a 10 Year Certain and Life variable
payout. The first monthly annuity payment will be made within one month
after the Maturity Date. Variable payment options are not available in
certain states.
EFFECTING AN ANNUITY
You may apply the proceeds of a withdrawal to effect an annuity. Unless
you choose otherwise, the amount of the proceeds from the General
Acount will be applied to a 10 Year Certain and Life fixed payout and the
amount of the proceeds from the Separate Account will be applied to a 10
Year Certain and Life variable payout.
Payment options will be subject to Our rules at the time of selection. Our
consent is required when an optional payment is selected, and when the
Payee either is an assignee or is not a natural person. Currently, the
payment options are only available if the proceeds applied are $1,000 or
more and the first periodic payment will be at least $20.
For annuity income options involving life income, the actual age of the
Payee will affect the amount of each payment. Since payments to older
Payees are expected to be fewer in number, the amounts of each annuity
payment shall be greater than for younger Payees. For annuity income
options that do not involve life income, the length of the payment period
will affect the amount of each payment. With a shorter period, the amount
of each annuity payment will be greater. Also, payments which occur
more frequently will be smaller than those occurring less frequently.
The Payee or any other person who is entitled to receive payment may
name a successor to receive any amount that We would otherwise pay to
that person's estate if that person died. The person who is entitled to
receive payment may change the successor at any time.
We must approve any arrangements that involve more than one of the
payment options, or a Payee who is not a natural person (for example, a
corporation), or a Payee who is a fiduciary. Also, the details of all
arrangements will be subject to Our rules at the time the arrangements take
effect. This includes rules on the minimum amount We will pay under an
option, minimum amounts for installment payments, withdrawal or
commutation rights (Your rights to receive payments over time, for which
We may offer You a lump sum payment), the naming of people who are
entitled to receive payment and their successors, and the ways of proving
age and survival.
You will make Your choice of a payment option when You apply for a
Contract and may make any changes by writing to Our Home Office.
Fixed Options
Payments under the fixed options are not affected by the investment
experience of any Investment Division of Our Separate Account. The
value as of the Maturity Date will be applied to the fixed option selected.
Thereafter, interest or payments are fixed according to the options chosen.
The following fixed options are available:
Deposit Option: The money will stay on deposit with Us for a period that
You and We agree upon. You will receive interest on the money at a
declared interest rate.
Installment Options: There are two ways that We pay installments:
Fixed Period: We will pay the amount applied in equal installments plus
applicable interest, for a specific number of years, for up to 30 years.
Fixed Amount: We will pay the sum in installments in an amount that You
and We agree upon. We will pay the installments until We pay the original
amount, together with any interest You have earned.
Monthly Life Income Option: We will pay the money as monthly income
for life. You may choose any one of three ways to receive the income:
We will guarantee payments for at least 20 years (called "20 Years Certain
and Life"); at least 10 years (called "10 Years Certain and Life); at 5
years (called "5 Years Certain and Life") ; or payment only for life. With a
life only payment option, payments will only be made as long as the Payee
is alive. Therefore, if a life only payment option is chosen and the Payee
dies after the first payment, only one payment will be made.
Other: You may ask Us to apply the money under any option that We
make available at the time the benefit is paid.
We guarantee interest under the Deposit Option at the rate of 2.75% a
year, and under either Installment Option at 2.75% a year. We may also
allow interest under the Deposit Option and under either Installment
Option at a rate that is above the guaranteed rate.
Variable Options
Payments under the variable options are affected by the investment
experience of the Investment Divisions of Our Separate Account. Variable
payment options are not available in certain states.
The annuity tables contained in the Contract are based on a five percent
(5%) assumed investment rate. This is a fulcrum rate around which
variable annuity payments will fluctuate to reflect whether the investment
experience of the Investment Divisions is better or worse than the assumed
investment rate. If the actual investment experience exceeds the assumed
investment rate, the payment will increase. Conversely, if the actual
investment experience is less than the assumed investment rate, payments
will decrease.
To determine the dollar amount of the first monthly variable payment, the
value in each Investment Division (as of a date not more than 10 business
days prior to the Maturity Date) will be applied to the appropriate rate for
the payout options selected using the age and sex (where permissible) of
the Payee. The amount of the first payment will then be used to determine
the number of Annuity Units for each Investment Division. The number of
Annuity Units is used to determine the amount of subsequent variable
payments.
The Annuity Unit Value for each Investment Division will be set at $10 on
the first day there are contract transactions in Our Separate Account.
Thereafter the Annuity Unit Value will vary with the investment
experience of the Investment Division and will reflect the daily asset
charge We make at an effective annual rate of 1.40%. The Annuity Unit
Value will increase if the net investment experience (investment
experience less the asset charge) is greater than the 5% assumed
investment rate. The Annuity Unit Value will decrease if the net
investment experience is less than the 5% assumed investment rate.
The amount of each subsequent variable payment will be determined for
each Investment Division by multiplying the number of Annuity Units by
the Annuity Unit Value.
Additional information on the variable annuity payments is contained in
the Statement of Additional Information which can be obtained by writing
to Our Home Office.
The following variable options are available:
Monthly Life Income Option: We will pay the money as monthly income
for life. You may choose any one of threefour ways to receive the income:
We will guarantee payments for at least 10 years (called "10 Years Certain
and Life"); at least 20 years (called "20 Years Certain and Life"); at least 5
years (called "5 Years Certain and Life"); or payment only for life. With a
life only payment option, payments will only be made as long as the
Annuitant is alive. Therefore, if a life only payment option is chosen and
the Payee dies after the first payment, only one payment will be made.
Other: You may ask Us to apply the money under any option that We
make available at the time the benefit is paid.
Transfers after the Maturity Date
After the Maturity Date, one transfer per Contract Year may be made
among the Investment Divisions of Our Separate Account. The transfer
request must be received at least 10 business days before the due date of
the first annuity payment to which the change will apply. The transfer will
take effect as of the date We receive Your request. Transfers after the
annuity payments have started will be based on the Annuity Unit Values.
There will be no transfer charge for this transfer. No transfers are allowed
from a fixed annuity option to a variable annuity option or from a variable
annuity option to a fixed annuity option.
ADDITIONAL INFORMATION
Your Voting Rights As an Owner
Fund Voting Rights
We invest the assets in the divisions of Our Separate Account in shares of
the corresponding portfolios of the Funds. Midland is the legal owner of
the shares and, as such, has the right to vote on certain matters. Among
other things, We may vote to:
elect the Funds' Board of Directors,
ratify the selection of independent auditors for the Funds,
vote on any other matters described in the Funds' current prospectuses or
requiring a vote by shareholders under the Investment Company Act of
1940, and
change the investment objectives and policies.
Even though We own the shares, We give You the opportunity to tell Us
how to vote the number of shares that are allocated to Your Contract. We
will vote those shares at meetings of Fund shareholders according to Your
instructions.
The Funds will determine how often shareholder meetings are held. As We
receive notice of these meetings, We will solicit Your voting instructions.
Although the Funds have held shareholder meetings approximately once a
year, the Funds are not required to hold a meeting in any given year.
If We do not receive instructions in time from all Owners, We will vote
shares for which no instructions have been received in a portfolio in the
same proportion as We vote shares for which We have received
instructions in that portfolio. We will also vote any Fund shares that We
are entitled to vote directly due to amounts We have accumulated in Our
Separate Account in the same proportions that Owners vote. If the federal
securities laws or regulations or interpretations of them change so that We
are permitted to vote shares of the Fund in Our own right or to restrict
Owner voting, We may do so.
How We Determine Your Voting Shares
You may participate in voting only on matters concerning the Fund
portfolios in which Your assets have been invested. We determine the
number of Fund shares in each division that are attributable to Your
Contract by dividing the amount in Your Contract Value allocated to that
division by the net asset value of one share of the corresponding Fund
portfolio as of the record date set by the Fund's Board for the Fund's
shareholders meeting. The record date for this purpose must be at least 10
and no more than 90 days before the meeting of the Fund. We count
fractional shares.
If You have a voting interest, We will send You proxy material and a form
for giving Us voting instructions. In certain cases, We may disregard
instructions relating to changes in the Fund's adviser or the investment
policies of its portfolios. We will advise You if We do and give Our
reasons in the next semiannual report to Owners.
Voting Privileges Of Participants In Other Companies
Currently, shares in the Funds are owned by other insurance companies to
support their variable life insurance and variable annuity products as well
as Our Separate Account. Those shares generally will be voted according
to the instructions of the owners of insurance and annuity contracts issued
by those other insurance companies. In certain cases, an insurance
company or some other owner of Fund shares may vote as they choose.
This will dilute the effect of the voting instructions of the Owners of Our
Variable Annuities. We do not foresee any disadvantage to this.
Nevertheless, the Funds' Board of Directors will monitor events to identify
conflicts that may arise and determine appropriate action. If We think any
Fund action is insufficient, We will see that appropriate action is taken to
protect Our Owners.
Our Reports to Owners
Shortly after the end of each Contract Year, We will send You a report
that shows Your Contract Value, information about Investment Divisions,
and any transactions involving Your Contract Value that occurred during
the year. Transactions include Your premium allocations and any transfers
or withdrawals that You made in that year.
We will also send You semi-annual reports with financial information on
the Funds, including a list of the investments held by each portfolio.
In addition, Our report will also contain any other information that is
required by the insurance supervisory official in the jurisdiction in which
this Contract is delivered.
Notices will be sent to You for transfers of amounts between Investment
Divisions and certain other Contract transactions.
Performance
Performance information for the Investment Divisions may appear in
reports and advertising to current and prospective Owners. The
performance information is based on historical investment experience of
the Investment Division and the Funds and does not indicate or represent
future performance.
Total returns are based on the overall dollar or percentage change in value
of a hypothetical investment. Total return quotations reflect changes in
Fund share price, the automatic reinvestment by the Separate Account of
all distributions and the deduction of applicable charges (including any
Contingent Deferred Sales Charges that would apply if You surrendered
the Contract at the end of the period indicated). Quotations of total return
may also be shown that do not take into account certain contractual
charges such as the Contingent Deferred Sales Charge. The total return
percentage will be higher under this method than under the standard
method described above.
A cumulative total return reflects performance over a stated period of time.
An average annual total return reflects the hypothetical annually
compounded return that would have produced the same cumulative total
return if the performance had been constant over the entire period.
Because average annual total returns tend to smooth out variations in an
Investment Division's returns, You should recognize that they are not the
same as actual year-by-year results.
Some Investment Divisions may also advertise yield. These measures
reflect the income generated by an investment in the Investment Divisions
over a specified period of time. This income is annualized and shown as a
percentage. Yields do not take into account capital gains or losses or the
Contingent Deferred Sales Charge. The standard quotations of yield reflect
the Contract Maintenance Charge.
The VIP Money Market Investment Division may advertise its current and
effective yield. Current yield reflects the income generated by an
investment in the Investment Division over a 7 day period. Effective yield
is calculated in a similar manner except that income earned is assumed to
be reinvested. The VIP II Investment Grade Bond and the VIP High
Income Investment Divisions may advertise a 30 day yield which reflects
the income generated by an investment in the Investment Division over a
30 day period.
Midland may also advertise performance figures for the Investment
Divisions based on the performance of a Portfolio prior to the time the
Separate Account commenced operations.
Your Beneficiary
You name Your Beneficiary when You apply for Your Contract. Unless
You have previously indicated otherwise, You may change the Beneficiary
during the Annuitant's lifetime by writing to Our Home Office. If no
Beneficiary is living when the Annuitant dies, We will pay the Death
Benefit to the Annuitant's estate.
Assigning Your Contract
You may assign (transfer) Your rights in this Contract to someone else. If
You do, You must send a copy of the assignment to Our Home Office. We
are not responsible for any payment We make or any action We take
before We receive notice of the assignment or for the validity of the
assignment. An absolute assignment is a change of ownership. An
assignment may be a taxable event.
When We Pay Proceeds From This Contract
We will generally pay any Death Benefits, withdrawals, or loans within
seven days after We receive the required form or request (and other
documents that may be required for payment of Death Benefits) at Our
Home Office. Death Benefits are determined as of the date We receive due
proof of death and the election of how the Death Benefit is to be paid.
We may, however, delay payment for one or more of the following
reasons:
We cannot determine the amount of the payment because the New York
Stock Exchange is closed, because trading in securities has been restricted
by the Securities and Exchange Commission, or because the SEC has
declared that an emergency exists; or
The SEC by order permits Us to delay payment to protect Our Owners.
We may also delay any payment until Your premium checks have cleared
Your bank.
We may defer payment of any withdrawal or surrender from the General
Account for up to six months after We receive Your request.
Dividends
We do not pay any dividends on the Contract described in this prospectus.
Midland's Sales And Other Agreements
Sales Agreements
The Contract will be sold by individuals who, in addition to being licensed
as life insurance agents for Midland National Life, are also registered
representatives of Walnut Street Securities (WSS), the principal
underwriter of the Contracts, or of broker-dealers which have entered into
written sales agreements with WSS. WSS is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. The mailing address
for WSS is 670 Mason Ridge Center, Suite 300, St. Louis, MO 63141-
8557.
During the first five Contract Years, We will pay agents a commission of
up to 6.5%5% of premiums paid. For subsequent years, the commission
allowance may equal an amount up to 3% of premiums paid and .25% of
the Contract Value.
We may also sell Our Contracts through broker-dealers registered with the
Securities and Exchange Commission under the Securities Exchange Act
of 1934 which enter into selling agreements with Us. The commission for
broker-dealers will be no more than that described above, except in the
first year we may pay 6.7%5.25% of premiums.
Regulation
We are regulated and supervised by the South Dakota Insurance
Department. In addition, We are subject to the insurance laws and
regulations in every jurisdiction where We sell contracts. This Contract
has been filed with and approved by insurance officials in such states. As a
result, the provisions of this Contract may vary somewhat from
jurisdiction to jurisdiction.
We submit annual reports on Our operations and finances to insurance
officials in all the jurisdictions where We sell contracts. The officials are
responsible for reviewing Our reports to be sure that We are financially
sound and that We are complying with applicable laws and regulations.
We are also subject to various federal securities laws and regulations.
Year 2000 Compliance Issues
Midland National Life is currently in the process of updating their
administrative systems to accommodate all Year 2000 issues. Midland
does not anticipate any material financial impact in processing and
completing the changes required to comply with the Year 2000 issues.
Discount for Midland Employees
Midland employees may receive a contribution to the Contract of 65% of
the first year commission which would normally have been paid on the
employee's first year premiums. This contribution will be paid by
Midland.
Legal Matters
The law firm of Sutherland, Asbill & Brennan L.L.P., Washington, D.C.,
has provided advice regarding certain matters relating to federal securities
laws.
Legal Proceedings
We are not involved in any material legal proceedings.
Experts
The financial statements of Midland National Life Separate Account C and
Midland National Life Insurance Company included in the Registration
Statement have been audited by Coopers & Lybrand LLP, independent
auditors, for the periods indicated in their report which appears in the
Registration Statement. The financial statements audited by Coopers &
Lybrand LLP have been included in reliance on their report given on their
authority as experts in accounting and auditing.
Statement of Additional Information
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. This
Statement of Additional Information can be acquired by checking the
appropriate box on the application form, by writing Our Home Office, or
by calling the Statement of Additional Information Toll Free number at 1-
800-272-1642. The following is the Table of Contents for the Statement of
Additional Information:
TABLE OF CONTENTS
PAGE
THE CONTRACT
Non-Participation 3
Misstatement of Age or Sex 3
Proof of Existence and Age 3
Assignment 3
Annuity Data 3
Incontestability 3
Ownership 3
Entire Contract 3
Changes in the Contract 3
Protection of Benefits 3
Accumulation Unit Value 3
Annuity Payments 4
CALCULATION OF YIELDS AND TOTAL RETURNS
VIP Money Market Investment Division Yield Calculation 4
Other Investment Division Yield Calculations 5
Standard Total Return Calculations Assuming Surrender 5
Other Performance Data 6
Adjusted HistoricalHypothetical Performance Data 7
FEDERAL TAX MATTERS
Tax Free Exchanges (1035) 8
Required Distributions 8
DISTRIBUTION OF THE CONTRACT 9
SAFEKEEPING OF ACCOUNT ASSETS 9
STATE REGULATION 9
RECORDS AND REPORTS 9
LEGAL PROCEEDINGS 9
LEGAL MATTERS 9
EXPERTS 9
OTHER INFORMATION 9
FINANCIAL STATEMENTS 10
<PAGE>
4 VARIABLE ANNUITY
VARIABLE ANNUITY 1
STATEMENT OF ADDITIONAL INFORMATION FOR THE
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY 2
CONTRACT
Offered by
MIDLAND NATIONAL LIFE INSURANCE COMPANY
Through Midland National Life Separate Account C
This Statement of Additional Information expands upon subjects discussed
in the current Prospectus for the Flexible Premium Deferred Variable
Annuity 2 Contract ("Contract") offered by Midland National Life
Insurance Company. You may obtain a copy of the Prospectus dated May
1, 19981997, by writing to Midland National Life Insurance Company,
One Midland Plaza, Sioux Falls, SD 57193. Terms used in the current
Prospectus for the Contract are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH THE PROSPECTUS FOR THE POLICY.
Dated May 1, 19981997
TABLE OF CONTENTS
Page
THE CONTRACT
Non-Participation 3
Misstatement of Age or Sex 3
Proof of Existence and Age 3
Assignment 3
Annuity Data 3
Incontestability 3
Ownership 3
Entire Contract 3
Changes in the Contract 3
Protection of Benefits 3
Accumulation Unit Value 3
Annuity Payments 4
CALCULATION OF YIELDS AND TOTAL RETURNS
VIP Money Market Investment Division Yield Calculation 4
Other Investment Division Yield Calculations 5
Standard Total Return Calculations Assuming Surrender 5
Other Performance Data 6
Adjusted HistoricalHypothetical Performance Data 7
FEDERAL TAX MATTERS
Tax Free Exchanges (1035) 8
Required Distributions 8
DISTRIBUTION OF THE CONTRACT 9
SAFEKEEPING OF ACCOUNT ASSETS 9
STATE REGULATION 9
RECORDS AND REPORTS 9
LEGAL PROCEEDINGS 9
LEGAL MATTERS 9
EXPERTS 9
OTHER INFORMATION 10
FINANCIAL STATEMENTS 10
THE CONTRACT
Non-Participation
The Contracts are non-participating. No dividends are payable and the
Contracts will not share in the profits or surplus earnings of Midland.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any other payee has been misstated in
the application, the Annuity payable under the Contract will be whatever
the Contract Value of the Contract would purchase on the basis of the
correct age or sex of the Annuitant and/or other payee, if any, on the date
Annuity Payments begin. Any overpayment or underpayments by Midland
as a result of any such misstatement will be corrected using an interest rate
of 6% per year.
Proof of Existence and Age
Before making any payment under the Contract, we may require proof of
the existence and/or proof of the age of the Owner or Annuitant.
Assignment
No assignment of a Contract will be binding on Midland unless made in
writing and sent to us at our Home Office. Midland is not responsible for
the adequacy of any assignment. The Owner's rights and the interest of any
Beneficiary not designated irrevocably will be subject to the rights of any
assignee of record.
Annuity Data
We will not be liable for obligations which depend on receiving
information from a payee until such information is received in a
satisfactory form.
Incontestability
The Contract is incontestable after it has been in force, during the
Annuitant's lifetime, for two years.
Ownership
Before the Annuitant's death, only the Owner will be entitled to the rights
granted by the Contract or allowed by Midland under the Contract, except
that the right to choose a Payment Option will belong to the Payee, unless
otherwise specified. If the Owner is an individual and dies before the
Annuitant, the rights of the Owner belong to the estate of the Owner
unless this Contract has been endorsed to provide otherwise.
Entire Contract
We have issued the Contract in consideration of the application and
payment of the first premium. A copy of the application is attached to and
is a part of the Contract. The Policy Form with the application and any
riders make the entire Contract. All statements made by or for the
Annuitant are considered representations and not warranties. Midland will
not use any statement in defense of a claim unless it is made in the
application and a copy of the application is attached to the Contract when
issued.
Changes in the Contract
Only Midland's President, a Vice President, the Secretary or an Assistant
Secretary of our Company have the authority to make any change in the
Contract and then only in writing. We will not be bound by any promise or
representation made by any other person.
Midland may not change or amend the Contract, except as expressly
provided in the Contract, without the Owner's consent. However, we may
change or amend the Contract if such change or amendment is necessary
for the Contract to comply with any state or federal law, rule or regulation.
Protection of Benefits
To the extent permitted by law, no benefit under the Contract will be
subject to any claim or process of law by any creditor.
Accumulation Unit Value
We determine Accumulation Unit Values for the Investment Division of
Our Separate Account at the end of each Business Day. The Accumulation
Unit Value for each Investment Division was set at $10.00 on the first day
there were contract transactions in Our Separate Account. After that, the
Accumulation Unit Value for any Business Day is equal to the
Accumulation Unit Value for the preceding Business Day multiplied by
the net investment factor for that division on that Business Day.
We determine the net investment factor for each Investment Division
every Business Day as follows:
First, We take the value of the shares belonging to the division (including
any shares from reinvested dividends or capital gain distributions) in the
corresponding Fund portfolio at the close of business that day (before
giving effect to any contract transaction for that day, such as premium
payments or surrenders). For this purpose, We use the share value reported
to Us by the Fund.
Then, We divide this amount by the value of the amounts in the
Investment Division at the close of business on the preceding Business
Day (after giving effect to any contract transactions on that day).
Then, We subtract a daily asset charge for each calendar day between
Business Days (for example, a Monday calculation may include charges
for Saturday, Sunday, and Monday). The daily charge is .0038626% which
is an effective annual rate of 1.40%. This charge is for mortality and
expense risks assumed by Us under the contract and to cover
administrative costs We incur for transactions related to the Separate
Account.
Finally, We reserve the right to subtract any other daily charge for taxes or
amounts set aside as a reserve for taxes. Generally, this means that We
would adjust unit values to reflect what happens to the Funds, and also for
any charges.
Annuity Payments
The amount of each fixed annuity payment will be set on the Maturity
Date and will not subsequently be affected by the investment performance
of the Investment Divisions.
The amount of each variable annuity payment will be affected by the
investment performance of the Investment Divisions. Variable payment
options are not available in certain states.
The dollar amount of the first monthly variable annuity payment is
computed for each Investment Division by applying the value in the
Investment Division, as of a date not more than 10 business days prior to
the Maturity Date, to the appropriate rate for the payout option selected
using the age and sex (where permissible) of the Annuitant. The number of
Annuity Units for each Investment Division is then calculated by dividing
the first variable annuity payment for that Investment Division by the
Investment Division's Annuity Unit Value as of the same date.
The dollar amount of each subsequent payment from an Investment
Division is equal to the number of Annuity Units for that Investment
Division times the Annuity Unit value for that Investment Division as of a
uniformly applied date not more than ten business days before the annuity
payment is due.
The payment made to the Annuitant for the first payment and all
subsequent payments will be the sum of the payment amounts for each
Investment Division.
The Annuity Unit Value for each Investment Division was set at $10 on
the first day there were contract transactions in Our Separate Account.
After that, the Annuity Unit Value for any business day is equal to (1)
multiplied by (2) multiplied by (3) where:
(1) = the Annuity Unit Value for the preceding business day:
(2) = the net investment factor (as described above) for that division on
that business day.
(3) = the investment result adjustment factor (.99986634 per day), which
recognizes an assumed interest rate of 5% per year used in determining the
annuity payment amounts.
Transfers after the Maturity Date will only be allowed once per Contract
Year and will be made using the Annuity Unit Value for the Investment
Divisions on the date the request for transfer is received. On the transfer
date, the number of Annuity Units transferred from the Investment
Division is multiplied by the Annuity Unit Value for that Investment
Division to determine the value being transferred. This value is then
transferred into the indicated Investment Division(s) by converting this
value into Annuity Units of the proper Investment Division(s). The
Annuity Units are determined by dividing the value being transferred into
an Investment Division by the Annuity Unit value of the Investment
Division on the transfer date. The transfer shall result in the same dollar
amount of variable annuity payment on the date of transfer.
CALCULATION OF YIELDS AND TOTAL RETURNS
VIP Money Market Investment Division Yield Calculation
In accordance with regulations adopted by the Securities and Exchange
Commission, Midland is required to compute the VIP Money Market
Investment Division's current annualized yield for a seven-day period in a
manner which does not take into consideration any realized or unrealized
gains or losses or shares of the VIP Money Market Portfolio or on its
portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the
sale of securities and unrealized appreciation and depreciation) in the
value of a hypothetical account having a balance of one unit of the VIP
Money Market Investment Division at the beginning of such seven-day
period, dividing such net change in account value by the value of the
account at the beginning of the period to determine the base period return
and annualizing this quotient on a 365-day basis. The net change in
account value reflects the deductions for the contract maintenance charge,
annual administrative expenses, the mortality and expense risk charge, and
income and expenses accrued during the period. Because of these
deductions, the yield for the VIP Money Market Investment Division of
the Separate Account will be lower than the yield for the VIP Money
Market Portfolio Fund or any comparable substitute funding vehicle.
The Securities and Exchange Commission also permits Midland to
disclose the effective yield of the VIP Money Market Investment Division
for the same seven-day period, determined on a compounded basis. The
effective yield is calculated by compounding the unannualized base period
return by adding one to the base period return, raising the sum to a power
equal to 365 divided by 7, and subtracting one from the result.
The yield on amounts held in the VIP Money Market Investment Division
normally will fluctuate on a daily basis. Therefore, the disclosed yield for
any given past period is not an indication or representation of future yields
or rates of return. The VIP Money Market Investment Division's actual
yield is affected by changes in interest rates on money market securities,
average portfolio maturity of the VIP Money Market Portfolio Fund or
substitute funding vehicle, the types and quality of portfolio securities held
by the VIP Money Market Portfolio Fund or substitute funding vehicle,
and operating expenses. In addition, the yield figures do not reflect the
effect of any Contingent Deferred Sales Charge that may be applicable to a
particular Contract. The annualized yield for the seven-day period ending
12/31/9712/31/96 was 4.07%.3.75%.
Other Investment Division Yield Calculations
Midland may from time to time disclose the current annualized yield of
one or more of the Investment Divisions (except the Money Market
Investment Division) for 30-day periods. The annualized yield of an
Investment Division refers to income generated by the Investment
Division over a specified 30-day period. Because the yield is annualized,
the yield generated by an Investment Division during the 30-day period is
assumed to be generated each 30-day period. This yield is computed by
dividing the net investment income per accumulation unit earned during
the period by the price per unit on the last day of the period, according to
the following formula:
YIELD = 2 [ (a - b + 1)6 - 1 ]
cd
Where: a = net investment income earned during the period by the
Fund (or substitute funding vehicle) attributable to shares owned
by the Investment Division.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of units outstanding during the
period.
d = the maximum offering price per unit on the last day of the
period.
Net investment income will be determined in accordance with rules
established by the Securities and Exchange Commission. Accrued
expenses will include all recurring fees that are charged to all Owner
accounts. The yield calculations do not reflect the effect of any Contingent
Deferred Sales Charges that may be applicable to a particular Contract.
Contingent Deferred Sales Charges range from 8%7% to 0% of the
amount of Premium withdrawn depending on the time elapsed between
each premium payment and the withdrawal. elapsed time since the
Contract was issued.
Because of the charges and deductions imposed by the Separate Account
the yield of the Investment Division will be lower than the yield for the
corresponding Fund. The yield on amounts held in the Investment
Divisions normally will fluctuate over time. Therefore, the disclosed yield
for any given past period is not an indication or representation of future
yields or rates of return. The Investment Division's actual yield will be
affected by the types and quality of portfolio securities held by the Fund,
and its operating expenses.
We currently do not advertise yields for any Investment Division.
Standard Total Return Calculations Assuming Surrender
Midland may from time to time also disclose average annual total returns
for one or more of the Investment Divisions for various periods of time.
Average annual total return quotations are computed by finding the
average annual compounded rates of return over one, five and ten year
periods that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P (1 + T)n = ERV
Where: P = an assumeda hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of an assumeda hypothetical
$1,000 payment made at the beginning of the one, five, or ten-
year period, at the end of the one, five, or ten-year period (or fractional
portion thereof).
All recurring fees that are charged to all Owner accounts are recognized in
the ending redeemable value. The standard average annual total return
calculations which assume the Contract is surrendered will reflect the
effect of Contingent Deferred Sales Charges that may be applicable to a
particular period.
The following is standardized average annual total return information for
the Investment Divisions of Separate Account C.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 8.28% 4.99%
VIP Equity Income (10/24/93) 15.24% 4.99%
VIP Growth (10/24/93) 12.69% 5.58%
VIP Overseas (10/24/93) 6.47% 3.68%
VIP II Investment Grade Bond (10/24/93) 2.58% -5.41%
VIP II Index 500 (10/24/93) 16.31% 12.94%
VIP II Asset Manager (10/24/93) 6.64% 5.54%
VIP Money Market (10/24/93) 2.45% -3.29%
VIP II Asset Manager: Growth (5/1/95) 17.04% 10.98%
VIP II Contrafund (5/1/95) 20.27% 12.52%
The following is the average annual total return information for the
Investment Divisions of Separate Account C based on the assumption that
the contract is surrendered at the end of the time period shown. The returns
reflect the impact of any applicable contingent deferred sales charge.
Investment Division Inception of the 1-Year Period
with Investment Division Ended
Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 2.35% -3.33%
VIP II Investment Grade Bond (10/24/93) 3.30% 0.20%
VIP High Income (10/24/93) 9.76% 8.67%
VIP II Asset Manager (10/24/93) 9.16% 11.61%
VIP II Index 500 (10/24/93) 19.43% 23.47%
VIP Equity-Income (10/24/93) 17.57% 18.95%
VIP Growth (10/24/93) 14.53% 14.40%
VIP Overseas (10/24/93) 6.94% 2.65%
VIP II Contrafund (10/24/93) 21.06% 15.05%
VIP II Asset Manager: Growth (5/1/95) 19.36% 15.96%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997. </>R
Midland may from time to time also disclose average annual total returns
in a format which assumes the Contract is kept in-force through the time
period shownin a non-standard format in conjunction with the standard
format described above. The non-standard format Such returns will be
identical to the standard format which assumes the Contract is surrendered
except that the Contingent Deferred Sales Charge percentage will be
assumed to be 0%. The returns which assume the Contract is kept in-force
will only be shown in conjunction with returns which assume the Contract
is surrendered. </>R
The following is the average annual total return information for the
Investment Division of Separate Account C based on the assumption that
the contract is kept in-force through the end of the time period shown. The
contingent deferred sales charges are set to zero.
Investment Division Inception of the 1-Year Period
with Investment Division Ended
Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 3.53% 3.87%
VIP II Investment Grade Bond (10/24/93) 4.44% 7.40%
VIP High Income (10/24/93) 10.71% 15.87%
VIP II Asset Manager (10/24/93) 10.12% 18.81%
VIP II Index 500 (10/24/93) 20.15% 30.67%
VIP Equity-Income (10/24/93) 18.33% 26.15%
VIP Growth (10/24/93) 15.36% 21.60%
VIP Overseas (10/24/93) 7.96% 9.85%
VIP II Contrafund (10/24/93) 22.75% 22.25%
VIP II Asset Manager: Growth (5/1/95) 21.09% 23.16%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997.
The following is non-standardized average annual total return information
for the Investment Divisions of Separate Account C.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 9.26% 11.99%
VIP Equity Income (10/24/93) 16.09% 11.99%
VIP Growth (10/24/93) 13.59% 12.58%
VIP Overseas (10/24/93) 7.48% 10.68%
VIP II Investment Grade Bond (10/24/93) 3.68% 1.59%
VIP II Index 500 (10/24/93) 17.15% 19.94%
VIP II Asset Manager (10/24/93) 7.65% 12.54%
VIP Money Market (10/24/93) 3.56% 3.71%
VIP II Asset Manager: Growth (5/1/95) 20.00% 17.98%
VIP II Contrafund (5/1/95) 23.18% 19.52%
Since the VIP III Balanced, VIP III Growth Opportunities, VIP III Growth
& Income, American Century VP Capital Appreciation, American Century
VP Balanced, American Century VP Value and American Century VP
International Investment Divisions were not available to the portfolio at
12/31/96, there is no average annual total return information to report for
these Investment Divisions.
Other Performance Data
Midland may from time to time also disclose cumulative total returns in
conjunction with the annual returns described above. standard format
described above. The cumulative returns will be calculated using the
following formula. assuming The cumulative returns which assume the
Contract is kept in-force assume that thethat the Contingent Deferred Sales
Charge percentage will be 0%.
CTR = [ERV/P] - 1
Where: CTR = the cumulative total return net of Investment Division
recurring charges for the period.
ERV = ending redeemable value of an assumeda hypothetical
$1,000 payment at the beginning of the one, five, or ten year period
at the end of the one, five, or ten-year period (or fractional portion
thereof).
P = an assumeda hypothetical initial payment of $1,000
The returns which assume the Contract is kept in-force will only be shown
in conjunction with returns which assume the Contract is surrendered.All
non-standard performance data will only be advertised if the standard
performance data is also disclosed.
Midland may also disclose the value of an assumeda hypothetical payment
of $10,000 at the end of various periods of time.
The following is the cumulative total return information for the Investment
Division of Separate Account C. The returns are based on the assumption
that the contract is surrendered at the end of the time period shown and the
returns reflect the impact of any applicable Contingent Deferred Sales
Charge.
Investment Division Inception of the 1-Year Period
with Investment Division Ended
Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 10.24% -3.33%
VIP II Investment Grade Bond (10/24/93) 14.56% 0.20%
VIP High Income (10/24/93) 47.74% 8.67%
VIP II Asset Manager (10/24/93) 44.35% 11.61%
VIP II Index 500 (10/24/93) 110.36% 23.47%
VIP Equity-Income (10/24/93) 96.99% 18.95%
VIP Growth (10/24/93) 76.55% 14.40%
VIP Overseas (10/24/93) 32.43% 2.65%
VIP II Contrafund (10/24/93) 66.60% 15.05%
VIP II Asset Manager: Growth (5/1/95) 60.43% 15.96%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997.
The following is standardized cumulative total return information for the
Investment Divisions of Separate Account C.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 28.88% 4.99%
VIP Equity Income (10/24/93) 57.19% 4.99%
VIP Growth (10/24/93) 46.39% 5.58%
VIP Overseas (10/24/93) 22.13% 3.68%
VIP II Investment Grade Bond (10/24/93) 8.45% -5.41%
VIP II Index 500 (10/24/93) 61.90% 12.94%
VIP II Asset Manager (10/24/93) 22.74% 5.54%
VIP Money Market (10/24/93) 8.04% -3.29%
VIP II Asset Manager: Growth (5/1/95) 30.07% 10.98%
VIP II Contrafund (5/1/95) 36.14% 12.52%-
The following is non-standardized cumulative total return information for
for the Investment Divisions of Separate Account C.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 32.63% 11.99%
VIP Equity Income (10/24/93) 60.94% 11.99%
VIP Growth (10/24/93) 50.14% 12.58%
VIP Overseas (10/24/93) 25.88% 10.68%
VIP II Investment Grade Bond (10/24/93) 12.20% 1.59%
VIP II Index 500 (10/24/93) 65.65% 19.94%
VIP II Asset Manager (10/24/93) 26.49% 12.54%
VIP Money Market (10/24/93) 11.79% 3.71%
VIP II Asset Manager: Growth (5/1/95) 35.62% 17.98%
VIP II Contrafund (5/1/95) 41.69% 19.52%
Since the VIP III Balanced, VIP III Growth Opportunities, VIP III Growth
& Income, American Century VP Capital Appreciation, American Century
VP Balanced, American Century VP Value and American Century VP
International Investment Divisions were not available to the portfolio at
12/31/96, there is no cumulative total return information to report for these
Investment Divisions.
The following is the cumulative total return information for the Investment
Division of Separate Account C. The returns are based on the assumption
that the contract is kept in-force through the end of the time period shown
and the contingent deferred sales charges are set to zero.
Investment Division Inception of the 1-Year Period
with Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 15.64% 3.87%
VIP II Investment Grade Bond (10/24/93) 19.96% 7.40%
VIP High Income (10/24/93) 53.14% 15.87%
VIP II Asset Manager (10/24/93) 49.75% 18.81%
VIP II Index 500 (10/24/93) 115.76% 30.67%
VIP Equity-Income (10/24/93) 102.39% 26.15%
VIP Growth (10/24/93) 81.95% 21.60%
VIP Overseas (10/24/93) 37.83% 9.85%
VIP II Contrafund (10/24/93) 72.90% 22.25%
VIP II Asset Manager: Growth (5/1/95) 66.73% 23.16%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997.
Hypothetical Adjusted Historical Performance Data
Midland may also disclose adjusted historical"hypothetical" performance
data for an Investment Division for periods before the Investment Division
commenced operations, based on the assumption that the Investment
Division was in existence before it actually was, and that the Investment
Division had been invested in a particular portfolio that was in existence
prior to the Investment Division's commencement of operations. The
portfolio used for these calculations will be the actual portfolio that the
Investment Division will invest in.
Adjusted historicalHypothetical performance data of this type will be
calculated as follows. First, the value of a hypothetical $1,000 investment
in the applicable portfolio is calculated on a monthly basis by comparing
the net asset value per share at the beginning of the month with the net
asset value per share at the end of the month (adjusted for any dividend
distributions during the month), and the resulting ratio is applied to the
value of the investment at the beginning of the month to get the gross
value of the investment at the end of the month. Second, that gross value is
then reduced by a "Contract Charges" factor to reflect the charges imposed
under the Contract. This Contract Charges factor is calculated by adding
the daily charge for mortality and expense risks (1.25% annually) to the
daily Administrative Charge (0.15% annually), and then adding an
additional amount that adjusts for the annual $35$33 Contract
Maintenance Charge. This additional amount is based on an average
Contract Value of $27,000$22,000, so it is calculated as
$35$33/$27,00022,000, or 0.13%.15% annually. The total of these three
amounts is then divided by 12 to get the monthly Contract Charges factor,
which is then applied to the value of the hypothetical initial payment in the
applicable portfolio to get the value in the Investment Division. The
Contract Charges factor is assumed to be deducted at the beginning of
each month. In this manner, the Ending Redeemable Value ("ERV") of an
assumeda hypothetical $1,000 initial payment in the Investment Division
is calculated each month during the applicable period, to get the ERV at
the end of the period. Third, that ERV is then utilized in the formulas
above.
This type of hypothetical performance data may be disclosed on both an
average annual total return and a cumulative total return basis. Moreover,
it may be disclosed assuming that the Contract is not surrendered (i.e.,
with no deduction for the Contingent Deferred Sales Charge) and
assuming that the Contract is surrendered at the end of the applicable
period (i.e., reflecting a deduction for any applicable Contingent Deferred
Sales Charge).
The following is the average annual total return information based on the
assumption that the contract is surrendered at the end of the time period
shown. The impact of any applicable contingent deferred sales charges are
reflected in the returns. The returns assume that each of the Investment
Divisions had been available to Separate Account C since the Portfolio
Inception date.The following is standardized average annual total return
information based on the hypothetical assumption that each of the
Investment Divisions listed had been available to Separate Account C
since the inception of each corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 10.26% 9.42% 12.87%
VIP Equity Income (10/9/86) 11.67% 12.00% 15.88%
VIP Growth (10/9/86) 13.04% 13.39% 13.08%
VIP Overseas (1/28/87) 6.20% N/A 7.06%
VIP II Investment Grade Bond (12/5/88) 6.51% N/A 4.55%
VIP II Index 500 (8/27/92) 14.86% N/A N/A
VIP II Asset Manager (9/16/89) 9.96% N/A 9.17%
VIP Money Market (4/1/82) 5.33% 4.33% 2.43%
VIP II Asset Manager: Growth (1/3/95) 17.16% N/A N/A
VIP II Contrafund (1/3/95) 25.85% N/A N/A
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 5.27% 4.26% 2.28%
VIP II Investment Grade Bond (12/5/88) 6.64% N/A 4.61%
VIP High Income (9/19/85) 10.74% 11.11% 11.51%
VIP II Asset Manager (9/6/89) 11.02% N/A 10.57%
VIP II Index 500 (8/27/92) 17.61% N/A 17.56%
VIP Equity-Income (10/9/86) 12.92% 14.97% 17.81%
VIP Growth (10/9/86) 13.81% 15.43% 15.64%
VIP Overseas (1/28/87) 6.56% 7.97% 11.72%
VIP II Contrafund (1/3/95) 24.89% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 19.42% N/A N/A
VIP III Balanced (1/3/95) 11.84% N/A N/A
VIP III Growth & Income (12/31/96) 19.51% N/A N/A
VIP III Growth Opportunities (1/3/95) 23.50% N/A N/A
American Century VP Balanced (5/1/91) 8.91% N/A 8.83%
American Century VP Capital Appreciation (11/20/87) 7.66% 7.05% 3.22%
American Century VP Value (5/1/96) 17.34% N/A N/A
American Century VP International (5/1/94) 7.43% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
The following is the average annual total return information based on the
assumption that the contract is kept in-force through the end of the time
period shown. The contingent deferred sales charges are assumed to be
zero. The returns assume that each of the Investment Divisions had been
available to Separate Account C since the Portfolio Inception date.The
following is non-standardized average annual total return information
based on the hypothetical assumption that each of the Investment
Divisions listed had been available to Separate Account C since the
inception of each corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 10.26% 9.42% 13.20%
VIP Equity Income (10/9/86) 11.67% 12.00% 16.18%
VIP Growth (10/9/86) 13.04% 13.39% 13.40%
VIP Overseas (1/28/87) 6.20% N/A 7.47%
VIP II Investment Grade Bond (12/5/88) 6.51% N/A 5.00%
VIP II Index 500 (8/27/92) 15.25% N/A N/A
VIP II Asset Manager (9/16/89) 9.96% N/A 9.55%
VIP Money Market (4/1/82) 5.33% 4.33% 2.92%
VIP II Asset Manager: Growth (1/3/95) 19.70% N/A N/A
VIP II Contrafund (1/3/95) 28.22% N/A N/A
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 5.27% 4.26% 3.25%
VIP II Investment Grade Bond (12/5/88) 6.64% N/A 5.50%
VIP High Income (9/19/85) 10.74% 11.11% 12.20%
VIP II Asset Manager (9/6/89) 11.02% N/A 11.28%
VIP II Index 500 (8/27/92) 18.02% N/A 18.12%
VIP Equity-Income (10/9/86) 12.92% 14.97% 18.36%
VIP Growth (10/9/86) 13.81% 15.43% 16.24%
VIP Overseas (1/28/87) 6.56% 7.97% 12.40%
VIP II Contrafund (1/3/95) 26.23% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 20.88% N/A N/A
VIP III Balanced (1/3/95) 13.50% N/A N/A
VIP III Growth & Income (12/31/96) 26.71% N/A N/A
VIP III Growth Opportunities (1/3/95) 24.87% N/A N/A
American Century VP Balanced (5/1/91) 9.24% N/A 9.59%
American Century VP Capital Appreciation (11/20/87) 7.66% 7.05% 4.16%
American Century VP Value (5/1/96) 21.18% N/A N/A
American Century VP International (5/1/94) 8.82% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
The following is the cumulative total return information based on the
assumption that the contract is surrendered at the end of the time period
shown. The impact of any applicable contingent deferred sales charges are
reflected in the returns. The returns assume that each of the Investment
Divisions had been available to Separate Account C since the Portfolio
Inception date.The following is standardized cumulative total return
information based on the hypothetical assumption that each of the
Investment Divisions listed had been available to Separate Account C
since the inception of each corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 201.35% 146.03% 83.20%
VIP Equity Income (10/9/86) 209.50% 210.49% 108.95%
VIP Growth (10/9/86) 250.65% 251.42% 84.86%
VIP Overseas (1/28/87) 81.78% N/A 40.66%
VIP II Investment Grade Bond (12/5/88) 66.47% N/A 24.91%
VIP II Index 500 (8/27/92) 82.63% N/A N/A
VIP II Asset Manager (9/16/89) 100.45% N/A 55.10%
VIP Money Market (4/1/82) 115.37% 52.77% 12.77%
VIP II Asset Manager: Growth (1/3/95) 37.21% N/A N/A
VIP II Contrafund (1/3/95) 58.28% N/A N/A
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 124.57% 51.75% 11.95%
VIP II Investment Grade Bond (12/5/88) 79.21% N/A 25.27%
VIP High Income (9/19/85) 250.35% 186.84% 72.43%
VIP II Asset Manager (9/6/89) 138.70% N/A 65.27%
VIP II Index 500 (8/27/92) 138.07% N/A 124.51%
VIP Equity-Income (10/9/86) 291.68% 303.55 % 126.90%
VIP Growth (10/9/86) 327.70% 319.84% 106.77%
VIP Overseas (1/28/87) 100.28% 115.23% 74.02%
VIP II Contrafund (1/3/95) 94.70% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 70.23% N/A N/A
VIP III Balanced (1/3/95) 39.79% N/A N/A
VIP III Growth & Income (12/31/96) 19.51% N/A N/A
VIP III Growth Opportunities (1/3/95) 88.16% N/A N/A
American Century VP Balanced (5/1/91) 76.77% N/A 52.67%
American Century VP Capital Appreciation (11/20/87) 110.99% 97.55% 17.18%
American Century VP Value (5/1/96) 30.58% N/A N/A
American Century VP International (5/1/94) 30.08% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
The following is the cumulative total return information based on the
assumption that the contract is kept in-force through the end of the time
period shown. The contingent deferred sales charges are assumed to be
zero. The returns assume that each of the Investment Divisions had been
available to Separate Account C since the Portfolio Inception date.The
following is non-standardized cumulative total return information based
on the hypothetical assumption that each of the Investment Divisions
listed had been available to Separate Account C since the inception of each
corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Investment Division to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 201.35% 146.03% 85.90%
VIP Equity Income (10/9/86) 209.50% 210.49% 111.65%
VIP Growth (10/9/86) 250.65% 251.42% 87.56%
VIP Overseas (1/28/87) 81.78% N/A 43.36%
VIP II Investment Grade Bond (12/5/88) 66.47% N/A 27.61%
VIP II Index 500 (8/27/92) 85.33% N/A N/A
VIP II Asset Manager (9/16/89) 100.45% N/A 57.80%
VIP Money Market (4/1/82) 115.37% 52.77% 15.47%
VIP II Asset Manager: Growth (1/3/95) 43.21% N/A N/A
VIP II Contrafund (1/3/95) 64.28% N/A N/A
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 124.57% 51.75% 17.35%
VIP II Investment Grade Bond (12/5/88) 79.21% N/A 30.67%
VIP High Income (9/19/85) 250.35% 186.84% 77.83%
VIP II Asset Manager (9/6/89) 138.70% N/A 70.67%
VIP II Index 500 (8/27/92) 142.57% N/A 129.91%
VIP Equity-Income (10/9/86) 291.68% 303.55% 132.30%
VIP Growth (10/9/86) 327.70% 319.84% 112.17%
VIP Overseas (1/28/87) 100.28% 115.23% 79.42%
VIP II Contrafund (1/3/95) 101.00% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 76.53% N/A N/A
VIP III Balanced (1/3/95) 46.09% N/A N/A
VIP III Growth & Income (12/31/96) 26.71% N/A N/A
VIP III Growth Opportunities (1/3/95) 94.46% N/A N/A
American Century VP Balanced (5/1/91) 80.37% N/A 58.07%
American Century VP Capital Appreciation (11/20/87) 110.99% 97.55% 22.58%
American Century VP Value (5/1/96) 37.78% N/A N/A
American Century VP International (5/1/94) 36.38% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
FEDERAL TAX MATTERS
Tax-Free Exchanges (Section 1035)
Midland accepts Premiums which are the proceeds of a Contract in a
transaction qualifying for a tax-free exchange under Section 1035 of the
Internal Revenue Code. Except as required by federal law in calculating
the basis of the Contract, the Company does not differentiate between
Section 1035 Premiums and non-Section 1035 Premiums.
We also accept "rollovers" from Contracts qualifying as individual
retirement annuities or accounts (IRAs), or any other qualified contract
which is eligible to "rollover" into an IRA (except 403(b) contracts). The
Company differentiates between nonqualified Contracts and IRAs to the
extent necessary to comply with federal tax laws.
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 to
provide that (a) if any Owner dies on or after the Annuity Date but prior to
the time the entire interest in the Contract has been distributed, the
remaining portion of such interest will be distributed at least as rapidly as
under the method of distribution being used as of the date of that Owner's
death; and (b) if any Owner dies prior to the annuity starting date, the
entire interest in the Contract will be distributed (1) within five years after
the date of that Owner's death, or (2) as Annuity payments which will
begin within one year of that Owner's death and which will be made over
the life of the Owner's "Designated Beneficiary" or over a period not
extending beyond the life expectancy of that Beneficiary. The Owner's
"Designated Beneficiary" is the person to whom ownership of the Contract
passes by reason of death and must be a natural person. However, if the
Owner's Designated Beneficiary is the surviving spouse of the Owner, the
Contract may be continued with the surviving spouse as the new Owner.
The Nonqualified Contracts 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.
DISTRIBUTION OF THE CONTRACT
Walnut Street Securities (WSS), the principal underwriter of the Contract,
is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. The address for WSS is as
follows: Walnut Street Securities, 670 Mason Ridge Center, Suite 300, St.
Louis, MO 63141-8557.
The Contracts are offered to the public through brokers, licensed under the
federal securities laws and state insurance laws, that have entered into
agreements with WSS. The offering of the Contracts is continuous and
WSS does not anticipate discontinuing the offering of the Contracts.
However, WSS does reserve the right to discontinue the offering of the
Contracts. Midland pays 0.1625% of all premiums paid into the Variable
Annuity 2 Contract as underwriting commission to WSS.
Prior to June 1, 1996 Midland paid underwriting commissions to North
American Management (NAM) since NAM was the principal underwriter
of Midland's Variable Annuity contractsthe Contracts during this time.
The following table shows the aggregate dollar amount of underwriting
commissions paid to NAM during the last three years. Such underwriting
commissions are not paid to WSS.
Underwriting
Year Commissions
1994 $121,960.86
1995 $100,715.80
1996 $99,593.61
1997 0
SAFEKEEPING OF ACCOUNT ASSETS
Title to assets of the Separate Account is held by Midland. The assets are
kept physically segregated and held separate and apart from our general
account assets. Records are maintained of all Premiums and redemptions
of Fund shares held by each of the Investment Divisions.
STATE REGULATION
Midland is subject to the insurance laws and regulations of all the states
where it is licensed to operate. The availability of certain contract rights
and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the Contracts will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Separate Account will be
maintained by Midland. As presently required by the Investment Company
Act of 1940 and regulations promulgated thereunder, reports containing
such information as may be required under that Act or by any other
applicable law or regulation will be sent to Owners semi-annually at their
last known address of record.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject that are material to
the Contracts. We are not involved in any litigation that is of material
importance in relation to our total assets or that relates to the Separate
Account.
LEGAL MATTERS
Legal advice regarding certain matters relating to the federal securities
laws applicable to the issue and sale of the Contracts has been provided by
Sutherland, Asbill & Brennan L.L.P., of Washington, D.C.
EXPERTS
The financial statements of Midland National Life Separate Account C and
Midland National Life Insurance Company included in this Statement of
Additional Information and Registration Statement have been audited by
Coopers & Lybrand LLP, independent auditors, for the periods indicated
in their report thereon which appears elsewhere herein and in the
Registration Statement. The financial statements and schedules audited by
Coopers & Lybrand LLP have been included in reliance on their report,
given on their authority as experts in accounting and auditing. The mailing
address for Coopers & Lybrand LLP is as follows:
Coopers & Lybrand LLP
IBM Park Building, Suite 1300
650 Third Avenue S.
Minneapolis, MN 55402-4333
OTHER INFORMATION
A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended, with respect to
the Contracts discussed in this Statement of Additional Information. Not
all of the information set forth in the Registration Statement, amendments
and exhibits thereto has been included in this Statement of Additional
Information. Statements contained in this Statement of Additional
Information concerning the content of the Contracts and other legal
instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments
filed with the Securities and Exchange Commission.
FINANCIAL STATEMENTS
The financial statements of Midland National Life Separate Account C and
Midland National Life Insurance Company should be considered only as
bearing on the ability of Midland to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of Separate Account C.
<PAGE>
2
12
Flexible Premium Deferred Variable Annuity Contract
(Variable Annuity)
Issued By:
Midland National Life Insurance Company (Through Midland National
Life Separate Account C)
One Midland Plaza Sioux Falls, SD 57193 (605) 335-5700
The Individual Flexible Premium Deferred Variable Annuity Contracts
described in this Prospectus provide for accumulation of the Contract
Value and payment of annuity payments on a fixed or variable basis.
Variable payment options are not available in certain states. The Contracts
are designed to aid individuals in long term planning for retirement or
other long term purposes.
The Contracts are available for retirement plans which do not qualify for
the special federal tax advantages available under the Internal Revenue
Code (Non-Qualified Plans) and for retirement plans which do qualify for
the federal tax advantages available under the Internal Revenue Code
(Qualified Plans).
This Prospectus generally describes only the variable portion of the
Contract, except where the General Account is specifically mentioned.
The Variable Annuity pays a Death Benefit when the Annuitant dies
before the Maturity Date if the Contract is still In Force. The Death
Benefit is equal to the greater of the Contract Value or premiums paid less
withdrawals.
You may withdraw part of the Contract Value, or completely surrender
Your Contract for its Cash Surrender Value prior to the Maturity Date.
You may incur a deferred sales charge, taxes and/or a tax penalty if You
surrender Your Contract or make a partial withdrawal.
You may allocate amounts in Your Contract Fund to either Our General
Account, which pays interest at a declared rate, or up to ten of the
investment divisions of Our Separate Account C. In certain states,
allocations to and transfers to and from the General Account are not
permitted.
We invest each of the Investment Divisions of Our Separate Account in
shares of a corresponding portfolio of Fidelity's Variable Insurance
Products Fund (VIP), Fidelity's Variable Insurance Products Fund II (VIP
II), Fidelity's Variable Insurance Products Fund III (VIP III), or the
American Century Variable Portfolios, Inc. (collectively called the
"Funds"), mutual funds with a choice of portfolios.
The prospectuses for the Funds, which accompany this Prospectus,
describes the investment objectives, policies, and risks of the Funds'
portfolios associated with the eighteen divisions of Our Separate
Account: VIP Money Market Portfolio, VIP High Income Portfolio, VIP
Equity-Income Portfolio, VIP Growth Portfolio, VIP Overseas Portfolio,
VIP II Asset Manager Portfolio, VIP II Investment Grade Bond Portfolio,
VIP II Contrafund Portfolio, VIP II Asset Manager: Growth Portfolio, VIP
II Index 500 Portfolio, VIP III Growth & Income Portfolio, VIP III
Balanced Portfolio, VIP III Growth Opportunities Portfolio, American
Century VP Capital Appreciation Portfolio, American Century VP Value
Portfolio, American Century VP Balanced Portfolio, and American
Century VP International Portfolio.
VIP Money Market Portfolio
VIP High Income Portfolio
VIP Equity-Income Portfolio
VIP Growth Portfolio
VIP Overseas Portfolio
VIP II Asset Manager Portfolio
VIP II Investment Grade Bond Portfolio
VIP II Contrafund Portfolio
VIP II Asset Manager: Growth Portfolio
VIP II Index 500 Portfolio
VIP III Growth & Income Portfolio
VIP III Balanced Portfolio
VIP III Growth Opportunities Portfolio
American Century VP Capital Appreciation Portfolio
American Century VP Value Portfolio
American Century VP Balanced Portfolio
American Century VP International Portfolio
American Century VP Income & Growth Portfolio
You bear the investment risk of this Contract for all amounts allocated to
Separate Account C. To the extent that Your Contract Value is in Separate
Account C, Your Contract Value will vary with the investment
performance of the corresponding portfolios of the Funds; there is no
minimum guaranteed fund value for amounts allocated to the Investment
Divisions of Our Separate Account. An investment in the portfolios,
including the VIP Money Market Portfolio, is neither insured nor
guaranteed by the U.S. Government, and there is no assurance that the VIP
Money Market Portfolio will be able to maintain a stable net asset value.
After the first premium, You may decide how much Your premium
payments will be and how often You wish to make them, within limits.
You have a limited right to examine this Contract and return it to Us for a
refund.
This Prospectus sets forth the information that a prospective investor
should know before investing. A Statement of Additional Information
about the Contract and Separate Account C is available free by writing
Midland at the address above or by checking the appropriate box on the
application form. The Statement of Additional Information, which has the
same date as this Prospectus, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The table
of contents of the Statement of Additional Information is included at the
end of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PLEASE READ THIS PROSPECTUS FOR DETAILS ON THE
CONTRACT BEING OFFERED TO YOU, AND KEEP IT FOR
FUTURE REFERENCE. THIS PROSPECTUS IS VALID ONLY WHEN
ACCOMPANIED BY CURRENT PROSPECTUSES FOR FIDELITY'S
VARIABLE INSURANCE PRODUCTS FUND, FIDELITY'S
VARIABLE INSURANCE PRODUCTS FUND II, FIDELITY'S
VARIABLE INSURANCE PRODUCTS FUND III, AND AMERICAN
CENTURY VARIABLE PORTFOLIOS, INC.
The date of this prospectus is May 1, 19981997.
The Contracts Are Not A Deposit Of, Or Guaranteed Or Endorsed By,
Any Bank Or Depository Institution, And The Contract Is Not Federally
Insured By The Federal Deposit Insurance Corporation, The Federal
Reserve Board, Or Any Other Agency. The Contracts involve investment
risk, including possible loss of principal.
Table of Contents
Definitions
FEE TABLE
PORTFOLIO ANNUAL EXPENSES (1)
EXAMPLES
SUMMARY
CONDENSED FINANCIAL INFORMATION
GENERAL INFORMATION ABOUT MIDLAND, SEPARATE
ACCOUNT C AND THE FUNDS
The Company That Issues Variable Annuities
Midland National Life Insurance Company
Our Parent
Separate Account Investment Choices
Our Separate Account And Its Investment Divisions
The Funds
Investment Policies Of The Funds' Portfolios
We Own The Assets Of Our Separate Account
Our Right To Change How We Operate Our Separate Account
DETAILED INFORMATION ABOUT THE CONTRACT
Requirements for Issuance of a Contract
Free Look
Allocation of Premiums
Transfers of Contract Value
Dollar Cost Averaging
Withdrawals
Loans
Death Benefit
Your Contract Value
Amounts In Our Separate Account
How We Determine The Accumulation Unit Value
CHARGES, FEES AND DEDUCTIONS
Sales Charges on Withdrawals
Charges Against The Separate Account
Administrative Charge
Contract Maintenance Charge
Transfer Charge
Charges In The Funds
Changing Your Premium Allocation Percentages
The General Account
Amounts In The General Account
Adding Interest To Your Amounts In The General Account
Transfers
Additional Information About Variable Annuities
Contract Periods, Anniversaries
Inquiries
FEDERAL TAX STATUS
Introduction
Diversification
Taxation of Annuities in General
Our Income Taxes
Withholding
MATURITY DATE
EFFECTING AN ANNUITY
Fixed Options
Variable Options
Transfers after the Maturity Date
ADDITIONAL INFORMATION
Your Voting Rights As an Owner
Fund Voting Rights
How We Determine Your Voting Shares
Voting Privileges Of Participants In Other Companies
Our Reports to Owners
Performance
Your Beneficiary
Assigning Your Contract
When We Pay Proceeds From This Contract
Dividends
Midland's Sales And Other Agreements
Sales Agreements
Regulation
Year 2000 Compliance Issues
Discount for Midland Employees
Legal Matters
Legal Proceedings
Experts
Statement of Additional Information
Definitions
Accumulation Unit means the units credited to each Investment Division
in the Separate Account before the Maturity Date.
Annuitant means the person, designated by the Owner, upon whose life
annuity payments are intended to be based on the Maturity Date.
Annuity Unit means the units in the Separate Account after the Maturity
Date which are used to determine the amount of the annuity payment.
Attained Age means the Issue Age plus the number of complete Contract
Years since the Contract Date.
Beneficiary means the person or persons to whom the Death Benefit is
paid if the Annuitant dies before the Maturity Date.
Business Day means any day We are open and the New York Stock
Exchange is open for trading. The holidays We currently observe are New
Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and the day after, Christmas Eve day and Christmas Day
and the day after.
Cash Surrender Value means the Contract Value on the date of surrender,
less the Contract Maintenance Charge and any Contingent Deferred Sales
Charge.
Contract means a contract designed to provide an Annuitant with an
income, which may be a lifetime income, beginning on the Maturity Date.
Contract Anniversary - The same month and day of the Contract Date in
each year following the Contract Date.
Contract Date means the date from which Contract Anniversaries and
Contract Years are determined.
Contract Value means the total amount of monies in Our Separate Account
C attributable to Your Contract and the monies in Our General Account
for Your Contract.
Contract Year means a year that starts on the Contract Date or on each
anniversary thereafter.
Death Benefit means the amount payable under Your Contract if the
Annuitant dies before the Maturity Date.
Funds mean the Investment Companies more commonly referred to as
mutual funds available for investment by Separate Account C on the
Contract Date or as later changed by Us. The Funds available as of the
date of the prospectus are the Fidelity Variable Insurance Products Fund
(VIP), the Fidelity Variable Insurance Products Fund II (VIP II), the
Fidelity Variable Insurance Products Fund III (VIP III), and American
Century Variable Portfolios, Inc. (American Century VP).
Home Office means where You write to Us to pay premiums, request
transfers, or other action regarding Your Contract. The address is:
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
In Force means the Contract has not been terminated.
Investment Division means a division of Separate Account C which
invests exclusively in the shares of a specified Portfolio of the Funds.
Issue Age means the age of the Annuitant on his/her birthday which is
nearest to the Contract Date.
Maturity Date means the date, specified in the Contract, when annuity
payments are to begin.
Owner means the person who purchases an Individual Variable Annuity
Contract and makes the premium payments. The Owner will usually be an
Annuitant, but need not be. The Owner has all rights in the Contract before
the Maturity Date, including the right to make withdrawals or surrender
the Contract, to designate and change the Beneficiaries who will receive
the proceeds at the death of the Annuitant before the Maturity Date, to
transfer funds among the Investment Divisions, and to designate a mode of
settlement for the Annuitant on the Maturity Date.
Payee means the person who is entitled to receive annuity payments after
an annuity is effected. On or after the Maturity Date, the Annuitant will be
the Payee. Before the Maturity Date, You will be the Payee.
Separate Account means Our Separate Account C which receives and
invests Your premiums under the Contract.
FEE TABLE
This information is intended to assist You in understanding the various
costs and expenses that an Owner will bear directly or indirectly. It reflects
expenses of the Separate Account as well as the Portfolios. See
CHARGES, FEES AND DEDUCTIONS on page 15 of the prospectus for
additional information.
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge imposed on Premiums 0.00%
Maximum Contingent Deferred Sales Charge (as a percentage of
premiums) (1) 7.00%
Transfer Fee (after 15 free transfers per year) $0.00$25.00
ANNUAL CONTRACT MAINTENANCE CHARGE $33.00
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees 1.25%
Administrative Charge .15%
Total Separate Account Annual Expenses 1.40%
(1) The Maximum Contingent Deferred Sales Charge decreases each year
so there is no charge after 6 Contract Years. Each year, after the first year,
10% of total premiums may be withdrawn without a Contingent Deferred
Sales Charge. The Contingent Deferred Sales Charge is based solely on
the Contract Year - additional premiums do not cause the Contingent
Deferred Sales Charge percentages to start over.
PORTFOLIO ANNUAL EXPENSES (1)(2)
(as a percentage of Portfolio average net assets)
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES(2)
VIP Money Market 0.21% 0.10% 0.31%
VIP High Income 0.59% 0.12% 0.71%
VIP Equity-Income (3) 0.50% 0.08% 0.58%
VIP Growth (3) 0.60% 0.09% 0.69%
VIP Overseas (3) 0.75% 0.17% 0.92%
VIP II Investment Grade Bond 0.44% 0.14% 0.58%
VIP II Asset Manager (3) 0.55% 0.10% 0.65%
VIP II Index 500 (4) 0.24% 0.04% 0.28%
VIP II Contrafund (3) 0.60% 0.11% 0.71%
VIP II Asset Manager: Growth (3) 0.60% 0.17% 0.77%
VIP III Balanced (3) 0.45% 0.16% 0.61%
VIP III Growth Opportunities (3) 0.60% 0.14% 0.74%
VIP III Growth & Income (4) 0.49% 0.21% 0.70%
American Century VP Capital Appreciation 1.00% 0.00% 1.00%
American Century VP Balanced 1.00% 0.00% 1.00%
American Century VP Value 1.00% 0.00% 1.00%
American Century VP International 1.50% 0.00% 1.50%
American Century VP Income & Growth (5) 1.00% 0.00% 1.00%
(1)(2) The fund data was provided by Fidelity Management & Research
Company and American Century Investment Management, Inc. Midland
has not independently verifiedguaranteed the accuracy of the Fund
datadate.
(2) With the exception of the American Century VP Income & Growth
Portfolio as described in (5), the annual expenses are based on actual
expenses for 1997.
(3) A portion of the brokerage commissions the fund paid was used to
reduce its expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby credits
realized as a result ofinterest earned on uninvested cash balances were
used to reduce custodian and transfer agent expenses. IncludingWithout
these reductions, total operating expenses would have been as follows: for
0.56% for VIP Equity-Income, 0.67% for VIP Growth, 0.92% for VIP
Overseas, 0.73% for VIP II Asset Manager, 0.71% for VIP II Contrafund,
0.85% for VIP II Asset Manager: Growth, 0.76% for VIP III Growth
Opportunities, and 0.71% for VIP III Balanced.
VIP Equity-Income 0.57%
VIP Growth 0.67%
VIP Overseas 0.90%
VIP II Asset Manager 0.64%
VIP II Contrafund 0.68%
VIP II Asset Manager: Growth 0.76%
VIP III Balanced 0.60%
VIP III Growth Opportunities 0.73%
(4) The fund's expenses were voluntarily reduced by the Fund's investment
advisor. Absent reimbursement, the management fee, other expenses, and
total expenses for the VIP II Index 500 would have been 0.27%, 0.13% %.
and0.50%, 195.78% and 196.29% for VIP III Growth & Income.
(5) The American Century VP Income & Growth Portfolio was
established on 10/30/1997. The annual expenses shown are estimated 1998
expenses as provided to Midland by American Century Investment
Management, Inc.
EXAMPLES
If You surrender or annuitize Your Contract at the end of the applicable
time period, You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
VIP Money Market 89 108 129 215
VIP High Income 93 120 149 256
VIP Equity-Income (3) 91 115 142 242
VIP Growth (3) 92 119 147 252
VIP Overseas 95 125 159 276
VIP II Investment Grade Bond 91 116 143 243
VIP II Asset Manager (3) 92 118 146 249
VIP II Index 500 (4) 88 107 127 212
VIP II Contrafund (3) 92 119 148 253
VIP II Asset Manager: Growth (3) 93 121 152 262
VIP III Balanced (3) 92 116 144 245
VIP III Growth Opportunities (3) 93 120 150 258
VIP III Growth & Income (4) 93 119 149 255
American Century VP Capital Appreciation 96 128 164 286
American Century VP Balanced 96 128 164 286
American Century VP Value 96 128 164 286
American Century VP International 100 143 189 334
American Century VP Income & Growth (5) 96 128 164 286
If You annuitize at the end of the applicable time period, You would pay
the following expenses on a $1,000 investment, assuming 5% annual
return on Your assets.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
VIP Money Market $89 $108 $130 $217
VIP High Income 93 121 151 260
VIP Equity-Income (3) 92 117 144 246
VIP Growth (3) 93 120 150 257
VIP Overseas 95 127 162 282
VIP II Investment Grade Bond 92 117 144 246
VIP II Asset Manager (3) 93 122 153 263
VIP II Index 500 (4) 89 108 129 215
VIP II Contrafund (3) 93 122 153 263
VIP II Asset Manager: Growth (3) 95 125 159 276
VIP III Balanced (3) 93 121 152 261
VIP III Growth Opportunities (3) 94 122 154 266
VIP III Growth & Income (4) 96 129 166 289
American Century VP Capital Appreciation 96 129 166 289
American Century VP Balanced 96 129 165 288
American Century VP Value 96 129 166 289
American Century VP International 101 144 190 336
If You do not surrender Your Contract, You would pay the following
expenses on a $1,000 investment, assuming 5% annual return on Your
assets:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
VIP Money Market 19 58 99 215
VIP High Income 23 70 119 256
VIP Equity-Income (3) 21 65 112 242
VIP Growth (3) 22 69 117 252
VIP Overseas (3) 25 75 129 276
VIP II Investment Grade Bond 21 66 113 243
VIP II Asset Manager (3) 22 68 116 249
VIP II Index 500 (4) 18 57 97 212
VIP II Contrafund (3) 22 69 118 253
VIP II Asset Manager: Growth (3) 23 71 122 262
VIP III Balanced (3) 22 66 114 245
VIP III Growth Opportunities (3) 23 70 120 258
VIP III Growth & Income (4) 23 69 119 255
American Century VP Capital Appreciation 26 78 134 286
American Century VP Balanced 26 78 134 286
American Century VP Value 26 78 134 286
American Century VP International 30 93 159 334
American Century VP Income & Growth (5) 26 78 134 286
WITH THE EXCEPTION OF THE AMERICAN CENTURY VP
INCOME & GROWTH PORTFOLIO, THE EXAMPLES ARE BASED
ON ACTUAL EXPENSES FOR 1997. ACTUAL EXPENSES ARE
SHOWN ON PAGE 4 UNDER PORTFOLIO ANNUAL EXPENSES
AND ARE NET OF ANY FEE WAIVERS OR EXPENSE
REIMBURSEMENTS. THE EXPENSES FOR THE AMERICAN
CENTURY VP INCOME & GROWTH PORTFOLIO ARE BASED ON
ESTIMATED 1998 EXPENSES AS PROVIDED TO MIDLAND BY
AMERICAN CENTURY MANAGEMENT, INC.
THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL; PAST
OR FUTURE ANNUAL RETURNS MAY BE GREATER OR LESSER
THAN THE ASSUMED AMOUNT. THESE EXAMPLES REFLECT
THE $33 CONTRACT MAINTENANCE CHARGE AS AN ANNUAL
CHARGE OF 0.13% 0.15% OF ASSETS BASED ON AN AVERAGE
CONTRACT VALUE OF $27,000$22,000.
SUMMARY
In this prospectus "We", "Our", and "Us" mean Midland National Life
Insurance Company.
"You" and "Your" mean the Owner of the Contract. We refer to the person
who is covered by the Contract as the "Annuitant", because the Annuitant
and the Owner may not be the same.
The following summary is qualified in its entirety by the detailed
information appearing later in this prospectus and this summary must be
read in conjunction with that detailed information. Unless otherwise
indicated, the description of the Contract in this prospectus assumes that
the Contract is In Force.
Features of the Variable Annuity
Your Contract Value - Your Contract Value is established after We receive
Your first premium payment.
Your Contract Value reflects the amount and frequency of premium
payments, the investment experience of amounts allocated to Our Separate
Account, interest earned on amounts allocated to the General Account,
withdrawals, and deduction of the Separate Account and Contract
Charges. You bear the investment risk under the Variable Annuity as Your
Contract Value will vary according to the investment experience of the
Investment Divisions of Our Separate Account You have selected. There
is no minimum guaranteed Contract Value with respect to any amounts
allocated to the Separate Account. (See Your Contract Value on page 15.)
Flexible Premium Payments You may pay premiums whenever You want
(prior to the Maturity Date), in whatever amount You want, within certain
limits. We require an initial minimum premium of at least $2,000 and
ongoing premium payments of at least $50. We currently waive the initial
minimum premium requirement of $2,000 for Qualified Contracts enrolled
in a bank draft investment program or payroll deduction plan if the
monthly premium is at least $100.
You will also choose a planned periodic premium. You need not pay
premiums of any set amount or according to the planned schedule.
Investment Choices of the Variable Annuity
You may allocate amounts in Your Contract Value to either Our General
Account, which pays interest at a declared rate, or up to ten of the
Investment Divisions of Our Separate Account. Each of these Investment
Divisions invests in shares of a corresponding portfolio of Fidelity's
Variable Insurance Products Fund, Fidelity's Variable Insurance Products
Fund II, Fidelity's Variable Insurance Products Fund III, or the American
Century Variable Portfolios, Inc. "series" type mutual funds. The
portfolios have different investment objectives. Fidelity Management &
Research Company receives fees from the VIP, VIP II and VIP III
portfolios for providing investment management services and American
Century Investment Management, Inc. receives fees from the American
Century Variable Portfolios for providing investment management
services. These fees are taken monthly in proportion to the average daily
net assets of each portfolio throughout the month.
For a full description of the Funds, see the Funds' prospectuses, which
accompany this prospectus. (See The Funds on page 10.) The current
Investment Divisions which invest in Portfolios of Fidelity's Variable
Insurance Products Fund are:
Money Market Portfolio
High Income Portfolio
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
The current Investment Divisions which invest in Portfolios of Fidelity's
Variable Insurance Products Fund II are:
Asset Manager Portfolio
Investment Grade Bond Portfolio
Index 500 Portfolio
Contrafund Portfolio
Asset Manager: Growth Portfolio
The current Investment Divisions which invest in Portfolios of Fidelity's
Variable Insurance Products Fund III are:
Growth & Income Portfolio
Balanced Portfolio
Growth Opportunities Portfolio
The current Investment Divisions which invest in Portfolios of the
American Century Variable Portfolios, Inc. are:
Capital Appreciation Portfolio
Value Portfolio
Balanced Portfolio
International Portfolio
Income & Growth
Each portfolio charges a different investment advisory fee.The VIP, VIP
II, and VIP III Funds also charge an amount for other operating expenses.
The total expenses for the year ending December 31, 19971996 are shown
on page 4 under the table of Portfolio Annual Expenses.
See Investment Policies Of The Funds' Portfolios on page 11, Charges In
The Funds on page 16, and The General Account on page 16.
Withdrawals
Unless restricted by a retirement arrangement in connection with which
You have purchased a Contract, You may withdraw all or part of Your
Cash Surrender Value at any time. A Contingent Deferred Sales Charge
may be imposed on the withdrawal. The amount You request plus any
deferred sales charge, and, upon full withdrawal, plus the Contract
Maintenance Charge will be deducted from Your Contract Value. You
may withdraw this amount in a lump sum or use it to purchase an annuity
that will continue as long as You live or for some other period You select.
A withdrawal may also have tax consequences including a 10% tax
penalty on certain withdrawals prior to age 59 1/2. After three years from
the Contract Date, the deferred sales charge, if any, will be waived upon
the withdrawal of funds to effect a life annuity. (See Sales Charges on
Withdrawals on page 15, FEDERAL TAX STATUS on page 17, and
EFFECTING AN ANNUITY on page 20.) Withdrawals from Contracts
used in connection with tax-qualified retirement plans may be restricted or
penalized by the terms of the plan or applicable law.
Charges under the Contracts. The charges made by Midland are intended
to compensate Us for paying the various categories of expenses and taxes
incurred in maintaining and operating the Contracts and Separate Account
and for assuming mortality and expense risks under the Contracts. These
charges consist of a $33 annual Contract Maintenance Charge and a daily
charge at an effective annual rate of 1.40% of the assets held in the
Investment Divisions. For more information regarding these charges, see
CHARGES, FEES AND DEDUCTIONS on page 15.
A Contingent Deferred Sales Charge is imposed to reimburse Midland for
distribution expenses, such as commissions paid to sales personnel, costs
of advertising and sales promotions, prospectus costs, and costs of policy
administration. Many mutual funds, other than no-load funds, make this
charge by deducting a percentage of the investor's payment and investing
only the remainder. Under the Contracts described in this prospectus, no
sales charge is taken out when Your premium is invested in the Investment
Divisions designated by You or in the General Account if so directed. In
any Contract Year, after the first Contract Year, You may make a
withdrawal of 10% of the sum of premiums paid without charge. A
Contingent Deferred Sales Charge may be deducted on all other
withdrawals (including withdrawals to effect an annuity). The charge is
7% of the amount of the premiums withdrawn in the first Contract Year
and thereafter the charge decreases. (See Sales Charges on Withdrawals on
page 15.) Withdrawals made seven or more Contract Years after the
Contract Date are subject to no Contingent Deferred Sales Charge at all.
Withdrawals may be subject to tax consequences under the Internal
Revenue Code. (See Withdrawals on page 14 and FEDERAL TAX
STATUS on page 17.)
Using Your Contract Value
Transfers On or before the Maturity Date, You may transfer amounts in
Your Contract Value between the General Account and Investment
Divisions of the Separate Account and among the Investment Divisions of
the Separate Account. Transfers take effect on the date We receive Your
request. We also require minimum amounts for each transfer, usually
$200. Currently, We do not charge You for making transfers.if You make
more than fifteen transfers a year, an administrative charge may be
deducted from Your Contract Value ($25 for each additional transfer). We
reserve the right to assess a $25 Administrative Chargethis charge after the
fifteenthfourth transfer in a Contract Year. There are other limitations on
transfers to and from the General Account.
Additional Information About Variable Annuities
Your Right To Examine This Contract - You have a right to examine the
Contract and, if You wish, return it to Us. Your request must be
postmarked no later than 10 days after You receive Your Contract. During
the Free Look Period, Your premium will be allocated to the VIP Money
Market Investment Division. (See Free Look on page 13.)
<PAGE>
CONDENSED FINANCIAL INFORMATION
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation
Investment at Beginning at End Units at End
Division of Period of Period of Period
VIP Money Market
1993(1) 10.00 10.02 3,675
1994 10.02 10.31 207,115
1995 10.31 10.76 320,841
1996 10.76 11.18 450,641
1997 11.18 11.63 534,936
VIP High Income
1993(1) 10.00 10.22 2.68
1994 10.22 9.93 70,977
1995 9.93 11.83 139,335
1996 11.83 13.26 221.760
1997 13.26 13.58 304,930
VIP Equity-Income
1993(1) 10.00 10.16 2,861
1994 10.16 10.71 163,874
1995 10.71 14.35 385,807
1996 14.35 16.09 696.083
1997 16.09 20.33 929,862
VIP Growth
1993(1) 10.00 10.09 2,539
1994 10.09 9.80 160,540
1995 9.80 13.32 347,738
1996 13.32 15.01 700,985
1997 15.01 18.28 917,650
VIP Overseas
1993(1) 10.00 10.40 1,706
1994 10.40 10.37 147,456
1995 10.37 11.36 217,322
1996 11.36 12.59 282,107
1997 12.59 13.85 336,988
VIP II Asset Manager
1993(1) 10.00 10.48 11,474
1994 10.48 9.67 280,056
1995 9.67 11.22 362,467
1996 11.22 12.65 447,842
1997 12.65 15.05 534,109
VIP II Investment
Grade Bond
1993(1) 10.00 10.06 124
1994 10.06 9.52 31,444
1995 9.52 11.03 52,431
1996 11.03 11.22 97,711
1997 11.22 12.06 136,067
VIP II Index 500
1993(1) 10.00 10.15 22
1994 10.15 10.11 32,675
1995 10.11 13.79 71,305
1996 13.79 16.57 256,789
1997 16.57 21.67 497,774
VIP II Asset Manager: Growth
1995(2) 10.00 11.48 13,682
1996 11.48 13.56 71,781
1997 13.56 16.92 176,790
VIP II Contrafund
1995(2) 10.00 11.84 35,906
1996 11.84 14.17 187,702
1997 14.17 17.34 397,591
VIP III Balanced
1997(3) 10.00 11.45 39,701
VIP III Growth Opportunities
1997(3) 10.00 12.28 75,926
VIP III Growth & Income
1997(3) 10.00 12.36 54,877
American Century VP
Capital Appreciation
1997(3) 10.00 11.35 13,870
American Century VP
Balanced(3) 10.00 11.40 13,519
American Century VP
Value
1997(3) 10.00 12.26 44,666
American Century VP
International
1997(3) 10.00 10.93 34,973
(1)Period from 10/24/93 to 12/31/93
(2) Period From 5/1/95 to 12/31/95
(3)Period from 5/1/97 to 12/31/97
The American Century VP Income and Growth Investment Division
became available on May 1, 1998, and thus had no financial information
to report at 12/31/1997.
The following Investment Divisions were not available in 1996 and thus
have no financial information to report as of 12/31/96: VIP III Growth &
Income, VIP III Balanced, VIP III Growth Opportunities, American
Century VP Capital Appreciation, American Century VP Value Portfolio,
American Century VP Balanced and American Century VP International.
GENERAL INFORMATION ABOUT
MIDLAND, SEPARATE ACCOUNT C
AND THE FUNDS
The Company That Issues Variable Annuities
Midland National Life Insurance Company
We are Midland National Life Insurance Company, a stock life insurance
company. Midland was organized in 1906 in South Dakota as a mutual life
insurance company at that time named "The Dakota Mutual Life Insurance
Company". We were reincorporated as a stock life insurance company in
1909. Our name "Midland" was adopted in 1925. We are licensed to do
business in 49 states, the District of Columbia, and Puerto Rico.
Our Parent
Midland is a subsidiary of Sammons Enterprises, Inc., Dallas, Texas.
Sammons has controlling or substantial stock interests in a large number
of other companies engaged in the areas of insurance, corporate services,
and industrial distribution.
Separate Account Investment Choices
Premiums may be allocated to up to ten of the Investment Divisions of
Our Separate Account or to Our General Account according to the
directions You provided on Your application. In certain states, allocations
to and transfers to and from the General Account are not permitted. These
instructions will apply to any subsequent premiums You pay that do not
include instructions as to how the premium is to be allocated until You
write to Our Home Office with new instructions. Allocation percentages
may be any whole number from 10 to 100, and the sum must equal 100.
You may choose not to allocate any premium to any particular Investment
Division. You may not have your Contract ValueFund allocated to more
than ten Investment Divisions of Our Separate Account at any one point in
time. (See, The General Account on page 16.)
Our Separate Account And Its Investment Divisions
The Separate Account is Our Separate Account C, established under the
Insurance Laws of the State of South Dakota in March, 1991, and is a unit
investment trust registered with the Securities and Exchange Commission
(SEC) under the Investment Company Act of 1940. This registration does
not involve any supervision by the SEC of the management or investment
contracts of the Separate Account. A unit investment trust is a type of
investment company. The Separate Account has a number of Investment
Divisions, each of which invests in shares of a corresponding portfolio of
the Funds. You may allocate part or all of Your premiums to no more than
ten of the eighteenseventeen Investment Divisions of Our Separate
Account. Our Separate Account divisions invest in the VIP Money Market
Portfolio, the VIP High Income Portfolio, the VIP Equity-Income
Portfolio, the VIP Growth Portfolio, the VIP II Asset Manager Portfolio,
the VIP Overseas Portfolio, the VIP II Investment Grade Bond Portfolio,
the VIP II Contrafund Portfolio, the VIP II Asset Manager: Growth
Portfolio, the VIP II Index 500 Portfolio, the VIP III Growth & Income
Portfolio, the VIP III Balanced Portfolio, the VIP III Growth
Opportunities Portfolio, the American Century VP Capital Appreciation
Portfolio, the American Century VP Value Portfolio, the American
Century VP Balanced Portfolio, and the American Century VP
International Portfolio.
VIP Money Market Portfolio
VIP High Income Portfolio
VIP Equity-Income Portfolio
VIP Growth Portfolio
VIP Overseas Portfolio
VIP II Asset Manager Portfolio
VIP II Investment Grade Bond Portfolio
VIP II Contrafund Portfolio
VIP II Asset Manager: Growth Portfolio
VIP II Index 500 Portfolio
VIP III Growth & Income Portfolio
VIP III Balanced Portfolio
VIP III Growth Opportunities Portfolio
American Century VP Capital Appreciation Portfolio
American Century VP Value Portfolio
American Century VP Balanced Portfolio
American Century VP International Portfolio
American Century VP Income & Growth Portfolio
The Funds
Fidelity's Variable Insurance Products Fund, Fidelity's Variable Insurance
Products Fund II, Fidelity's Variable Insurance Products Fund III, and the
American Century Variable Portfolios, Inc. are open-end diversified
management investment companies, more commonly called mutual funds.
As a "series" type of mutual funds, they issue several different "series" of
portfolios. The Funds' shares are bought and sold by Our Separate
Account at net asset value. More detailed information about the Funds and
their investment policies, risks, expenses and all other aspects of their
operations, appears in their prospectuses, which accompany this
prospectus, and in the Funds' Statements of Additional Information. You
should read the Funds' prospectus carefully before allocating or
transferring money to any Fund.
The Funds sell their shares to separate accounts of various insurance
companies to support both variable life insurance contracts and variable
annuity contracts. We currently do not foresee any disadvantages to Our
Contract Owners arising out of this. If We believe that the Funds do not
sufficiently respond to protect Our Contract Owner's interests, We will see
to it that appropriate action is taken to protect Our Contract Owners. The
Funds will also monitor this possibility. Also, if We ever believe that any
of the Funds' Portfolios are so large as to materially impair its investment
performance of a Portfolio or the Fund, We will examine other investment
options.
Investment Policies Of The Funds' Portfolios
Each portfolio has a different investment objective which it tries to
achieve by following separate investment policies. The objectives and
policies of each portfolio will affect its return and its risks. Remember that
the investment experience of the Investment Divisions of Our Separate
Account depends on the performance of the corresponding Funds'
portfolios. The investment advisor for the VIP I, VIP II, and VIP III funds
is Fidelity Management & Research Company. The investment advisor for
the American Century VP funds is American Century Investment
Management, Inc. The objectives of the Funds' portfolios are as follows:
Portfolio
Objective
VIP Money Market
Seeks to earn aobtain as high a level of current income by investing in
high quality money market instruments as is consistent with preserving
capital and providing liquidity. (An investment in the VIP Money Market
or any other Portfolio is neither insured nor guaranteed by the U.S.
Government, and there is no assurance that the Money Market Portfolio
will be able to maintain a constant net asset value.)
VIP High Income
Seeks to obtain a high level of current income by investing primarily in
high-yielding, lower-rated, fixed-income securities, while also considering
growth of capital.
VIP Equity-Income
Seeks to obtain reasonable income by investing primarily in income-
producing equity securities. In choosing these securities, the Manager will
consider the potential for capital appreciation. The Fund seeksPortfolio's
goal is to achieve a yield thatwhich exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500
Stocks.
VIP Growth
Seeks to achieve capital appreciation by investing in common stocks,
normally through the purchase of common stocks, although the Portfolio's
investments are not restricted to any one type of security. Capital
appreciation also may be found in other types of securities, including
bonds and preferred stocks.
VIP Overseas
Seeks long-term growth of capital, primarily through investments in
foreign securities.
VIP II Asset Manager
Seeks high total return with reduced risk over the long-term by allocating
its assets among stocks, bonds and short-term fixed- income instruments.
VIP II Investment Grade Bond
Seeks as high a level of current income as is consistent with the
preservation of capital by investing in a broad range of investment grade
fixed income securities.
VIP II Contrafund
Seeks to achieve capital appreciation over the long term by investing in
securities of companies that are undervalued or out-of-favor.
VIP II Asset Manager: Growth
Seeks to maximize total return over the long term through investments in
stocks, bonds, and short-term instruments. This portfolio has a heavier
emphasis on stocks than the Asset Manager Portfolio.
VIP II Index 500
Seeks to provide investment results that correspond to the total return of
common stocks publicly traded in the United States by duplicating the
composition and total return of Standard & Poor's Composite Index of 500
Stocks. This is designed as a long-term investment option.
VIP III Growth & Income
Seeks high total return, combining current income and capital
appreciation. Invests mainly in stocks that pay current dividends and show
earnings potential.
VIP III Balanced
Seeks to balance the growth potential of stocks with the possible income
cushion of bonds. Invests in broad selection of stocks, bonds and
convertible securities.
VIP III Growth Opportunities
Seeks long-term growth of capital. Invests primarily in common stocks
and securities convertible into common stocks, but it has the ability to
purchase other securities such as preferred stocks and bonds that may
produce capital growth.adjusts its mix between growth, value, cyclical and
other securities to take advantage of attractive valuations.
American Century VP Capital Appreciation
Seeks capital growth by investing in common stocks that management
considers to have better-than-average prospects for appreciation.
American Century VP Value
Seeks long-term capital growth with income as a secondary objective.
Invests primarily in equity securities of well-established companies that
management believes to be under-valued.
American Century VP Balanced
Seeks capital growth and current income. Invests approximately 60
percent of its assets in growth stocks and the rest in fixed income
securities.
American Century VP International
Seeks capital growth by investing in securities of foreign companies that
management believes to have potential for appreciation.
American Century VP Income & Growth
Seeks dividend growth, current income and capital appreciation by
investing in common stocks.
We Own The Assets Of Our Separate Account
Under South Dakota law, We own the assets of Our Separate Account and
use them only to support Your Contract and other Variable Annuity
Contracts. The assets of the Separate Account may not be charged with
liabilities arising out of Midland's other business and the obligations under
the Contracts are obligations of Midland. The income, gains and losses
(realized and unrealized) of the Separate Account are credited to or
charged against the Separate Account without regard to other income,
gains, or losses of Midland. Under certain unlikely circumstances, one
Investment Division of the Separate Account may be liable for claims
relating to the operations of another division. We may also permit charges
owed to Us to stay in the Separate Account. Thus, We may also participate
proportionately in the Separate Account. These accumulated amounts
belong to Us and We may transfer them from the Separate Account to Our
General Account.
Our Right To Change How We Operate Our Separate Account
In addition to changing or adding investment companies, We have the
right to modify how We or Our Separate Account operate. We intend to
comply with applicable law in making any changes and, if necessary, We
will seek approval of Contract Owners. We have the right to:
add Investment Divisions to, or remove Investment Divisions from Our
Separate Account, combine two or more divisions within Our Separate
Account, or withdraw assets relating to Our Variable Annuities from one
Investment Division and put them into another;
eliminate the shares of the portfolio and substitute shares of another
portfolio of the Funds or another open-end, registered investment
company, if the shares of the portfolio are no longer available for
investment or, if in Our judgment, further investment in the portfolio
should become inappropriate in view of the purposes of Separate Account
C;
register or end the registration of Our Separate Account under the
Investment Company Act of 1940;
operate Our Separate Account under the direction of a committee or
discharge such a committee at any time (the committee may be composed
entirely of persons who are "interested persons" of Midland under the
Investment Company Act of 1940);
disregard instructions from Owners that would otherwise require that a
Fund's shares be voted so as to cause a change in the investment objectives
of the portfolio of a Fund or approval or disapproval of an investment
advisory policy for the portfolio of a Fund. We would do so only if
required by state insurance regulatory authorities pursuant to insurance
law or regulation; or
operate Our Separate Account or one or more of the Investment Divisions
in any other form the law allows, including a form that allows Us to make
direct investments. We may make any legal investments We wish. In
choosing these investments, We will rely on Our own or outside counsel
for advice. In addition, We may disapprove any change in investment
advisers or in investment policy unless a law or regulation provides
differently.
If any changes are made that result in a material change in the underlying
investments of any Investment Division, You will be notified. We may,
for example, cause the Investment Division to invest in a mutual fund
other than or in addition to the current Funds.
If You then wish to transfer the amount You have in that Investment
Division to another division of Our Separate Account, or to Our General
Account, You may do so, without charge, by writing to Our Home Office.
At the same time, You may also change how Your premiums are allocated.
DETAILED INFORMATION ABOUT
THE CONTRACT
Requirements for Issuance of a Contract
To buy a Contract, You must complete an application form and send it,
together with Your initial premium payment of at least $2,000 (except for
Qualified Contracts enrolled in a bank draft investment program or payroll
deduction plan if the monthly premium is at least $100) to Midland
through a representative who is fully licensed and registered to sell the
Contract. You will then be issued a Contract that sets forth precisely Your
rights and Our obligations. Once Your Contract is issued, additional
premium payments may be made by check or money order payable to the
order of Midland and mailed to the Home Office. Any additional premium
payment must be at least $50.
If We receive and accept Your completed application for a Contract with
or before Your initial premium payment, We will, as of the day We
receive Your premium, invest the entire amount in the Money Market
Investment Division . If the application is complete, We will accept or
reject it within two business days of receipt. If the application is
incomplete, We will attempt to complete it within five business days. If it
is not complete at the end of this period, We will inform You of the reason
for the delay and the premium payment will be returned immediately,
unless You specifically consent to Us keeping the premium payment until
the application is complete. Each premium received after the Free Look
period will be allocated to Our Separate Account or General Account on
the day We receive Your premium.
Free Look
You have a 10-day "free look" period after You receive Your Contract to
review it and decide whether You wish to retain it. If You wish to cancel
the Contract, You may return it to the agent who sold it to You or to Our
office. If You return Your Contract, We will return the greater of: (1) the
premium paid; or (2) the Contract Value plus the sum of all charges
deducted from the Contract Value.
During the Free Look Period, Your premium will be allocated to the VIP
Money Market Investment Division. At the end of the Free Look Period
(which is administratively assumed to be 15 days after the Contract Date
for reallocation purposes), Your Contract Value will then be allocated
according to the instructions in Your application. (See Allocation of
Premiums below.)
In order to comply with regulations and legal requirements, in certain
states the length of the Free Look Period may vary.
Allocation of Premiums
The Owner determines how the premiums will be allocated among the
Investment Divisions, and between the Separate Account and the General
Account, by specifying the desired allocation on the application form of
the Contract. After the Feee Look Period, You may change subsequent
premium allocations by providing Us with written instructions. If You
send Us an additional premium payment without instructions about how
the premium should be allocated, We will allocate the premium using the
premium allocations specified in the application form or subsequently
changed by You. You may not have Your Contract ValueFund allocated to
more than ten investment divisions of Our Separate Account at any point
in time.
Transfers of Contract Value
Currently, on or before the Maturity Date, You may make an unlimited
number ofup to fifteen transfers of Contract Value in each Contract Year
without charge. We charge $25 for each additional transfer in a single
Contract Year. We reserve the right to assess a $25this charge after the
fifteenthfourth transfer in a Contract Year. During the first two Contract
Years, if a transfer is all of Your Contract Value in Our Separate Account
to the General Account, We will not make a charge for that transfer. To
make a transfer, write to Our Home Office.
You may ask Us to transfer amounts between the General Account and
any Investment Divisions of Our Separate Account and among Investment
Divisions of Our Separate Account by writing to Us at Our Home Office.
The transfer will take effect as of the date We receive Your request. The
minimum amount We will transfer on any date is $200. A smaller transfer
may be made under special circumstances mentioned in Our Right To
Change How We Operate Our Separate Account on page 12. This
minimum need not come from any one Investment Division or be
transferred to any one Investment Division as long as the total net amount
transferred that day equals the minimum.
For limitations on transfers to and from the General Account, see The
General Account on page 16.
Dollar Cost Averaging
The Dollar Cost Averaging (DCA) program enables You to make monthly
transfers of a predetermined dollar amount from the DCA Source Account
(any one Investment Division or the General Account)VIP Money Market
Investment Division into one or more of the other Investment Divisions
(not the General Account). By allocating monthly, as opposed to
allocating the total amount at one time, You may reduce the impact of
market fluctuations. This plan of investing, however, does not assure a
profit or protect against a loss in declining markets.
DCA can be elected at any time by completion of the Proper Request
Forms (obtained by contacting Us at the Home Office)the DCA Request
Form (form number 5653) and by insuring that a sufficient amount is in
DCA Source Accountthe VIP Money Market Investment Division, either
through payment of a premium with the DCA request form, allocation of
premiums, or transfer of amounts to the DCA Source AccountVIP Money
Market Investment Division. Copies of the DCA Request Formform 5653
can be obtained by contacting Us at Our Home Office. The election will
specify:
that any money received with the form is to be placed into the The DCA
Source Account. The DCA Source Account is the account from which
DCA transfers will be made.VIP Money Market Investment Division
That any money received with the form is to be placed into the DCA
Source Account.
The monthly amount to be transferred to the other Investment Divisions,
and
How that monthly amount is to be allocated among the Investment
Divisions
Since the DCA program is only suitable for substantial, infrequent
premium payments, DCA is only available when the premium payment
mode is annual or if the amount in the DCA Source AccountVIP Money
Market Investment Division is at least $2,400 at the time DCA is to begin.
The DCA Request Form must be received with any premium payment
You intend to apply to DCA.
The minimum monthly amount to be transferred using DCA is $200. In
order to begin the DCA program, the value in the VIP Money Market
Investment Division must be equal to at least 12 monthly transfers. When
DCA is elected, all amounts in the DCA Source AccountVIP Money
Market Investment Division will be available for transfer under the DCA
program. Once DCA is elected, additional premiums can be deposited into
the DCA Source Accountthe VIP Money Market Investment Division for
DCA by sending them in with a DCA request form.
You may change the DCA allocation percentages or DCA transfer
amounts twice each Contract Year. Any premium payments received while
the DCA program is in effect will be allocated using the allocation
percentages from the DCA request form, unless You specify otherwise.
If requested at issue, DCA will start at the beginning of the second
Contract Month. If requested after issue, DCA will start at the beginning
of the first Contract Month which occurs at least 30 days from the day the
request is received.
Transfers under the DCA program will count toward the number of free
transfers allowed each Contract Year.
DCA will last until the value in the DCA Source AccountVIP Money
Market Investment Division is exhausted or until a request for termination
is received in writing from You. DCA will automatically be terminated on
the Maturity Date.
We reserve the right to end the DCA program at any time by sending You
a notice one month in advance.
Withdrawals
Unless restricted by a retirement arrangement under which You are
covered, You may at any time withdraw all or part of Your Cash Surrender
Value by sending Us Your request in writing. Partial withdrawals from an
Investment Division or the General Account, however, must be made in
amounts of $500 or more and cannot reduce Your Contract Value to less
than $1,000. If a withdrawal results in less than $1,000 remaining, the
entire Contract Value must be withdrawn.
We will generally pay the amount of any withdrawal from the Separate
Account, less any applicable sales charge and any required tax
withholding, and upon full withdrawal, less the Contract Maintenance
Charge, within seven days after We receive a properly completed
withdrawal request. We may defer payment for a longer period only when
trading on the New York Stock Exchange is restricted as defined by the
Securities and Exchange Commission; when the New York Stock
Exchange is closed (other than customary weekend and holiday closing);
when an emergency exists as defined by the Securities and Exchange
Commission as a result of which disposal of the Separate Account's
securities or determination of the net asset value of each Investment
Division is not reasonably practicable; or for such other periods as the
Securities and Exchange Commission may by order permit for the
protection of Owners. We expect to pay the amount of any withdrawal
from the General Account promptly, but have the right to delay payment
up to six months.
Unless You specify otherwise, Your withdrawal will, subject to minimum
amount requirements, be allocated among all Investment Divisions and the
General Account in the same proportion as the value of Your interest in
each Investment Division and in the General Account bears to Your total
Contract Value. The Contingent Deferred Sales Charge will be determined
without reference to the source of the withdrawal. The charge will be
determined by reference to the Contract Year at the time of the
withdrawal.
A withdrawal will generally have federal income tax consequences, which
can include tax penalties and tax withholding. You should consult with tax
advisers before making a withdrawal. (See FEDERAL TAX STATUS on
page 17.)
Under certain types of retirement arrangements, the Retirement Equity Act
of 1984 provides that, in the case of a married Participant, a withdrawal
request must include the consent of the Participant's spouse. This consent
must contain the Participant's signature and the notarized or properly
witnessed signature of the Participant's spouse. These new spousal consent
requirements generally were effective beginning January 1, 1985 and
apply to married Participants in most qualified pension plans, including
plans for self-employed individuals, and those Section 403(b) annuities
which are considered employee pension benefit plans under the Employee
Retirement Income Security Act of 1974 (ERISA). You should check the
terms of Your retirement plan and consult a tax advisor before making a
withdrawal.
Participants in the Texas Optional Retirement Program may not receive
the proceeds of a withdrawal from a Contract or apply them to start an
annuity prior to retirement except in the case of termination of
employment in the Texas public institutions of higher education, death, or
total disability. Such proceeds may, however, be used to fund another
eligible vehicle.
Withdrawals from Section 403(b) plans are also severely restricted. (See
FEDERAL TAX STATUS on page 17.)
Loans
Prior to the Maturity Date, owners of contracts issued in connection with
Section 403(b) or Section 401(k) qualified plans may request a loan using
the Contract as security for the loan. Loans are subject to provisions of the
Code and the terms of the retirement program. A tax advisor should be
consulted prior to requesting a loan.
The amount of the loan must be at least $2,000 and must not exceed the
Contract Value less any applicable Contingent Deferred Sales Charge, less
any outstanding prior loans, less loan interest to the end of the next
Contract Year. Only one loan can be made within a 12 month period.
When a loan is requested, You may tell Us how much of the loan is to be
allocated to Your unloaned value in the General Account and to Your
value in each Investment Division of the Separate Account. If You fail to
specify, the loan will be allocated among all Investment Divisions and the
General Account in the same proportion as the value of Your interest in
each Investment Division and the General Account bears to Your total
Contract Value. We will redeem units from an Investment Division
sufficient to cover that part of the loan. That portion of the Contract Value
which is equal to the loan will be held in the General Account and will
earn interest at a rate of 3% per year.
We will charge interest on loans at the rate of 5% per year. Loan interest is
due and payable on each Contract Anniversary. Interest not paid will be
added to the loan and also bear interest. If the total loan plus loan interest
equals or exceeds the Contract Value, less any applicable Contingent
Deferred Sales Charge, less any applicable withholding taxes, the Contract
will terminate with no further value. In such case, We will give You at
least 31 days written notice.
The total loan plus loan interest will be deducted from any amount applied
under a payment option or otherwise payable under the Contract.
The loan agreement will describe the amount, duration, and restrictions on
the loan. In general, loans must be repaid in monthly or quarterly
installments within 5 years. You are allowed a 30-day grace from the
installment due date. If a quarterly installment is not received within the
grace period, a deemed distribution of the entire amount of the outstanding
principal, interest due, and any applicable charges under this Contract,
including any withdrawal charge, will be made. This deemed distribution
may be subject to income and penalty tax under the Code and may
adversely affect the treatment of the Contract under Internal Revenue
Code section 403(b).
You may be subject to income tax or penalty if the amount or duration of
the loan violates Internal Revenue Code requirements. In addition, IRS
authorities and the Department of Labor suggest that a loan may, at least
in certain circumstances, result in adverse tax and ERISA consequences
for Section 403(b) or Section 401(k) programs.
Requesting a loan will have a permanent affect on the contract value
because the investment results of the Investment Divisions will apply only
to the unborrowed portion of the Contract Value. The longer a loan is
outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the net investment results are greater than 3%
while the loan is outstanding, the Contract Value will not increase as
rapidly as it would have if no debt were outstanding. If net investment
results are below 3% the Contract Value will be higher than it would have
been had no loan been outstanding.
Death Benefit
If the Annuitant is an Owner and dies before the Maturity Date, then the
Death Benefit, other than amounts payable to or for the benefits of the
surviving spouse of the Annuitant as the Contingent Owner, must be paid
out within 5 years of the death of the Annuitant. The value of the Death
Benefit will be determined as of the date We receive due proof of death
and the election of how the Death Benefit is to be paid. The Death Benefit
will be the greater of i) the Contract Value and ii) the sum of all premiums
paid less any prior withdrawals. Unless a Payment Option is selected
within 90 days after We receive due proof of death, the Death Benefit will
be paid as a lump sum.
If the Annuitant is not an Owner and any Owner dies before the Maturity
Date, the Contract Value will be paid as of the date We receive due proof
of death and an election of how it is to be paid. If the surviving spouse has
not been named as the Contingent Owner, the Contract ends and the
Contract Value (not the Death Benefit) must be paid out within 5 years of
the death of the Owner. Unless another choice is made within 90 days, the
Contract Value will be paid in a lump sum. If the spouse is named as the
Contingent Owner, the Contract will continue with the spouse now being
the Owner.
If any Owner dies on or after the Maturity Date, then any amounts
remaining to be paid, other than amounts payable to or for the benefit of
the surviving spouse of the Owner, must be paid out at least as rapidly as
benefits were being paid at the time of the Owner's death.
Other rules relating to distributions at death apply to Qualified Contracts.
Your Contract Value
Your Contract Value is the sum of the amounts You have in the General
Account and in the various Investment Divisions of Our Separate Account.
Your Contract Value also reflects the various charges described below.
Transaction charges or sales charges are made as of the effective date of
the transaction. Charges against Our Separate Account are reflected daily.
The value of any amount allocated to an Investment Division of Our
Separate Account will go up or down depending on the investment
experience of that division. You bear this investment risk. For amounts
allocated to the Investment Divisions of Our Separate Account, there is no
guaranteed minimum value. However, We guarantee a minimum interest
rate of 3.0% a year on that portion of the Contract Value held under the
General Account. Excess interest on payments held under the General
Account may be credited in addition to the 3.0% guaranteed interest rate
(but there is no guarantee that any additional interest will ever be credited)
(see The General Account on page 16).
Amounts In Our Separate Account
Amounts allocated, transferred or added to the Investment Divisions of
Our Separate Account are used to purchase Accumulation Units. The
amount You have in each division is represented by the value of the
Accumulation Units credited to Your Contract Value for that division. The
number of Accumulation Units purchased or redeemed in an Investment
Division of Our Separate Account is calculated by dividing the dollar
amount of the transaction by the division's Accumulation Unit Value
calculated as of the close of business that day if that is a day on which the
New York Stock Exchange is open. If the New York Stock Exchange is
not open that day, the request will be processed on the next Business Day.
The number of Accumulation Units for an Investment Division at any time
is the number of Accumulation Units purchased less the number of
Accumulation Units redeemed. The value of Accumulation Units
fluctuates with the investment performance of the corresponding portfolios
of the Funds, which reflects the investment income and realized and
unrealized capital gains and losses of the portfolio and the expenses of the
Funds. The Accumulation Unit Values also reflect the daily asset charge
We make to Our Separate Account at an effective annual rate of 1.40%.
The number of Accumulation Units credited to You, however, will not
vary because of changes in Accumulation Unit Values. On any given day,
the value You have in an Investment Division of Our Separate Account is
the Accumulation Unit Value times the number of Accumulation Units
credited to You in that division. The Accumulation Units of each
Investment Division of Our Separate Account have different
Accumulation Unit Values.
Accumulation Units of an Investment Division are purchased when You
allocate premiums or transfer amounts to that division. Accumulation
Units are redeemed or sold when You make withdrawals or transfer
amounts from an Investment Division of the Separate Account and to pay
the Death Benefit when the Annuitant dies. We also redeem Accumulation
Units for other charges.
How We Determine The Accumulation Unit Value
We determine Accumulation Unit Values for the Investment Divisions of
Our Separate Account at the end of each Business Day. The Accumulation
Unit Value for each Investment Division was set at $10.00 on the first day
there were contract transactions in Our Separate Account.
Additional information on the Accumulation Unit Values is contained in
the Statement of Additional Information which can be obtained by writing
Our Home Office.
CHARGES, FEES AND DEDUCTIONS
Sales Charges on Withdrawals
A Contingent Deferred Sales Charge may be imposed on the withdrawal
of the premiums (including a withdrawal to effect an annuity). The charge
compensates Us for paying the expenses of selling and distributing the
Contacts, including commissions, preparation of sales literature, and other
promotional activities. To the extent that the deferred sales charge is
insufficient to recover all distribution expenses, the deficiency will be met
from Our surplus which may be, in part, derived from the charges for the
assumption of mortality and expense risks (described below). For the
purpose of determining the deferred sales charge, any amount that You
withdraw will be treated as being from premiums first, and then from
investment income. There is no sales charge on the investment income
withdrawn. The amount of any sales charge depends on the Contract Year
of the withdrawal. Your first Contract Year begins on the Contract Date. A
subsequent Contract Year begins on each anniversary of that date.
After the first Contract Year, You may make a withdrawal from Your
Contract Value of up to 10% of the sum of the premiums paid without
incurring a sales charge if the withdrawal is the first in the Contract Year.
This is only available on the first withdrawal in a Contract Year and
amounts not taken in a Contract Year are not carried over to the following
Contract Year. For the purpose of applying the sales charge, any premium
not subject to the sales charge will be withdrawn first.
The Table below shows the Contingent Deferred Sales Charge for each
Contract Year that will be applied to the premium withdrawn.
The Sales Charge
As A Percentage Of
Contract Year The Premium Withdrawn (a)
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and Beyond No Charge
(a) Subject to 10% free withdrawal described above.
After the Contract has been in force for three years, Midland will not
assess a Contingent Deferred Sales Charge if You make a full surrender
and use the proceeds to purchase a life income annuity option.
Your withdrawal request may specify the source from which the
withdrawal is to be made. If You fail to specify, Your withdrawal will,
subject to minimum amount requirements, be allocated among all
Investment Divisions and the General Account in the same proportion as
the value of Your interest in each Investment Division and in the General
Account bears to Your total Contract Value. The Contingent Deferred
Sales Charge will be determined without reference to the source of the
withdrawal. The charge will be determined by reference to the Contract
Year at the time of the withdrawal.
Charges Against The Separate Account
The amount in Your Contract Value which is allocated to the Investment
Divisions of Our Separate Account will be reduced by any fees and
charges allocated to the Investment Divisions of Our Separate Account.
Administrative Charge
We make a daily charge to cover Our administrative expenses incurred to
operate the Separate Account. The effective annual rate of this charge is
.15% of the value of the assets in the Separate Account. This charge is
reflected in the unit values for the Investment Divisions of the Separate
Account and cannot be increased.
Charge for Assuming Mortality and Expense Risks.
A deduction is made daily from each Investment Division at an annual
rate of 1.25% of the assets held in the Investment Division. This charge
may not be increased by Midland. This charge is not assessed against
amounts invested under the General Account or amounts effected as a
fixed dollar annuity. We expect a profit from this charge.
Contract Maintenance Charge
We will deduct a Contract Maintenance Charge of $33.00 on each
Contract Anniversary on or before the Maturity Date. This charge is
intended to cover Our recordkeeping and other expenses incurred to
maintain the Contracts. The charge is deducted from each Investment
Division and the General Account in the same proportion as the value of
Your interest in each Investment Division and in the General Account
bears to the total Contract Value. If the Contract is surrendered during a
Contract Year, We will deduct the full Contract Maintenance Charge for
the current Contract Year at that time.
We may reduce the Contract Maintenance Charge for contracts issued in a
manner that results in savings of administrative expenses. The amounts of
reductions will be considered on a case-by-case basis and will reflect the
reduced administrative expenses we expect.
Transfer Charge
Currently, before the Maturity Date, You may make an unlimited number
of transfers of Contract Fund in each Contract Yeaer without charge. if
You make more than fifteen transfers in any Contract Year We will charge
You a transfer fee of $25 for each additional transfer. There will be no
charge for the first fifteen transfers in any Contract Year. However, We
reserve the right to assess a charge of $25 after the fifteenth transfer in a
Contract Year. To make a transfer, contact Us at Our Home Office.this
charge after the fourth transfer in a Contract Year.
If We charge You for making a transfer, We will allocate the charge to the
Investment Divisions from which the transfer is being made in equal
proportion to such Investment Divisions. For example, if the transfer is
made from two Investment Divisions, the transfer charge allocated to each
of the Investment Divisions will be $12.50. All transfers included in one
transfer request count as one transfer for purposes of any fee.
Charges In The Funds
The Funds make a charge for managing investments and providing
services. These charges vary by portfolio.
The VIP, the VIP II, and the VIP III Portfolios have an annual
management fee that is the sum of an individual fund fee rate, and a group
fee rate which is based on the monthly average net assets of the mutual
funds advised by Fidelity Management & Research Company. In addition,
each of these portfolios' total operating expenses will include fees for
management, shareholder services and other expenses, such as custodial,
legal, accounting and other miscellaneous fees. See the VIP, VIP II and
VIP III prospectus for additional information on how these charges are
determined and on the minimum and maximum charges allowed. All
expenses for the year ending December 31, 19971996 are shown on page 4
under the table titled Portfolio Annual Expenses.
The American Century Variable Portfolios have annual management fees
that are based on the monthly average of the net assets in each of the
portfolios. See the American Century VP prospectus for details. The
expenses for the year ending December 31, 19971996 are shown on page 4
under the table titled Portfolio Annual Expenses.
Changing Your Premium Allocation Percentages
You may change the allocation percentages of Your premiums by writing
to Our Home Office and telling Us what changes You wish to make. These
changes will go into effect as of the date We receive Your request at Our
Home Office and will affect transactions on and after that date. While the
Dollar Cost Averaging program is in effect, the allocation percentages that
apply to any premiums received will be the Dollar Cost Averaging
allocation percentages unless you specify otherwise. (See Dollar Cost
Averaging, page 13).
The General Account
Subject to certain limitations described below, You may allocate some or
all of Your Contract Value to the General Account, which pays interest at
a declared rate. The principal is guaranteed by Us. The General Account
supports Our insurance and annuity obligations including Our obligations
under the General Account. In certain states, allocations to and transfers to
and from the General Account are not permitted. Because of applicable
exemptive and exclusionary provisions, interests in the General Account
have not been registered under the Securities Act of 1933, and the General
Account has not been registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the General
Account nor any interests therein are generally subject to regulation under
the 1933 Act or the 1940 Act. We have been advised that the staff of the
SEC has not made a review of the disclosures which are included in this
prospectus for Your information which relate to the General Account.
Amounts In The General Account
You may accumulate amounts in the General Account by:
allocating premium,
transferring amounts from the Investment Divisions of Our Separate
Account, or
earning interest on amounts You already have in the General Account.
The maximum amount that can be allocated to the General Account
through allocation of premiums and net transfers (amounts transferred in
less amounts transferred out) over the life of the Contract is $250,000.
The amount You have in the General Account at any time is the sum of all
premiums allocated to that account, all transfers and all earned interest.
This amount is reduced by amounts transferred out or withdrawn and
deductions allocated to the General Account.
Adding Interest To Your Amounts In The General Account
We pay interest on all amounts that You have in the General Account. The
annual interest rates will never be less than the minimum guaranteed
interest rate of 3.0%. We may, at the sole discretion of Our Board of
Directors, credit interest in excess of 3.0%. You assume the risk that
interest credited may not exceed 3.0%. We currently intend to guarantee
the interest rate for one year periods starting at the beginning of each
calendar year. Interest is compounded daily at an effective annual rate that
equals the annual rate declared by Our Board of Directors.
Transfers
You may request a transfer between the General Account and one or more
of the Investment Divisions of Our Separate Account. However, only two
transfers are allowed from the General Account per Contract Year and the
total amount transferred from the General Account in any Contract Year is
limited to the larger of:
25% of the amount in the General Account at the beginning of the
Contract year, or
$1,000.
Additional Information About Variable Annuities
Contract Periods, Anniversaries
We measure Contract Years, Contract Months and Contract Anniversaries
(annual and monthly) from the Contract Date shown on the Contract
Information page of Your Contract. Each Contract Month begins on the
same day in each calendar month as the day of the month in the Contract
Date. The calendar days of 29, 30, and 31 are not used.
Generally, when We refer to the age of the Annuitant, We mean his or her
age on the birthday nearest to that particular date.
Inquiries
You can make any inquiries about Your Contract by writing or calling Us
at Our Home Office.
FEDERAL TAX STATUS
Introduction
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT
INTENDED AS TAX ADVICE.
This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may
receive a distribution under a Contract. Any person concerned about these
tax implications should consult a competent tax adviser before making a
premium payment. This discussion is based upon Midland's understanding
of the present federal income tax laws as they are currently interpreted by
the Internal Revenue Service. No representation is made as to the
likelihood of the continuation of the present federal income tax laws or of
the current interpretation by the Internal Revenue Service. Moreover, no
attempt has been made to consider any applicable state or other tax laws.
The Qualified Contracts are designed for use by individuals in connection
with retirement plans which are intended to qualify as plans qualified for
special income tax treatment under Sections 401, 403(a), 403(b) or 408 of
the Internal Revenue Code (the "Code"). The ultimate effect of federal
income taxes on the contributions, Contract Value, on annuity payments
and on the economic benefit to the Owner, the Annuitant or the
Beneficiary depends on the type of retirement plan, on the tax and
employment status of the individual concerned and on Our tax status. In
addition, certain requirements must be satisfied in purchasing a qualified
contract in connection with a tax qualified plan in order to receive
favorable tax treatment. 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 both may
result if this Contract 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 Contract.
With respect to qualified Contracts an endorsement of the Contract and/or
limitations or penalties imposed by the Internal Revenue Code may
impose limits on premiums, withdrawals, distributions or benefits, or on
other provisions of the Contracts. Some retirement plans are subject to
distribution and other requirements that are not incorporated into our
Contract administrative procedures. Owners, participants and beneficiaries
are responsible for determining that contributions, distributions and other
transactions with respect to the Contracts comply with applicable law.
Therefore, purchasers of Qualified Contracts should seek competent legal
and tax advice regarding the suitability of the Contract for their situation,
the applicable requirements and the tax treatment of the rights and benefits
of a Contract. The following discussion assumes the Qualified Contracts
are purchased in connection with retirement plans that qualify for special
federal income tax treatment described above.
Diversification
Section 817(h) of the Code imposes certain diversification standards on
the underlying assets of variable annuity contracts. The Code provides that
a variable annuity contract will not be treated as an annuity contract for
any period (and any subsequent period) for which the investments are not,
in accordance with regulations prescribed by the United States Treasury
Department (Treasury Department), adequately diversified.
Disqualification of the Contract as an annuity contract would result in
imposition of federal income tax to the Contract Owner with respect to
earnings allocable to the Contract prior to the receipt of payments under
the Contract.
We intend that all Funds underlying the Contracts will be managed in such
a manner as to comply with these diversification requirements.
In certain circumstances, owners of variable contracts may be considered
the owners, for federal income tax purposes, of the assets of the separate
account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published
rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise investment
control over the assets. The Treasury Department also announced, in
connection with the issuance of regulations concerning diversifications,
that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated
asset account may cause the investor (i.e., the Contract Owner), rather than
the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by
way of regulations or rulings on the "extent to which policyowners may
direct their investments to particular subaccounts without being treated as
owners of the underlying assets."
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 policy owners were not owners of separate account assets.
For example, the Owner has additional flexibility in allocating premium
payments and Contract Values. These differences could result in an Owner
being treated as the owner of a pro rata portion of the assets of the
Separate Account. In addition, We do not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department
has stated it expects to issue. We therefore reserve the right to modify the
Contract as necessary to attempt to prevent an Owner from being
considered the owner of a pro rata share of the assets of the Separate
Account.
Taxation of Annuities in General
Nonqualified Policies. The following discussion assumes that the Contract
will qualify as an annuity contract for federal income tax purposes.
"Investment in the Contract" refers to premiums paid less any prior
withdrawals of premiums where prior withdrawals are treated as being
earnings first.
Section 72 of the Code governs taxation of annuities in general. We
believe that the owner generally is not taxed on increases in the value of a
Contract until distribution occurs either in the form of a lump sum
received by withdrawing all or part of the Contract Value (i.e.,
"withdrawals") or as annuity payments under the annuity income option
elected. The exception to this rule is the treatment afforded to owners that
are not natural persons. Generally, an owner of a contract who is not a
natural person must include in income any increase in the excess of the
owner's contract value over the owner's Investment in the Contract during
the taxable year, even if no distribution occurs. There are, however,
exceptions to this rule which You may wish to discuss with Your tax
counsel. The following discussion applies to Contracts owned by natural
persons.
The taxable portion of a distribution (in the form of an annuity or lump
sum payment) is taxed as ordinary income. For this purpose, the
assignment, pledge, or agreement to assign or pledge any portion of the
Contract Value generally will be treated as a distribution.
Generally, in the case of a withdrawal under a nonqualified contract,
amounts received are first treated as taxable income to the extent that the
Contract Value immediately before the withdrawal exceeds the Investment
in the Contract at that time. Any additional amount is not taxable.
Although the tax consequences may vary depending on the annuity
income option elected under the Contract, in general, only the portion of
the annuity payment that represents the amount by which the Contract
Value exceeds the Investment in the Contract will be taxed. For fixed
annuity payments, in general, there is no tax on the amount of each
payment which represents the same ratio that the Investment in the
Contract bears to the total expected value of the annuity payment for the
term of the payment; however, the remainder of each annuity payment is
taxable. For variable annuity payments, in general, a specific dollar
amount of each payment is not taxed. The dollar amount is determined by
dividing the Investment in the Contract by the total number of expected
periodic payments. The remainder of each annuity payment is taxable.
Any distribution received subsequent to the investment in the Contract
being recovered will be fully taxable.
Amounts may be distributed from a Contract because of the death of an
Owner or an Annuitant. Generally, such amounts are includible in the
income of the recipient as follows: (i) if distributed in a lump sum, they
are taxed in the same manner as a withdrawal from the Contract; or (ii) if
distributed under a payment option, they are taxed in the same way as
annuity payments. For these purposes, the Investment in the Contract is
not affected by the Owner's or Annuitant's death. That is, the Investment in
the Contract remains the amount of any premiums paid which were not
excluded from gross income.
In the case of a distribution pursuant to a nonqualified contract, there may
be imposed a federal penalty tax equal to 10% of the amount treated as
taxable income. In general, however, there is no penalty tax on
distributions: (1) made on or after the date on which the owner is actual
age 59-1/2, (2) made as a result of death or disability of the owner, or (3)
received in substantially equal payments as a life annuity (subject to
special "recapture" rules if the series of payments is subsequently
modified). Other tax penalties may apply to certain distributions under a
Qualified Contract.
Possible Changes in Taxation. In past years, legislation has been proposed
in the U.S. Congress that would have adversely modified the federal
taxation of certain annuities. For example, one such proposal would have
changed that tax treatment of nonqualified annuities that did not have
"substantial life contingencies" by taxing income as it is credited to the
annuity. Although as of the date of this Prospectus Congress was not
actively considering any legislation regarding the taxation of annuities,
there is always the possibility that the tax treatment of annuities could
change by legislation or other means (such as IRS regulations, revenue
rulings, judicial decisions, etc.). Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change.)
Transfers, Assignments or Exchanges of a Contract. A transfer of
ownership of a Contract, the designation of an Annuitant, payee or other
beneficiary who is not also the Owner, the selection of certain Maturity
Dates or the exchange of a Contract may result in certain tax consequences
to the Owner that are not discussed herein. An Owner contemplating any
such transfer, assignment or exchange of a Contract should contact a
competent tax advisor with respect to the potential tax effects of such
transaction.
Multiple Contracts. All nonqualified deferred annuity contracts entered
into after October 12, 1988 that are issued by the Company (or its
affiliates) to the same Owner during any calendar year are treated as one
annuity Contract for purposes of determining the amount includible in
gross income under Code Section 72(e). The effects of this rule are not yet
clear; however, it could affect the time when income is taxable and the
amount that might be subject to the 10% penalty tax described above. In
addition, the Treasury Department has specific authority to issue
regulations that prevent the avoidance of Section 72(e) through the serial
purchase of annuity contracts or otherwise. There may also be other
situations in which the Treasury may conclude that it would be appropriate
to aggregate two or more annuity contracts purchased by the same Owner.
Accordingly, a Contract Owner should consult a competent tax advisor
before purchasing more than one annuity contract.
Qualified Policies. The rules governing the tax treatment of distributions
under qualified plans vary according to the type of plan and the terms and
conditions of the plan itself. Generally, in the case of a distribution to a
participant or beneficiary under a Contract purchased in connection with
these plans, only the portion of the payment in excess of the Investment in
the Contract allocated to that payment is subject to tax. The Investment in
the Contract equals the portion of premiums invested in the Contract that
were not excluded from Your gross income, and may be zero. In general,
for allowed withdrawals, a ratable portion of the amount received is
taxable, based on the ratio of the Investment in the Contract to the total
Contract Value. The amount excluded from a taxpayer's income will be
limited to an aggregate cap equal to the Investment in the Contract. The
taxable portion of annuity payments is generally determined under the
same rules applicable to nonqualified contracts. However, special
favorable tax treatment may be available for certain distributions
(including lump sum distributions). Adverse tax consequences may result
from distributions prior to age 59-1/2 (subject to certain exceptions),
distributions that do not conform to specified commencement and
minimum distribution rules, aggregate distributions in excess of a
specified annual amount, and in certain other circumstances. For qualified
plans under Section 401(a), 403(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 You (or the plan
participant) (I) reach age 70 1/2 or (ii) retire, 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 April
1 of the calendar year following the calendar year in which You (or the
plan participant) reach 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 You (or the plan
participant) reach age 70 1/2. Roth IRAs under Section 408A do not
require distributions at any time prior to Your death.
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 ceretain limitations. However, these payments may be subject to FICA
(Social Security) taxes. A Qualified Contract issued as a tax-sheltered
annuity under section 403(b) will be amended as necessary to conform to
the requirements of the Code. Code section 403(b)(11) restricts the
distribution under Code section 403(b) annuity contracts of: (1) elective
contributions made in years beginning after December 31, 1988; (2)
earnings on those contributions; and (3) earnings in such years on amounts
held as of the last year beginning before January 1, 1989. Distribution of
those amounts may only occur upon death of the employee, attainment of
age 59-1/2, separation from service, disability, or financial hardship. In
addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Distributions from Qualified Contracts are generally subject to the same
withholding rules as distributions from nonqualified Contracts, except that
certain distributions are subject to mandatory federal income tax
withholding.
Code sections 219 and 408 permit individuals or their employers to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" or "IRA." Individual Retirement Annuities are
subject to limitations on the amount that may be contributed and deducted
and the time when distributions may commence. In addition, distributions
from certain other types of retirement plans may be placed into an
Individual Retirement Annuity on a tax deferred basis. Employers may
establish Simplified Employee Pension (SEP) Plans to provide IRA
contributions on behalf of their employees.
Code section 401(a) permits employers to establish various types of
retirement plans for employees, and permit 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 consequences to the plan,
to the participant, or to both may result if this Contract is assigned or
transferred to any individual as a means to provide benefit payments.
Our Income Taxes
The operations of Our Separate Account are included in Our federal
income tax return and We pay no tax on investment income and capital
gains reflected in Variable Annuity Contract reserves. However, the 1990
Tax Act requires a negative reserve, based on premiums, to be established.
This reserve will cause Our taxable income to increase. We reserve the
right to charge the Separate Account for this and any other such taxes in
the future if the tax law changes and We incur additional federal income
taxes which are attributable to Our Separate Account. This charge will be
set aside as a provision for taxes which We will keep in the Investment
Divisions rather than in Our General Account. We anticipate that Our
Owners would benefit from any investment earnings that are not needed to
maintain this provision.
We may have to pay state and local taxes (in addition to applicable taxes
based on premiums) in several states. At present, these taxes are not
substantial. If they increase, however, charges may be made for such taxes
when they are attributable to Our Separate Account.
Withholding
Unless You elect to the contrary, any amounts that are received under
Your Contract that We reasonably believe are includible in gross income
for tax purposes will be subject to withholding to meet federal income tax
obligations. The rate of withholding on payments under Your Contract,
such as withdrawals, will be 10%. Withholding is mandatory for certain
Qualified Contracts. Thus, in the absence of an election by You that We
should not do so, We will withhold from every withdrawal the appropriate
percentage of the amount of the payment that We reasonably believe is
includible in gross income. Midland will provide forms and instructions
concerning the right to elect that no amount be withheld from payments.
Generally there will be no withholding for taxes until payments are
actually received under Your Contract.
Distributions from Contracts generally are subject to withholding for Your
federal income tax liability. The withholding rate varies according to the
type of distribution and Your tax status. You will be provided the
opportunity to elect not to have tax withheld from distributions.
"Eligible rollover distributions" from section 401(a) plans and section
403(b) tax-sheltered annuities are subject to a mandatory federal income
tax withholding of 20%. An eligible rollover distribution is the taxable
portion of any distribution from such a plan, except certain distributions
such as distributions required by the Code or distributions in a specified
annuity form. The 20% withholding does not apply, however, if You
choose a "direct rollover" from the plan to another tax-qualified plan or
IRA.
The Interest and Dividend Tax Compliance Act of 1983 requires
recipients, including those who have elected out of withholding, to supply
their Taxpayer Identification Number (Social Security Number) to payers
of distributions for tax reporting purposes. Failure to furnish this number
when required may result in the imposition of a tax penalty and will
subject the distribution to the withholding requirements of the law
described above.
MATURITY DATE
Unless restricted by the laws of the state in which this Contract is
delivered, the Maturity Date of the Contract is the Contract Anniversary
nearest Attained Age 90 of the Annuitant for nonqualified Contracts and is
the Contract Anniversary nearest the Annuitant's 70th birthday for
Qualified Contracts. You may elect a different Maturity Date by filing a
written request to Us at least 31 days before the requested Maturity Date.
The requested Maturity Date must be a Contract Anniversary. For
nonqualified Contracts the requested Maturity Date cannot be later than
the Annuitant's Attained Age 90 and cannot be earlier than the tenth
Contract Anniversary. For qualified Contracts the requested Maturity Date
cannot be earlier than the date the Annuitant attains age 59-1/2 or five
years from the Contract Date, whichever is later; and in no event can the
Maturity Date be later than April 1 of the calendar year immediately
following the calendar year in which the Annuitant attains age 70-1/2.
If You have not previously specified otherwise, on the Maturity Date You
may take the Cash Surrender Value (in some states, the Contract Value) in
one sum or convert the Contract Value into an annuity payable to the
Annuitant under one or more of the payment options described below.
Unless You choose otherwise, the amount in the General Account will be
applied to a 10 Year Certain and Life fixed payout and the amount in the
Separate Account will be applied to a 10 Year Certain and Life variable
payout. The first monthly annuity payment will be made within one month
after the Maturity Date. Variable payment options are not available in
certain states.
EFFECTING AN ANNUITY
You may apply the proceeds of a withdrawal to effect an annuity. Unless
you choose otherwise, the amount of the proceeds from the General
Acount will be applied to a 10 Year Certain and Life fixed payout and the
amount of the proceeds from the Separate Account will be applied to a 10
Year Certain and Life variable payout.
Payment options will be subject to Our rules at the time of selection. Our
consent is required when an optional payment is selected, and when the
Payee either is an assignee or is not a natural person. Currently, the
payment options are only available if the proceeds applied are $1,000 or
more and the first periodic payment will be at least $20.
For annuity income options involving life income, the actual age of the
Payee will affect the amount of each payment. Since payments to older
Payees are expected to be fewer in number, the amounts of each annuity
payment shall be greater than for younger Payees. For annuity income
options that do not involve life income, the length of the payment period
will affect the amount of each payment. With a shorter period, the amount
of each annuity payment will be greater. Also, payments which occur
more frequently will be smaller than those occurring less frequently.
The Payee or any other person who is entitled to receive payment may
name a successor to receive any amount that We would otherwise pay to
that person's estate if that person died. The person who is entitled to
receive payment may change the successor at any time.
We must approve any arrangements that involve more than one of the
payment options, or a Payee who is not a natural person (for example, a
corporation), or a Payee who is a fiduciary. Also, the details of all
arrangements will be subject to Our rules at the time the arrangements take
effect. This includes rules on the minimum amount We will pay under an
option, minimum amounts for installment payments, withdrawal or
commutation rights (Your rights to receive payments over time, for which
We may offer You a lump sum payment), the naming of people who are
entitled to receive payment and their successors, and the ways of proving
age and survival.
You will make Your choice of a payment option when You apply for a
Contract and may make any changes by writing to Our Home Office.
Fixed Options
Payments under the fixed options are not affected by the investment
experience of any Investment Division of Our Separate Account. The
value as of the Maturity Date will be applied to the fixed option selected.
Thereafter, interest or payments are fixed according to the options chosen.
The following fixed options are available:
Deposit Option: The money will stay on deposit with Us for a period that
You and We agree upon. You will receive interest on the money at a
declared interest rate.
Installment Options: There are two ways that We pay installments:
Fixed Period: We will pay the amount applied in equal installments plus
applicable interest, for a specific number of years, for up to 30 years.
Fixed Amount: We will pay the sum in installments in an amount that You
and We agree upon. We will pay the installments until We pay the original
amount, together with any interest You have earned.
Monthly Life Income Option: We will pay the money as monthly income
for life. You may choose any one of threefour ways to receive the income:
We will guarantee payments for at least 20 years (called "20 Years Certain
and Life"); at least 10 years (called "10 Years Certain and Life); at least 5
years (called "5 Years Certain and Life"); or payment only for life. With a
life only payment option, payments will only be made as long as the Payee
is alive. Therefore, if a life only payment option is chosen and the Payee
dies after the first payment, only one payment will be made.
Other: You may ask Us to apply the money under any option that We
make available at the time the benefit is paid.
We guarantee interest under the Deposit Option at the rate of 2.75% a
year, and under either Installment Option at 2.75% a year. We may also
allow interest under the Deposit Option and under either Installment
Option at a rate that is above the guaranteed rate.
Variable Options
Payments under the variable options are affected by the investment
experience of the Investment Divisions of Our Separate Account. Variable
payment options are not available in certain states.
The annuity tables contained in the Contract are based on a five percent
(5%) assumed investment rate. This is a fulcrum rate around which
variable annuity payments will fluctuate to reflect whether the investment
experience of the Investment Divisions is better or worse than the assumed
investment rate. If the actual investment experience exceeds the assumed
investment rate, the payment will increase. Conversely, if the actual
investment experience is less than the assumed investment rate, payments
will decrease.
To determine the dollar amount of the first monthly variable payment, the
value in each Investment Division (as of a date not more than 10 business
days prior to the Maturity Date) will be applied to the appropriate rate for
the payout options selected using the age and sex (where permissible) of
the Payee. The amount of the first payment will then be used to determine
the number of Annuity Units for each Investment Division. The number of
Annuity Units is used to determine the amount of subsequent variable
payments.
The Annuity Unit Value for each Investment Division will be set at $10 on
the first day there are contract transactions in Our Separate Account.
Thereafter the Annuity Unit Value will vary with the investment
experience of the Investment Division and will reflect the daily asset
charge We make at an effective annual rate of 1.40%. The Annuity Unit
Value will increase if the net investment experience (investment
experience less the asset charge) is greater than the 5% assumed
investment rate. The Annuity Unit Value will decrease if the net
investment experience is less than the 5% assumed investment rate.
The amount of each subsequent variable payment will be determined for
each Investment Division by multiplying the number of Annuity Units by
the Annuity Unit Value.
Additional information on the variable annuity payments is contained in
the Statement of Additional Information which can be obtained by writing
to Our Home Office.
The following variable options are available:
Monthly Life Income Option: We will pay the money as monthly income
for life. You may choose any one of three ways to receive the income:
We will guarantee payments for at least 10 years (called "10 Years Certain
and Life"); at least 20 years (called "20 Years Certain and Life"); least 5
years (called "5 Years Certain and Life" ); or payment only for life. With a
life only payment option, payments will only be made as long as the
Annuitant is alive. Therefore, if a life only payment option is chosen and
the Payee dies after the first payment, only one payment will be made.
Other: You may ask Us to apply the money under any option that We
make available at the time the benefit is paid.
Transfers after the Maturity Date
After the Maturity Date, one transfer per Contract Year may be made
among the Investment Divisions of Our Separate Account. The transfer
request must be received at least 10 business days before the due date of
the first annuity payment to which the change will apply. The transfer will
take effect as of the date We receive Your request. Transfers after the
annuity payments have started will be based on the Annuity Unit Values.
There will be no transfer charge for this transfer. No transfers are allowed
from a fixed annuity option to a variable annuity option or from a variable
annuity option to a fixed annuity option.
ADDITIONAL INFORMATION
Your Voting Rights As an Owner
Fund Voting Rights
We invest the assets in the divisions of Our Separate Account in shares of
the corresponding portfolios of the Funds. Midland is the legal owner of
the shares and, as such, has the right to vote on certain matters. Among
other things, We may vote to:
elect the Funds' Board of Directors,
ratify the selection of independent auditors for the Funds,
vote on any other matters described in the Funds' current prospectuses or
requiring a vote by shareholders under the Investment Company Act of
1940, and
change the investment objectives and policies.
Even though We own the shares, We give You the opportunity to tell Us
how to vote the number of shares that are allocated to Your Contract. We
will vote those shares at meetings of Fund shareholders according to Your
instructions.
The Funds will determine how often shareholder meetings are held. As We
receive notice of these meetings, We will solicit Your voting instructions.
Although the Funds have held shareholder meetings approximately once a
year, the Funds are not required to hold a meeting in any given year.
If We do not receive instructions in time from all Owners, We will vote
shares for which no instructions have been received in a portfolio in the
same proportion as We vote shares for which We have received
instructions in that portfolio. We will also vote any Fund shares that We
are entitled to vote directly due to amounts We have accumulated in Our
Separate Account in the same proportions that Owners vote. If the federal
securities laws or regulations or interpretations of them change so that We
are permitted to vote shares of the Fund in Our own right or to restrict
Owner voting, We may do so.
How We Determine Your Voting Shares
You may participate in voting only on matters concerning the Fund
portfolios in which Your assets have been invested. We determine the
number of Fund shares in each division that are attributable to Your
Contract by dividing the amount in Your Contract Value allocated to that
division by the net asset value of one share of the corresponding Fund
portfolio as of the record date set by the Fund's Board for the Fund's
shareholders meeting. The record date for this purpose must be at least 10
and no more than 90 days before the meeting of the Fund. We count
fractional shares.
If You have a voting interest, We will send You proxy material and a form
for giving Us voting instructions. In certain cases, We may disregard
instructions relating to changes in the Fund's adviser or the investment
policies of its portfolios. We will advise You if We do and give Our
reasons in the next semiannual report to Owners.
Voting Privileges Of Participants In Other Companies
Currently, shares in the Funds are owned by other insurance companies to
support their variable life insurance and variable annuity products as well
as Our Separate Account. Those shares generally will be voted according
to the instructions of the owners of insurance and annuity contracts issued
by those other insurance companies. In certain cases, an insurance
company or some other owner of Fund shares may vote as they choose.
This will dilute the effect of the voting instructions of the Owners of Our
Variable Annuities. We do not foresee any disadvantage to this.
Nevertheless, the Funds' Board of Directors will monitor events to identify
conflicts that may arise and determine appropriate action. If We think any
Fund action is insufficient, We will see that appropriate action is taken to
protect Our Owners.
Our Reports to Owners
Shortly after the end of each Contract Year, We will send You a report
that shows Your Contract Value, information about Investment Divisions,
and any transactions involving Your Contract Value that occurred during
the year. Transactions include Your premium allocations and any transfers
or withdrawals that You made in that year.
We will also send You semi-annual reports with financial information on
the Funds, including a list of the investments held by each portfolio.
In addition, Our report will also contain any other information that is
required by the insurance supervisory official in the jurisdiction in which
this Contract is delivered.
Notices will be sent to You for transfers of amounts between Investment
Divisions and certain other Contract transactions.
Performance
Performance information for the Investment Divisions may appear in
reports and advertising to current and prospective Owners. The
performance information is based on historical investment experience of
the Investment Division and the Funds and does not indicate or represent
future performance.
Total returns are based on the overall dollar or percentage change in value
of a hypothetical investment. Total return quotations reflect changes in
Fund share price, the automatic reinvestment by the Separate Account of
all distributions and the deduction of applicable charges (including any
Contingent Deferred Sales Charges that would apply if You surrendered
the Contract at the end of the period indicated). Quotations of total return
may also be shown that do not take into account certain contractual
charges such as the Contingent Deferred Sales Charge. The total return
percentage will be higher under this method than under the standard
method described above.
A cumulative total return reflects performance over a stated period of time.
An average annual total return reflects the hypothetical annually
compounded return that would have produced the same cumulative total
return if the performance had been constant over the entire period.
Because average annual total returns tend to smooth out variations in an
Investment Division's returns, You should recognize that they are not the
same as actual year-by-year results.
Some Investment Divisions may also advertise yield. These measures
reflect the income generated by an investment in the Investment Divisions
over a specified period of time. This income is annualized and shown as a
percentage. Yields do not take into account capital gains or losses or the
Contingent Deferred Sales Charge. The standard quotations of yield reflect
the Contract Maintenance Charge.
The VIP Money Market Investment Division may advertise its current and
effective yield. Current yield reflects the income generated by an
investment in the Investment Division over a 7 day period. Effective yield
is calculated in a similar manner except that income earned is assumed to
be reinvested. The VIP II Investment Grade Bond and the VIP High
Income Investment Divisions may advertise a 30 day yield which reflects
the income generated by an investment in the Investment Division over a
30 day period.
Midland may also advertise performance figures for the Investment
Divisions based on the performance of a Portfolio prior to the time the
Separate Account commenced operations.
Your Beneficiary
You name Your Beneficiary when You apply for Your Contract. Unless
You have previously indicated otherwise, You may change the Beneficiary
during the Annuitant's lifetime by writing to Our Home Office. If no
Beneficiary is living when the Annuitant dies, We will pay the Death
Benefit to the Annuitant's estate.
Assigning Your Contract
You may assign (transfer) Your rights in this Contract to someone else. If
You do, You must send a copy of the assignment to Our Home Office. We
are not responsible for any payment We make or any action We take
before We receive notice of the assignment or for the validity of the
assignment. An absolute assignment is a change of ownership. An
assignment may be a taxable event.
When We Pay Proceeds From This Contract
We will generally pay any Death Benefits, withdrawals, or loans within
seven days after We receive the required form or request (and other
documents that may be required for payment of Death Benefits) at Our
Home Office. Death Benefits are determined as of the date We receive due
proof of death and the election of how the Death Benefit is to be paid.
We may, however, delay payment for one or more of the following
reasons:
We cannot determine the amount of the payment because the New York
Stock Exchange is closed, because trading in securities has been restricted
by the Securities and Exchange Commission, or because the SEC has
declared that an emergency exists; or
The SEC by order permits Us to delay payment to protect Our Owners.
We may also delay any payment until Your premium checks have cleared
Your bank.
We may defer payment of any withdrawal or surrender from the General
Account for up to six months after We receive Your request.
Dividends
We do not pay any dividends on the Contract described in this prospectus.
Midland's Sales And Other Agreements
Sales Agreements
The Contract will be sold by individuals who, in addition to being licensed
as life insurance agents for Midland National Life, are also registered
representatives of Walnut Street Securities (WSS), the principal
underwriter of the Contracts, or of broker-dealers which have entered into
written sales agreements with WSS. WSS is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. The mailing address
for WSS is 670 Mason Ridge Center, Suite 300, St. Louis, MO 63141-
8557.
During the first five Contract Years, We will pay agents a commission of
up to 5% of premiums paid. For subsequent years, the commission
allowance may equal an amount up to 3% of premiums paid and .25% of
the Contract Value.
We may also sell Our Contracts through broker-dealers registered with the
Securities and Exchange Commission under the Securities Exchange Act
of 1934 which enter into selling agreements with Us. The commission for
broker-dealers will be no more than that described above, except in the
first year we may pay 5.25% of premiums.
Regulation
We are regulated and supervised by the South Dakota Insurance
Department. In addition, We are subject to the insurance laws and
regulations in every jurisdiction where We sell contracts. This Contract
has been filed with and approved by insurance officials in such states. As a
result, the provisions of this Contract may vary somewhat from
jurisdiction to jurisdiction.
We submit annual reports on Our operations and finances to insurance
officials in all the jurisdictions where We sell contracts. The officials are
responsible for reviewing Our reports to be sure that We are financially
sound and that We are complying with applicable laws and regulations.
We are also subject to various federal securities laws and regulations.
Year 2000 Compliance Issues
Midland National Life is currently in the process of updating their
administrative systems to accommodate all Year 2000 issues. Midland
does not anticipate any material financial impact in processing and
completing the changes required to comply with the Year 2000 issues.
Discount for Midland Employees
Midland employees may receive a contribution to the Contract of 65% of
the first year commission which would normally have been paid on the
employee's first year premiums. This contribution will be paid by
Midland.
Legal Matters
The law firm of Sutherland, Asbill & Brennan L.L.P., Washington, D.C.,
has provided advice regarding certain matters relating to federal securities
laws.
Legal Proceedings
We are not involved in any material legal proceedings.
Experts
The financial statements of Midland National Life Separate Account C and
Midland National Life Insurance Company included in the Registration
Statement have been audited by Coopers & Lybrand LLP, independent
auditors, for the periods indicated in their report which appears in the
Registration Statement. The financial statements audited by Coopers &
Lybrand LLP have been included in reliance on their report given on their
authority as experts in accounting and auditing.
Statement of Additional Information
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. This
Statement of Additional Information can be acquired by checking the
appropriate box on the application form, by writing Our Home Office, or
by calling the Statement of Additional Information Toll Free number at 1-
800-272-1642. The following is the Table of Contents for the Statement of
Additional Information:
TABLE OF CONTENTS
PAGE
THE CONTRACT
Non-Participation 3
Misstatement of Age or Sex 3
Proof of Existence and Age 3
Assignment 3
Annuity Data 3
Incontestability 3
Ownership 3
Entire Contract 3
Changes in the Contract 3
Protection of Benefits 3
Accumulation Unit Value 3
Annuity Payments 4
CALCULATION OF YIELDS AND TOTAL RETURNS
VIP Money Market Investment Division Yield Calculation 4
Other Investment Division Yield Calculations 5
Standard Total Return Calculations Assuming Surrender 5
Other Performance Data 6
Adjusted HistoricalHypothetical Performance Data 7
FEDERAL TAX MATTERS
Tax Free Exchanges (1035) 8
Required Distributions 8
DISTRIBUTION OF THE CONTRACT 9
SAFEKEEPING OF ACCOUNT ASSETS 9
STATE REGULATION 9
RECORDS AND REPORTS 9
LEGAL PROCEEDINGS 9
LEGAL MATTERS 9
EXPERTS 9
OTHER INFORMATION 9
FINANCIAL STATEMENTS 10
<PAGE>
2 VARIABLE ANNUITY
VARIABLE ANNUITY 1
STATEMENT OF ADDITIONAL INFORMATION FOR THE
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
CONTRACT
Offered by
MIDLAND NATIONAL LIFE INSURANCE COMPANY
(Through Midland National Life Separate Account C)
This Statement of Additional Information expands upon subjects discussed
in the current Prospectus for the Flexible Premium Deferred Variable
Annuity Contract ("Contract") offered by Midland National Life Insurance
Company. You may obtain a copy of the Prospectus dated May 1,
19981997 , by writing to Midland National Life Insurance Company, One
Midland Plaza, Sioux Falls, SD 57193. Terms used in the current
Prospectus for the Contract are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH THE PROSPECTUS FOR THE POLICY.
Dated May 1, 19981997
TABLE OF CONTENTS
Page
THE CONTRACT
Non-Participation 3
Misstatement of Age or Sex 3
Proof of Existence and Age 3
Assignment 3
Annuity Data 3
Incontestability 3
Ownership 3
Entire Contract 3
Changes in the Contract 3
Protection of Benefits 3
Accumulation Unit Value 3
Annuity Payments 4
CALCULATION OF YIELDS AND TOTAL RETURNS
VIP Money Market Investment Division Yield Calculation 4
Other Investment Division Yield Calculations 5
Standard Total Return Calculations Assuming Surrender 5
Other Performance Data 6
Adjusted HistoricalHypothetical Performance Data 7
FEDERAL TAX MATTERS
Tax Free Exchanges (1035) 8
Required Distributions 8
DISTRIBUTION OF THE CONTRACT 9
SAFEKEEPING OF ACCOUNT ASSETS 9
STATE REGULATION 9
RECORDS AND REPORTS 9
LEGAL PROCEEDINGS 9
LEGAL MATTERS 9
EXPERTS 9
OTHER INFORMATION 10
FINANCIAL STATEMENTS 10
THE CONTRACT
Non-Participation
The Contracts are non-participating. No dividends are payable and the
Contracts will not share in the profits or surplus earnings of Midland.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any other payee has been misstated in
the application, the Annuity payable under the Contract will be whatever
the Contract Value of the Contract would purchase on the basis of the
correct age or sex of the Annuitant and/or other payee, if any, on the date
Annuity Payments begin. Any overpayment or underpayments by Midland
as a result of any such misstatement will be corrected using an interest rate
of 6% per year.
Proof of Existence and Age
Before making any payment under the Contract, we may require proof of
the existence and/or proof of the age of the Owner or Annuitant.
Assignment
No assignment of a Contract will be binding on Midland unless made in
writing and sent to us at our Home Office. Midland is not responsible for
the adequacy of any assignment. The Owner's rights and the interest of any
Beneficiary not designated irrevocably will be subject to the rights of any
assignee of record.
Annuity Data
We will not be liable for obligations which depend on receiving
information from a payee until such information is received in a
satisfactory form.
Incontestability
The Contract is incontestable after it has been in force, during the
Annuitant's lifetime, for two years.
Ownership
Before the Annuitant's death, only the Owner will be entitled to the rights
granted by the Contract or allowed by Midland under the Contract, except
that the right to choose a Payment Option will belong to the Payee, unless
otherwise specified. If the Owner is an individual and dies before the
Annuitant, the rights of the Owner belong to the estate of the Owner
unless this Contract has been endorsed to provide otherwise.
Entire Contract
We have issued the Contract in consideration of the application and
payment of the first premium. A copy of the application is attached to and
is a part of the Contract. The Policy Form with the application and any
riders make the entire Contract. All statements made by or for the
Annuitant are considered representations and not warranties. Midland will
not use any statement in defense of a claim unless it is made in the
application and a copy of the application is attached to the Contract when
issued.
Changes in the Contract
Only Midland's President, a Vice President, the Secretary or an Assistant
Secretary of our Company have the authority to make any change in the
Contract and then only in writing. We will not be bound by any promise or
representation made by any other person.
Midland may not change or amend the Contract, except as expressly
provided in the Contract, without the Owner's consent. However, we may
change or amend the Contract if such change or amendment is necessary
for the Contract to comply with any state or federal law, rule or regulation.
Protection of Benefits
To the extent permitted by law, no benefit under the Contract will be
subject to any claim or process of law by any creditor.
Accumulation Unit Value
We determine Accumulation Unit Values for the Investment Division of
Our Separate Account at the end of each Business Day. The Accumulation
Unit Value for each Investment Division was set at $10.00 on the first day
there were contract transactions in Our Separate Account. After that, the
Accumulation Unit Value for any Business Day is equal to the
Accumulation Unit Value for the preceding Business Day multiplied by
the net investment factor for that division on that Business Day.
We determine the net investment factor for each Investment Division
every Business Day as follows:
First, We take the value of the shares belonging to the division (including
any shares from reinvested dividends or capital gain distributions) in the
corresponding Fund portfolio at the close of business that day (before
giving effect to any contract transaction for that day, such as premium
payments or surrenders). For this purpose, We use the share value reported
to Us by the Fund.
Then, We divide this amount by the value of the amounts in the
Investment Division at the close of business on the preceding Business
Day (after giving effect to any contract transactions on that day).
Then, We subtract a daily asset charge for each calendar day between
Business Days (for example, a Monday calculation may include charges
for Saturday, Sunday, and Monday). The daily charge is .0038626% which
is an effective annual rate of 1.40%. This charge is for mortality and
expense risks assumed by Us under the contract and to cover
administrative costs We incur for transactions related to the Separate
Account.
Finally, We reserve the right to subtract any other daily charge for taxes or
amounts set aside as a reserve for taxes. Generally, this means that We
would adjust unit values to reflect what happens to the Funds, and also for
any charges.
Annuity Payments
The amount of each fixed annuity payment will be set on the Maturity
Date and will not subsequently be affected by the investment performance
of the Investment Divisions.
The amount of each variable annuity payment will be affected by the
investment performance of the Investment Divisions. Variable payment
options are not available in certain states.
The dollar amount of the first monthly variable annuity payment is
computed for each Investment Division by applying the value in the
Investment Division, as of a date not more than 10 business days prior to
the Maturity Date, to the appropriate rate for the payout option selected
using the age and sex (where permissible) of the Annuitant. The number of
Annuity Units for each Investment Division is then calculated by dividing
the first variable annuity payment for that Investment Division by the
Investment Division's Annuity Unit Value as of the same date.
The dollar amount of each subsequent payment from an Investment
Division is equal to the number of Annuity Units for that Investment
Division times the Annuity Unit value for that Investment Division as of a
uniformly applied date not more than ten business days before the annuity
payment is due.
The payment made to the Annuitant for the first payment and all
subsequent payments will be the sum of the payment amounts for each
Investment Division.
The Annuity Unit Value for each Investment Division was set at $10 on
the first day there were contract transactions in Our Separate Account.
After that, the Annuity Unit Value for any business day is equal to (1)
multiplied by (2) multiplied by (3) where:
(1) = the Annuity Unit Value for the preceding business day:
(2) = the net investment factor (as described above) for that division on
that business day.
(3) = the investment result adjustment factor (.99986634 per day), which
recognizes an assumed interest rate of 5% per year used in determining the
annuity payment amounts.
Transfers after the Maturity Date will only be allowed once per Contract
Year and will be made using the Annuity Unit Value for the Investment
Divisions on the date the request for transfer is received. On the transfer
date, the number of Annuity Units transferred from the Investment
Division is multiplied by the Annuity Unit Value for that Investment
Division to determine the value being transferred. This value is then
transferred into the indicated Investment Division(s) by converting this
value into Annuity Units of the proper Investment Division(s). The
Annuity Units are determined by dividing the value being transferred into
an Investment Division by the Annuity Unit value of the Investment
Division on the transfer date. The transfer shall result in the same dollar
amount of variable annuity payment on the date of transfer.
CALCULATION OF YIELDS AND TOTAL RETURNS
VIP Money Market Investment Division Yield Calculation
In accordance with regulations adopted by the Securities and Exchange
Commission, Midland is required to compute the VIP Money Market
Investment Division's current annualized yield for a seven-day period in a
manner which does not take into consideration any realized or unrealized
gains or losses or shares of the VIP Money Market Portfolio or on its
portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the
sale of securities and unrealized appreciation and depreciation) in the
value of a hypothetical account having a balance of one unit of the VIP
Money Market Investment Division at the beginning of such seven-day
period, dividing such net change in account value by the value of the
account at the beginning of the period to determine the base period return
and annualizing this quotient on a 365-day basis. The net change in
account value reflects the deductions for the contract maintenance charge,
annual administrative expenses, the mortality and expense risk charge, and
income and expenses accrued during the period. Because of these
deductions, the yield for the VIP Money Market Investment Division of
the Separate Account will be lower than the yield for the VIP Money
Market Portfolio Fund or any comparable substitute funding vehicle.
The Securities and Exchange Commission also permits Midland to
disclose the effective yield of the VIP Money Market Investment Division
for the same seven-day period, determined on a compounded basis. The
effective yield is calculated by compounding the unannualized base period
return by adding one to the base period return, raising the sum to a power
equal to 365 divided by 7, and subtracting one from the result.
The yield on amounts held in the VIP Money Market Investment Division
normally will fluctuate on a daily basis. Therefore, the disclosed yield for
any given past period is not an indication or representation of future yields
or rates of return. The VIP Money Market Investment Division's actual
yield is affected by changes in interest rates on money market securities,
average portfolio maturity of the VIP Money Market Portfolio Fund or
substitute funding vehicle, the types and quality of portfolio securities held
by the VIP Money Market Portfolio Fund or substitute funding vehicle,
and operating expenses. In addition, the yield figures do not reflect the
effect of any Contingent Deferred Sales Charge that may be applicable to a
particular Contract. The annualized yield for the seven-day period ending
12/31/ 9796 was 4.07%.3.75%.
Other Investment Division Yield Calculations
Midland may from time to time disclose the current annualized yield of
one or more of the Investment Divisions (except the Money Market
Investment Division) for 30-day periods. The annualized yield of an
Investment Division refers to income generated by the Investment
Division over a specified 30-day period. Because the yield is annualized,
the yield generated by an Investment Division during the 30-day period is
assumed to be generated each 30-day period. This yield is computed by
dividing the net investment income per accumulation unit earned during
the period by the price per unit on the last day of the period, according to
the following formula:
YIELD = 2 [ (a - b + 1)6 - 1 ]
cd
Where: a = net investment income earned during the period by the
Fund (or substitute funding vehicle) attributable to shares owned
by the Investment Division.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of units outstanding during the
period.
d = the maximum offering price per unit on the last day of the
period.
Net investment income will be determined in accordance with rules
established by the Securities and Exchange Commission. Accrued
expenses will include all recurring fees that are charged to all Owner
accounts. The yield calculations do not reflect the effect of any Contingent
Deferred Sales Charges that may be applicable to a particular Contract.
Contingent Deferred Sales Charges range from 7% to 0% of the amount of
Premium withdrawn depending on the elapsed time since the Contract was
issued.
Because of the charges and deductions imposed by the Separate Account
the yield of the Investment Division will be lower than the yield for the
corresponding Fund. The yield on amounts held in the Investment
Divisions normally will fluctuate over time. Therefore, the disclosed yield
for any given past period is not an indication or representation of future
yields or rates of return. The Investment Division's actual yield will be
affected by the types and quality of portfolio securities held by the Fund,
and its operating expenses.
We currently do not advertise yields for any Investment Division.
Standard Total Return Calculations Assuming Surrender
Midland may from time to time also disclose average annual total returns
for one or more of the Investment Divisions for various periods of time.
Average annual total return quotations are computed by finding the
average annual compounded rates of return over one, five and ten year
periods that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P (1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten-year period, at the
end of the one, five, or ten-year period (or fractional portion thereof).
All recurring fees that are charged to all Owner accounts are recognized in
the ending redeemable value. The standard average annual total return
calculations which assume the Contract is surrendered will reflect the
effect of Contingent Deferred Sales Charges that may be applicable to a
particular period.
The following is the average annual total return information for the
Investment Division of Separate Account C. The returns are based on the
assumption that the contract is surrendered at the end of the time period
shown and the returns reflect the impact of any applicable Contingent
Deferred Sales Charge.The following is standardized average annual total
return information for the Investment Divisions of Separate Account C.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 8.28% 4.99%
VIP Equity Income (10/24/93) 15.24% 4.99%
VIP Growth (10/24/93) 12.69% 5.58%
VIP Overseas (10/24/93) 6.47% 3.68%
VIP II Investment Grade Bond (10/24/93) 2.58% -5.41%
VIP II Index 500 (10/24/93) 16.31% 12.94%
VIP II Asset Manager (10/24/93) 6.64% 5.54%
VIP Money Market (10/24/93) 2.45% -3.29%
VIP II Asset Manager: Growth (5/1/95) 17.04% 10.98%
VIP II Contrafund (5/1/95) 20.27% 12.52%
Investment Division Inception of the 1-Year Period
with Investment Division Ended
Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 2.95% -3.13%
VIP II Investment Grade Bond (10/24/93) 3.87% 0.40%
VIP High Income (10/24/93) 10.24% 8.87%
VIP II Asset Manager (10/24/93) 9.64% 11.81%
VIP II Index 500 (10/24/93) 19.79% 23.67%
VIP Equity-Income (10/24/93) 17.95% 19.15%
VIP Growth (10/24/93) 14.95% 14.60%
VIP Overseas (10/24/93) 7.45% 2.85%
VIP II Contrafund (5/1/95) 21.54% 15.25%
VIP II Asset Manager: Growth (5/1/95) 19.86% 16.16%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997.
Midland may from time to time also disclose average annual total returns
in a format which assumes the Contract is kept in-force through the time
period shownin a non-standard format in conjunction with the standard
format described above. Such returnsThe non-standard format will be
identical to the standard format which assumes the Contract is surrendered
except that the Contingent Deferred Sales Charge percentage will be
assumed to be 0%. The returns which assume the Contract is kept in-force
will only be shown in conjunction with returns which assume the Contract
is surrendered.
The following is non-standardized average annual total return information
for the Investment Divisions of Separate Account C.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 9.26% 11.99%
VIP Equity Income (10/24/93) 16.09% 11.99%
VIP Growth (10/24/93) 13.59% 12.58%
VIP Overseas (10/24/93) 7.48% 10.68%
VIP II Investment Grade Bond (10/24/93) 3.68% 1.59%
VIP II Index 500 (10/24/93) 17.15% 19.94%
VIP II Asset Manager (10/24/93) 7.65% 12.54%
VIP Money Market (10/24/93) 3.56% 3.71%
VIP II Asset Manager: Growth (5/1/95) 20.00% 17.98%
VIP II Contrafund (5/1/95) 23.18% 19.52%
The following is the average annual total return information for the
Investment Division of Separate Account C. The returns are based on the
assumption that the contract is kept in-force through the end of the time
period shown and the contingent deferred sales charges are set to zero.
Investment Division Inception of the 1-Year Period
with Investment Division Ended
Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 3.53% 3.87%
VIP II Investment Grade Bond (10/24/93) 4.44% 7.40%
VIP High Income (10/24/93) 10.71% 15.87%
VIP II Asset Manager (10/24/93) 10.12% 18.81%
VIP II Index 500 (10/24/93) 20.15% 30.67%
VIP Equity-Income (10/24/93) 18.33% 26.15%
VIP Growth (10/24/93) 15.36% 21.60%
VIP Overseas (10/24/93) 7.96% 9.85%
VIP II Contrafund (5/1/95) 22.75% 22.25%
VIP II Asset Manager: Growth (5/1/95) 21.09% 23.16%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997.
Since the VIP III Balanced, VIP III Growth Opportunities, VIP III Growth
& Income, American Century VP Capital Appreciation, American Century
VP Balanced, American Century VP Value and American Century VP
International Investment Divisions were not available to the portfolio at
12/31/96, there is no average annual total return information to report for
these Investment Divisions.
Other Performance Data
Midland may from time to time also disclose cumulative total returns in
conjunction with the annual returnsstandard format described above. The
cumulative returns will be calculated using the following formula.
assuming The cumulative returns which assume the Contract is kept in-
force assume that the Contingent Deferred Sales Charge percentage will be
zero.0%.
CTR = [ERV/P] - 1
Where: CTR = the cumulative total return net of Investment Division
recurring charges for the period.
ERV = ending redeemable value of an assumeda hypothetical
$1,000 payment at the beginning of the one, five, or ten-year
period at the end of the one, five, or ten-year period (or fractional portion
thereof).
P = an assumeda hypothetical initial payment of $1,000
The returns which assume the Contract is kept in-force will only be shown
in conjunction with returns which assume the Contract is surrendered.All
non-standard performance data will only be advertised if the standard
performance data is also disclosed.
Midland may also disclose the value of an assumeda hypothetical payment
of $10,000 at the end of various periods of time.
The following is standardized cumulative total return information for the
Investment Divisions of Separate Account C.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 28.88% 4.99%
VIP Equity Income (10/24/93) 57.19% 4.99%
VIP Growth (10/24/93) 46.39% 5.58%
VIP Overseas (10/24/93) 22.13% 3.68%
VIP II Investment Grade Bond (10/24/93) 8.45% -5.41%
VIP II Index 500 (10/24/93) 61.90% 12.94%
VIP II Asset Manager (10/24/93) 22.74% 5.54%
VIP Money Market (10/24/93) 8.04% -3.29%
VIP II Asset Manager: Growth (5/1/95) 30.07% 10.98%
VIP II Contrafund (5/1/95) 36.14% 12.52%
The following is non-standardized cumulative total return information for
the Investment Divisions of Separate Account C.
The following is the cumulative total return information for the Investment
Division of Separate Account C. The returns are based on the assumption
that the contract is surrendered at the end of the time period shown and the
returns reflect the impact of any applicable contingent deferred sales
charge.
Investment Division Inception of the 1-Year Period
with Investment Division Ended
Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 12.94% -3.13%
VIP II Investment Grade Bond (10/24/93) 17.26% 0.40%
VIP High Income (10/24/93) 50.44% 8.87%
VIP II Asset Manager (10/24/93) 47.05% 11.81%
VIP II Index 500 (10/24/93) 113.06% 23.67%
VIP Equity-Income (10/24/93) 99.69% 19.15%
VIP Growth (10/24/93) 79.25% 14.60%
VIP Overseas (10/24/93) 35.13% 2.85%
VIP II Contrafund (5/1/95) 68.40% 15.25%
VIP II Asset Manager: Growth (5/1/95) 62.23% 16.16%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997.
Investment Division Inception of the 1-Year Period
with Investment Division to Ended
Inception Date 12/31/96 12/31/96
VIP High Income (10/24/93) 32.63% 11.99%
VIP Equity Income (10/24/93) 60.94% 11.99%
VIP Growth (10/24/93) 50.14% 12.58%
VIP Overseas (10/24/93) 25.88% 10.68%
VIP II Investment Grade Bond (10/24/93) 12.20% 1.59%
VIP II Index 500 (10/24/93) 65.65% 19.94%
VIP II Asset Manager (10/24/93) 26.49% 12.54%
VIP Money Market (10/24/93) 11.79% 3.71%
VIP II Asset Manager: Growth (5/1/95) 35.62% 17.98%
VIP II Contrafund (5/1/95) 41.69% 19.52%
The following is the cumulative total return information for the Investment
Division of Separate Account C. The returns are based on the assumption
that the contract is kept in-force through the end of the time period shown
and the contingent deferred sales charges are set to zero.
Investment Division Inception of the 1-Year Period
with Investment Division Ended
Inception Date to 12/31/97 12/31/97
VIP Money Market (10/24/93) 15.64% 3.87%
VIP II Investment Grade Bond (10/24/93) 19.96% 7.40%
VIP High Income (10/24/93) 53.14% 15.87%
VIP II Asset Manager (10/24/93) 49.75% 18.81%
VIP II Index 500 (10/24/93) 115.76% 30.67%
VIP Equity-Income (10/24/93) 102.39% 26.15%
VIP Growth (10/24/93) 81.95% 21.60%
VIP Overseas (10/24/93) 37.83% 9.85%
VIP II Contrafund (5/1/95) 72.90% 22.25%
VIP II Asset Manager: Growth (5/1/95) 66.73% 23.16%
VIP III Balanced (5/1/97) N/A N/A
VIP III Growth & Income (5/1/97) N/A N/A
VIP III Growth Opportunities (5/1/97) N/A N/A
American Century VP Balanced (5/1/97) N/A N/A
American Century VP Capital Appreciation (5/1/97) N/A N/A
American Century VP Value (5/1/97) N/A N/A
American Century VP International (5/1/97) N/A N/A
American Century VP Income & Growth (5/1/98) N/A N/A
N/A - The return information for the funds are not reflected as the funds
had not been included in Midland National Life Separate Account C for
more than 12 months at 12/31/1997.
Since the VIP III Balanced, VIP III Growth Opportunities, VIP III Growth
& Income, American Century VP Capital Appreciation, American Century
VP Balanced, American Century VP Value and American Century VP
International Investment Divisions were not available to the portfolio at
12/31/96, there is no cumulative total return information to report for these
Investment Divisions.
Adjusted HistoricalHypothetical Performance Data
Midland may also disclose adjusted historical"hypothetical" performance
data for an Investment Division for periods before the Investment Division
commenced operations, based on the assumption that the Investment
Division was in existence before it actually was, and that the Investment
Division had been invested in a particular portfolio that was in existence
prior to the Investment Division's commencement of operations. The
portfolio used for these calculations will be the actual portfolio that the
Investment Division will invest in.
Adjusted historicalHypothetical performance data of this type will be
calculated as follows. First, the value of an assumedhypothetical $1,000
investment in the applicable portfolio is calculated on a monthly basis by
comparing the net asset value per share at the beginning of the month with
the net asset value per share at the end of the month (adjusted for any
dividend distributions during the month), and the resulting ratio is applied
to the value of the investment at the beginning of the month to get the
gross value of the investment at the end of the month. Second, that gross
value is then reduced by a "Contract Charges" factor to reflect the charges
imposed under the Contract. The Contract Charges factor is calculated
by adding the daily charge for mortality and expense risks (1.25%
annually) to the daily Administrative Charge (0.15% annually), and then
adding an additional amount that adjusts for the annual $33 Contract
Maintenance Charge. This additional amount is based on an average
Contract Value of $27,000$22,000, so it is calculated as
$33 /27,00022,000, or 0.13%.15% annually. The total of these three
amounts is then divided by 12 to get the monthly Contract Charges factor,
which is then applied to the value of the hypothetical initial payment in the
applicable portfolio to get the value in the Investment Division. The
Contract Charges factor is assumed to be deducted at the beginning of
each month. In this manner, the Ending Redeemable Value ("ERV") of a
hypothetical $1,000 initial payment in the Investment Division is
calculated each month during the applicable period, to get the ERV at the
end of the period. Third, that ERV is then utilized in the formulas above.
This type of adjusted historicalhypothetical performance data may be
disclosed on both an average annual total return and a cumulative total
return basis. Moreover, it may be disclosed assuming that the Contract is
not surrendered (i.e., with no deduction for the Contingent Deferred Sales
Charge) and assuming that the Contract is surrendered at the end of the
applicable period (i.e., reflecting a deduction for any applicable
Contingent Deferred Sales Charge).
The following is the average annual total return information based on the
assumption that the Contract is surrendered at the end of the time period
shown. The impact of any applicable Contingent Deferred Sales Charges
are reflected in the returns. The returns assume that each of the Investment
Divisions had been available to Midland National Life Separate Account
C since the Portfolio Inception Date.The following is standardized average
annual total return information based on the hypothetical assumption that
each of the Investment Divisions listed had been available to Separate
Account C since the inception of each corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 10.26% 9.42% 12.87%
VIP Equity Income (10/9/86) 11.67% 12.00% 15.88%
VIP Growth (10/9/86) 13.04% 13.39% 13.08%
VIP Overseas (1/28/87) 6.20% N/A 7.06%
VIP II Investment Grade Bond (12/5/88) 6.51% N/A 4.55%
VIP II Index 500 (8/27/92) 14.86% N/A N/A
VIP II Asset Manager (9/16/89) 9.96% N/A 9.17%
VIP Money Market (4/1/82) 5.33% 4.33% 2.43%
VIP II Asset Manager: Growth (1/3/95) 17.16% N/A N/A
VIP II Contrafund (1/3/95) 25.85% N/A N/A
The following is the average annual total return information based on the
assumption that the contract is surrendered at the end of the time period
shown. The impact of any applicable contingent deferred sales charges are
reflected in the returns. The returns assume that each of the Investment
Divisions had been available to Separate Account C since the Portfolio
Inception date.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 5.27% 4.26% 2.77%
VIP II Investment Grade Bond (12/5/88) 6.64% N/A 5.06%
VIP High Income (9/19/85) 10.74% 11.11% 11.86%
VIP II Asset Manager (9/16/89) 11.02% N/A 10.93%
VIP II Index 500 (8/27/92) 17.86% N/A 17.84%
VIP Equity-Income (10/9/86) 12.92% 14.97% 18.08%
VIP Growth (10/9/86) 13.81% 15.43% 15.94%
VIP Overseas (1/28/87) 6.56% 7.97% 12.06%
VIP II Contrafund (1/3/95) 25.28% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 19.84% N/A N/A
VIP III Balanced (1/3/95) 12.32% N/A N/A
VIP III Growth & Income (12/31/96) 19.71% N/A N/A
VIP III Growth Opportunities (1/3/95) 23.89% N/A N/A
American Century VP Balanced (5/1/91) 9.24% N/A 9.21%
American Century VP Capital Appreciation (11/20/87) 7.66% 7.05% 3.69%
American Century VP Value (5/1/96) 18.31% N/A N/A
American Century VP International (5/1/94) 8.03% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
The following is non-standardized average annual total return information
based on the hypothetical assumption that each of the Investment
Divisions listed had been available to Separate Account C since the
inception of each corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 10.26% 9.42% 13.20%
VIP Equity Income (10/9/86) 11.67% 12.00% 16.18%
VIP Growth (10/9/86) 13.04% 13.39% 13.40%
VIP Overseas (1/28/87) 6.20% N/A 7.47%
VIP II Investment Grade Bond (12/5/88) 6.51% N/A 5.00%
VIP II Index 500 (8/27/92) 15.25% N/A N/A
VIP II Asset Manager (9/16/89) 9.96% N/A 9.55%
VIP Money Market (4/1/82) 5.33% 4.33% 2.92%
VIP II Asset Manager: Growth (1/3/95) 19.70% N/A N/A
VIP II Contrafund (1/3/95) 28.22% N/A N/A
The following is the average annual total return information based on the
assumption that the contract is kept in-force through the end of the time
period shown. The contingent deferred sales charges are assumed to be
zero. The returns assume that each of the Investment Divisions had been
available to Separate Account C since the Portfolio Inception date.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 5.27% 4.26% 3.25%
VIP II Investment Grade Bond (12/5/88) 6.64% N/A 5.50%
VIP High Income (9/19/85) 10.74% 11.11% 12.20%
VIP II Asset Manager (9/16/89) 11.02% N/A 11.28%
VIP II Index 500 (8/27/92) 18.02% N/A 18.12%
VIP Equity-Income (10/9/86) 12.92% 14.97% 18.36%
VIP Growth (10/9/86) 13.81% 15.43% 16.24%
VIP Overseas (1/28/87) 6.56% 7.97% 12.40%
VIP II Contrafund (1/3/95) 26.23% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 20.88% N/A N/A
VIP III Balanced (1/3/95) 13.50% N/A N/A
VIP III Growth & Income (12/31/96) 26.71% N/A N/A
VIP III Growth Opportunities (1/3/95) 24.87% N/A N/A
American Century VP Balanced (5/1/91) 9.24% N/A 9.59%
American Century VP Capital Appreciation (11/20/87) 7.66% 7.05% 4.16%
American Century VP Value (5/1/96) 21.18% N/A N/A
American Century VP International (5/1/94) 8.82% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
The following is standardized cumulative total return information based on
the hypothetical assumption that each of the Investment Divisions listed
had been available to Separate Account C since the inception of each
corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 201.35% 146.03% 83.20%
VIP Equity Income (10/9/86) 209.50% 210.49% 108.95%
VIP Growth (10/9/86) 250.65% 251.42% 84.86%
VIP Overseas (1/28/87) 81.78% N/A 40.66%
VIP II Investment Grade Bond (12/5/88) 66.47% N/A 24.91%
VIP II Index 500 (8/27/92) 82.63% N/A N/A
VIP II Asset Manager (9/16/89) 100.45% N/A 55.10%
VIP Money Market (4/1/82) 115.37% 52.77% 12.77%
VIP II Asset Manager: Growth (1/3/95) 37.21% N/A N/A
VIP II Contrafund (1/3/95) 58.28% N/A N/A
The following is the cumulative total return information based on the
assumption that the contract is surrendered at the end of the time period
shown. The impact of any applicable contingent deferred sales charges are
reflected in the returns. The returns assume that each of the Investment
Divisions had been available to Separate Account C since the Portfolio
Inception date.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 124.57% 51.75% 14.65%
VIP II Investment Grade Bond (12/5/88) 79.21% N/A 27.97%
VIP High Income (9/19/85) 250.35% 186.84% 75.13%
VIP II Asset Manager (9/16/89) 138.70% N/A 67.97%
VIP II Index 500 (8/27/92) 140.77% N/A 127.21%
VIP Equity-Income (10/9/86) 291.68% 303.55% 129.60%
VIP Growth (10/9/86) 327.70% 319.84% 109.47%
VIP Overseas (1/28/87) 100.28% 115.23% 76.72%
VIP II Contrafund (1/3/95) 96.50% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 72.03% N/A N/A
VIP III Balanced (1/3/95) 41.59% N/A N/A
VIP III Growth & Income (12/31/96) 19.71% N/A N/A
VIP III Growth Opportunities (1/3/95) 89.96% N/A N/A
American Century VP Balanced (5/1/91) 80.37% N/A 55.37%
American Century VP Capital Appreciation (11/20/87) 110.99% 97.55% 19.88%
American Century VP Value (5/1/96) 32.38% N/A N/A
American Century VP International (5/1/94) 32.78% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
The following is non-standardized cumulative total return information
based on the hypothetical assumption that each of the Investment
Divisions listed had been available to Separate Account C since the
inception of each corresponding Portfolio.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Investment Division to Ended Ended
Inception Date 12/31/96 12/31/96 12/31/96
VIP High Income (9/19/85) 201.35% 146.03% 85.90%
VIP Equity Income (10/9/86) 209.50% 210.49% 111.65%
VIP Growth (10/9/86) 250.65% 251.42% 87.56%
VIP Overseas (1/28/87) 81.78% N/A 43.36%
VIP II Investment Grade Bond (12/5/88) 66.47% N/A 27.61%
VIP II Index 500 (8/27/92) 85.33% N/A N/A
VIP II Asset Manager (9/16/89) 100.45% N/A 57.80%
VIP Money Market (4/1/82) 115.37% 52.77% 15.47%
VIP II Asset Manager: Growth (1/3/95) 43.21% N/A N/A
VIP II Contrafund (1/3/95) 64.28% N/A N/A
The following is the cumulative total return information based on the
assumption that the contract is kept in-force through the end of the time
period shown. The contingent deferred sales charges are assumed to be
zero. The returns assume that each of the Investment Divisions had been
available to Separate Account C since the Portfolio Inception date.
Investment Division Inception of the 10-Year Period 5-Year Period
with Portfolio Portfolio to Ended Ended
Inception Date 12/31/97 12/31/97 12/31/97
VIP Money Market (4/1/82) 124.57% 51.75% 17.35%
VIP II Investment Grade Bond (12/5/88) 79.21% N/A 30.67%
VIP High Income (9/19/85) 250.35% 186.84% 77.83%
VIP II Asset Manager (9/16/89) 138.70% N/A 70.67%
VIP II Index 500 (8/27/92) 142.57% N/A 129.91%
VIP Equity-Income (10/9/86) 291.68% 303.55% 132.30%
VIP Growth (10/9/86) 327.70% 319.84% 112.17%
VIP Overseas (1/28/87) 100.28% 115.23% 79.42%
VIP II Contrafund (1/3/95) 101.00% N/A N/A
VIP II Asset Manager: Growth (1/3/95) 76.53% N/A N/A
VIP III Balanced (1/3/95) 46.09% N/A N/A
VIP III Growth & Income (12/31/96) 26.71% N/A N/A
VIP III Growth Opportunities (1/3/95) 94.46% N/A N/A
American Century VP Balanced (5/1/91) 80.37% N/A 58.07%
American Century VP Capital Appreciation (11/20/87) 110.99% 97.55% 22.58%
American Century VP Value (5/1/96) 37.78% N/A N/A
American Century VP International (5/1/94) 36.38% N/A N/A
American Century VP Income & Growth (10/30/97) N/A N/A N/A
There are no returns shown for the American Century VP Income &
Growth Investment Division since the fund was formed within 12 months
of year ending 12/31/1997.
FEDERAL TAX MATTERS
Tax-Free Exchanges (Section 1035)
Midland accepts Premiums which are the proceeds of a Contract in a
transaction qualifying for a tax-free exchange under Section 1035 of the
Internal Revenue Code. Except as required by federal law in calculating
the basis of the Contract, the Company does not differentiate between
Section 1035 Premiums and non-Section 1035 Premiums.
We also accept "rollovers" from Contracts qualifying as individual
retirement annuities or accounts (IRAs), or any other qualified contract
which is eligible to "rollover" into an IRA (except 403(b) contracts). The
Company differentiates between nonqualified Contracts and IRAs to the
extent necessary to comply with federal tax laws.
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 to
provide that (a) if any Owner dies on or after the Annuity Date but prior to
the time the entire interest in the Contract has been distributed, the
remaining portion of such interest will be distributed at least as rapidly as
under the method of distribution being used as of the date of that Owner's
death; and (b) if any Owner dies prior to the annuity starting date, the
entire interest in the Contract will be distributed (1) within five years after
the date of that Owner's death, or (2) as Annuity payments which will
begin within one year of that Owner's death and which will be made over
the life of the Owner's "Designated Beneficiary" or over a period not
extending beyond the life expectancy of that Beneficiary. The Owner's
"Designated Beneficiary" is the person to whom ownership of the Contract
passes by reason of death and must be a natural person. However, if the
Owner's Designated Beneficiary is the surviving spouse of the Owner, the
Contract may be continued with the surviving spouse as the new Owner.
The Nonqualified Contracts 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.
DISTRIBUTION OF THE CONTRACT
Walnut Street Securities (WSS), the principal underwriter of the Contract,
is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. The address for WSS is as
follows: Walnut Street Securities, 670 Mason Ridge Center, Suite 300, St.
Louis, MO 63141-8557.
The Contracts are offered to the public through brokers, licensed under the
federal securities laws and state insurance laws, that have entered into
agreements with WSS. The offering of the Contracts is continuous and
WSS does not anticipate discontinuing the offering of the Contracts.
However, WSS does reserve the right to discontinue the offering of the
Contracts. Beginning January 1, 1998, Midland will pay an underwriting
commission to WSS equal to 0.125% of all Variable Annuity
premiums.Such underwriting commissions are not paid to WSS.
Prior to June 1, 1996 Midland paid underwriting commissions to North
American Management (NAM) since NAM was the principal underwriter
of the Contracts during this time. The following table shows the aggregate
dollar amount of underwriting commissions paid to NAM during the last
three years.
Underwriting
Year Commissions
1994 $121,960.86
1995 $100,715.80
1996 $99,593.61
1997 $0.00
SAFEKEEPING OF ACCOUNT ASSETS
Title to assets of the Separate Account is held by Midland. The assets are
kept physically segregated and held separate and apart from our general
account assets. Records are maintained of all Premiums and redemptions
of Fund shares held by each of the Investment Divisions.
STATE REGULATION
Midland is subject to the insurance laws and regulations of all the states
where it is licensed to operate. The availability of certain contract rights
and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the Contracts will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Separate Account will be
maintained by Midland. As presently required by the Investment Company
Act of 1940 and regulations promulgated thereunder, reports containing
such information as may be required under that Act or by any other
applicable law or regulation will be sent to Owners semi-annually at their
last known address of record.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject that are material to
the Contracts. We are not involved in any litigation that is of material
importance in relation to our total assets or that relates to the Separate
Account.
LEGAL MATTERS
Legal advice regarding certain matters relating to the federal securities
laws applicable to the issue and sale of the Contracts has been provided by
Sutherland, Asbill & Brennan L.L.P., of Washington, D.C.
EXPERTS
The financial statements of Midland National Life Separate Account C and
Midland National Life Insurance Company included in this Statement of
Additional Information and Registration Statement have been audited by
Coopers & Lybrand LLP, independent auditors, for the periods indicated
in their report thereon which appears elsewhere herein and in the
Registration Statement. The financial statements and schedules audited by
Coopers & Lybrand LLP have been included in reliance on their report,
given on their authority as experts in accounting and auditing. The mailing
address for Coopers & Lybrand LLP is as follows:
Coopers & Lybrand LLP
IBM Park Building, Suite 1300
650 Third Avenue S.
Minneapolis, MN 55402-4333
OTHER INFORMATION
A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended, with respect to
the Contracts discussed in this Statement of Additional Information. Not
all of the information set forth in the Registration Statement, amendments
and exhibits thereto has been included in this Statement of Additional
Information. Statements contained in this Statement of Additional
Information concerning the content of the Contracts and other legal
instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments
filed with the Securities and Exchange Commission.
FINANCIAL STATEMENTS
The financial statements of Midland National Life Separate Account C and
Midland National Life Insurance Company should be considered only as
bearing on the ability of Midland to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of Separate Account C.
<PAGE>
12
Part C.
Item 24.
(a) Financial Statements
Financial statements are included in Part B of the Registration
Statement.
(b) Exhibits:
(1) Resolution of the Board of Directors of Midland National Life
Insurance Company authorizing establishment of Separate
Account C. (2)
(2) Not Applicable
(3) (a) Principal Underwriting Agreement between Midland
National Life Insurance Company and Walnut Street Securities (2)
(b) Registered Representative Contract (2)
(4) (a) Form A053A1 Flexible Premium Deferred Variable Annuity
Contract (2)
(b) Maturity Date Endorsement for Qualified Contracts (2)
(c) Endorsement for Tax Sheltered Annuity (2)
(d) Form A057A1 Flexible Premium Deferred Variable Annuity
Contract (2)
(5) (a) Form of Application for Flexible Premium Deferred Variable
Annuity Contract A053A1 and A057A1 (2)
(b) Supplement to Application (2)
(6) (a) Articles of Incorporation of Midland National Life Insurance
Company (2)
(b) By-laws of Midland National Life Insurance Company (2)
(7) Not Applicable
(8) (a) Form of Participation Agreement between Midland National
Life Insurance Company and Fidelity VIP I and VIP II (2)
(b) Form of Participation Agreement between Midland National
Life Insurance Company and Fidelity VIP III (2)
(c) Form of Participation Agreement between Midland National Life
Insurance Company and American Century Investment Services
Inc. (2)
(9) Opinion and Consent of Counsel (2)
(10) (a) Consent of Counsel (3)
(b) Consent of Independent Auditors (3)
(11) Not Applicable
(12) Not Applicable
(13) Performance Data Calculations (1)
(1) Filed with Pre-effective Amendment #1 of this form N-4 Registration
Statement, file number 33-64016 (August 11, 1993).
(2) Filed herewith.
(3) Filed by amendment.
<PAGE>
Item 25.
Below is a list of our directors and executive officers.
Directors
Name and Position with Principal Occupation
Business Address Midland During Past Five Years
John C. Watson Chairman of Chairman of the Board (October
Midland National Life the Board 1992 to present), Chairman of
One Midland Plaza the Board and Chief Executive
Sioux Falls, SD 57193 Officer (October 1992 to March
1997), Midland National Life
Insurance Company; President
and Director (1992 to September 1997),
Consolidated Investment Services,
Inc.; Chairman of the Board,
President, (December 1996 to
present), Sammons Financial
Holdings, Inc.; Chairman of the
Board and Chief Executive Officer/
President (December 1996 to present),
North American Company for Life and
Health Insurance; President and
Director (1996 to December 1997),
Briggs ITD Corporation; Director,
Chairman of the Board, President,
Chief Executive Officer
(1996 to present), NACOLAH
Holding Corporation; Director,
Chairman of the Board, President,
Chief Executive Officer
(1996 to present), North American
Company for Life and Health of
New York; Director, Chairman of
the Board, President, Chief
Executive Officer (1996 to present),
NACOLAH Life Insurance Company;
Director, Chairman of the Board,
President, Chief Executive Officer
(1996 to present), Institutional
Founders Life Insurance Company;
Chairman of the Board and Director
(1995-present), Midland Advisors
Company; President and Director (1992
to September 1997), CH Holdings, Inc.;
Director, (1992 to present), Sammons
Enterprises, Inc.; Chairman of the
Board, President, and Chief
Executive Officer (October 1992
to January 1997), Investors Life
Insurance Company of Nebraska;
President and Chief Operating
Officer (1990 to October 1992),
Franklin Life Insurance Company
Vice President (November 1996 to
present), NAC Holdings, Inc.
Michael M. Masterson Chief Executive Chief Executive Officer and
Midland National Life Officer and President (March 1997 to present)
One Midland Plaza President President and Chief Operating
Sioux Falls, SD 57193 Officer (March 1996 to February
1997), Executive Vice President-
Marketing (March 1995 to February
1996), Midland National Life
Insurance Company; President and
Chief Operating Officer (March
1996 to December 1996), Executive
Vice President-Marketing (March
1995 to February 1996), Investors
Life Insurance Company of Nebraska;
President and Director (September
1997 to present), CH Holdings, Inc.;
President and Director (December 1997
to present), Brigg ITD Corp; President
and Director (September 1997 to
present), Consolidated Investment
Services; Director (January 1995 to
present), Midland Advisors Company;
Director (January 1996 to present),
NACOLAH Holding Corp; Director (May
1997 to Present), Sammons Financial
Holdings; Vice President-Individual
Sales (prior thereto), Northwestern
National Life
Russell A. Evenson Senior Vice Senior Vice President and Chief
Midland National Life President and Actuary (March 1996 to present),
One Midland Plaza Chief Actuary Senior Vice President and Actuary
Sioux Falls, SD 57193 (prior thereto), Midland National
Life Insurance Company; Senior
Vice President and Chief Actuary
(March 1996 to December 1996),
Senior Vice President and Actuary
(prior thereto), Investors Life
Insurance Company of Nebraska;
Vice President and Chief Actuary
(1990 to 1993), Professional
Insurance Corporation
John J. Craig, II Executive Senior Vice President and Chief
Midland National Life Vice President Financial Officer (October 1993
One Midland Plaza to present), Midland National
Sioux Falls, SD 57193 Life Insurance Company; Treasurer
(January 1996 to present), Briggs
ITD Corp.; Treasurer (March 1996
to present), Sammons Financial
Holdings, Inc.; Treasurer
(November 1993 to present), CH
Holdings; Treasurer (November
1993 to present), Consolidated
Investment Services, Inc.;
Treasurer (November 1993 to
present), Richmond Holding
Company, L.L.C.; Senior
Vice President and Chief
Financial Officer (October 1993
to December 1996), Investors Life
Insurance Company of Nebraska;
Partner (prior thereto), Ernst
and Young
Steven C. Palmitier Senior Vice Senior Vice President and Chief
Midland National Life President and Marketing Officer (August 1996
One Midland Plaza Chief Marketing to present), Midland National
Sioux Falls, SD 57193 Officer Life Insurance Company; Senior
Vice President-Sales (prior
thereto), Penn Mutual Life
Insurance
Robert W. Korba Board of President and Director (since
Sammons Enterprises, Inc Directors 1988), Sammons Enterprises, Inc.
300 Crescent CT Member
Dallas, TX 75201
James N. Whitson Board of Executive Vice President (since
Sammons Enterprises, Inc Directors 1989), Sammons Enterprises, Inc.
300 Crescent CT Member
Dallas, TX 75201
E John Fromelt Chief Chief Investment Officer (since
Midland National Life Investment 1990), Midland National Life
One Midland Plaza Officer Insurance Company; President
Sioux Falls, SD 57193 (since August 1995), Midland
Advisors Company; Chief
Investment Officer (1996 to
present), North American Company
for Life and Health; Chief
Investment Officer (1990-1996),
Investors Life Insurance Company
of Nebraska
Executive Officers (Other Than Directors)
Jack L. Briggs Vice President, Vice President, Secretary and
Midland National Life Secretary, and General Counsel (since 1978),
One Midland Plaza General Counsel Midland National Life Insurance
Sioux Falls, SD 57193 Company; Vice President,
Secretary, and General Counsel
(1978 to 1996), Investors Life
Insurance Company of Nebraska
Gary W. Helder Vice President- Vice President-Policy
Midland National Life Policy Administration (since 1991),
One Midland Plaza Administration Midland National Life Insurance
Sioux Falls, SD 57193 Company; Vice President-Policy
Administration (1991-1996),
Investors Life Insurance Company
of Nebraska
Robert W. Buchanan Vice President- Vice President-Marketing
Midland National Life Marketing Services (March 1996 to
One Midland Plaza Services present), Second Vice President-
Sioux Falls, SD 57193 Sales Development (prior
thereto), Midland National Life
Insurance Company; Second Vice
President - Sales Development
(1983 to 1996), Investors Life
Insurance Company of Nebraska
Item 26. Persons Controlled by or Under Common Control With the
Depositor.
The Depositor, Midland National Life Insurance Company (Midland) is a
subsidiary of Sammons Enterprises, Incorporated. The Registrant is a
segregated asset account of Midland.
The following indicates the persons controlled by or under common
control with Midland:
Estate of Charles A. Sammons
Sammons Enterprises, Inc. (Delaware Corp) 56.82%
I. Richmond Holding Company, LLC (Delaware LLC) 95%
II. COMMUNICATIONS - Sammons Communications, Inc. (Delaware Corp) 100%
Sammons of Fort Worth (A partnership) 60%
Sammons Communications of New Jersey, Inc. (New Jersey Corp) 100%
NTV Realty, Inc. (Delaware Corp) 100%
Sammons Communications of Connecticut, Inc. (Connecticut Corp) 100%
Sammons Communications of Washington, Inc. (Delaware Corp) 100%
Oxford Valley Cable Vision, Inc. (Pennsylvania Corp) 88%
Sammons Communications of Texas, Inc. (Texas Corp) 100%
Sammons Communications of Illinois, Inc. (Delaware Corp) 100%
Sammons Communications of New York, Inc. (Delaware Corp) 100%
Sammons Communication of Pennsylvania, Inc. (Delaware Corp) 100%
Sammons Communications of Virginia, Inc. (Delaware Corp) 100%
Sammons Communications of Mississippi, Inc. (Delaware Corp) 100%
AC Communications, Inc. (Delaware Corp) 100%
Sammons Cardinal Inc. (Delaware Corp) 100%
Sammons of Indiana (A partnership) 50%
Sammons Communications of Indiana Inc. (Delaware Corp) 100%
Sammons of Indiana (A partnership) 50%
Capital Telecommunications Inc. (Delaware Corp) 100%
Metroplex Cable Television, Inc. (Texas Corp) 100%
Sammons of Fort Worth (A partnership) 40%
Pacific Communications, Inc. (Delaware Corp) 100%
III. Consolidated Investment Services Inc. (Nevada Corp) 100%
Richmond Holding Company, LLC (Delaware LLC) 5%
Midland Advisors Company (South Dakota Corp) 100%
Vinson Supply (UK) LTD. (United Kingdom Corp) 50%
A. INSURANCE
Sammons Financial Holdings, Inc. (Delaware Corp) 100%
Midland National Life Insurance Company (South Dakota Corp)
99.9%
(FEDID #46-0164570 NAIC CO Code 66044 SD)
NACOLAH Holding Corporation (Delaware Corp) 100%
(FEDID #36-412699)
Institutional Founders Life Insurance Company (Ill. Corp.) 100%,
FEDID No. 36-3508234, NAIC Co. Code 85707, Group Code
0431 IL
North American Company for Life & Health Insurance (Ill.
Corp)100%
FEDID No. 36-2428931, NAIC Co. Code 66974, Group Code
0431 IL
North American Company for Life & Health Insurance of
New York (New York Corp.), 100%
FEDID No. 361556010, NAIC Co. Code 91286, Group Code
0431 NY
NACOLAH Life Insurance Company (Ill. Corp.) 100%
FEDID No. 36-3723034, NAIC Co. Code 85456, Group Code 0431 IL
NAC Holdings, Inc. (Delaware Corp.) 100%
NACOLAH Ventures, L.L.C. (Delaware Corp.), FEDID No. 36-3495904
Midland Advisors Company (South Dakota Corp.) 100%
B. ALLIED
CH Holdings Inc. (Delaware Corp) 100%
Sammons Corporation (Texas Corp) 100%
Sammons Realty, Inc. (Delaware Corp) 100%
Wood Young and Company, Inc. (Texas Corp) 100%
Cathedral Hill Hotel, Inc. (Delaware Corp) 100%
Grand Bahama Hotel Company (Delaware Corp) 100%
Jack Tar Grand Bahama Limited (Bahama Corp) 100%
C. WATER
Mountain Valley Spring Company (Arkansas Corp) 100%
Water Lines Inc. (Arkansas Corp) 100%
D. SUPPLY AND SERVICE
Vinson Supply Company (Delaware Corp) 100%
Vinson Supply (UK) LTD. (United Kingdom Corp) 50%
Composite Thread Protectors (UK) LTD. (United Kingdom Corp)
100%
Myron C. Jacobs Supply Company (Oklahoma Corp) 100%
Composite Thread Protectors, Inc. (Pennsylvania Corp) 100%
Vinson Supply de Mexico S.A. de C.V. (Mexico Corp) 98%
Otter Inc. (Oklahoma Corp) 100%
Vinson Supply de Mexico S.A. de C.V. (Mexico Corp) 2%
Briggs-Weaver Inc. (Delaware Corp) 100%
TMIS Inc. (Texas Corp) 100%
Briggs-Weaver de Mexico S.A. de C.V. (Mexico Corp) 2%
Sealing Specialists of Texas, Inc. (Texas Corp) 100%
Briggs-Weaver de Mexico S.A. de C.V. (Mexico Corp) 98%
Vinson Marrero Company (Delaware Corp) 100%
Item 27. Number of Contract Owners
As of December 31, 1997 there were 1,128 holders of nonqualified
contracts and 1,990 holders of qualified contracts.
Item 28. Indemnification
The Company indemnifies actions against all officers, directors, and employees
to the full extent permitted by South Dakota law. This includes any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative. Such indemnification includes
expenses, judgments, fines, and amounts paid in settlement of such
actions, suits, or proceedings.
Item 29a.Relationship of Principal Underwriter to Other Investment Companies
Walnut Street Securities, the principal underwriter of the Registrant is
also the principal underwriter for flexible premium variable life insurance
contracts issued through Midland National Life Separate Account A.
Walnut Street Securities, the principal underwriter of the Registrant is
also the principal underwriter for General American Life Insurance
Company as well as Paragon Life Insurance Company.
Item 29b.Principal Underwriters
Unless otherwise noted, the address of each director and executive officer
ofWalnut Street Securities is 670 Mason Ridge Center Drive, Suite 300, St.
Louis MO 63141-8557
Name and Principal Position and Offices
Business Address With Walnut Street Securities
Richard J. Miller Pres., CEO, Dir.
Nancy L. Gucwa Chief Operating Officer, E.V.P., Dir.
Steve Abbey Chief Compliance Officer, V.P., Securities
Registered Options Principal, Municipal
Securities Registered Principal
Don Wuller Sr.V.P.Admin, CFO
Margret Witt Compliance Registered Options Principal
Randall Vogel Chief Operations Officer
Milton F. Svetanics Jr. Dir., Chief Legal Officer, V.P.
Mathew P. McCauley Dir.
Dona Barber Dir.
Bernard H. Wolzenski Dir.
Stephen Palmitier Dir.
Kevin Eichner Dir.
Genmark, Inc. Owner
Item 29c.Compensation of Principal Underwriters
The following commissions and other compensation were received by each
principal underwriter, directly or indirectly, from the Registrant during the
Registrant's last fiscal year:
(1) (2) (3) (4) (5)
Net
Name of Underwriting
Principal Discount and Compensation Brokerage
Underwriter Commissions On Redemption Commissions
Compensation
Walnut Street 1,310,003.97 0 0 0
Securities
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder,
are maintained by Midland National Life Insurance Company at:
One Midland Plaza
Sioux Falls, SD 57193
Item 31. Management Services
No management related services are provided to the Registrant, except as
discussed in Parts A and B.
Item 32. Undertakings and Representations - Midland National Life
Insurance Company represents that all fees and charges deducted under
the contract in the aggregate are reasonable in relation to the services
rendered, the expenses to be incurred and the risk assumed by Midland
National Life Insurance Company.
(a) A post-effective amendment to this registration statement will be filed
as frequently as is necessary to ensure that the audited financial statement in
the registration statement are never more than 16 months old for so long as
payments under the variable annuity contracts may be accepted.
(b) Any application to purchase a contract offered by the prospectus will
include a space that an applicant can check to request a Statement of
Additional Information.
(c) Any Statement of Additional Information and any financial statements
required to be made available under this form will be delivered promptly
upon written or oral request.
Section 403(b) Representation
Registrant represents that it is relying on a no-action letter dated November
28, 1988, to the American Council of Life Insurance (Ref. No. IP--88),
regarding sections 22(e), 27(c)(1), and 27(d) of the Investment Company
Act of 1940, in connection with redeemability restrictions on Section 403(b)
Contracts, and that paragraphs numbered (1) through (4) of that letter will
be complied with.
Statement Pursuant to Rule 6c-7
Midland National Life and Separate Account C rely on 17 C.F.R. Section
270.6c-7 and represent that the provisions of that Rule have been or will be
complied with. Accordingly, Midland National Life and Separate Account C are
exempt from the provisions of Sections 22(e), 27(c)(1), and 27(d) of the
Investment Company Act of 1940 with respect to any variable annuity contract
participating in such account to the extent necessary to permit compliance with
the Texas Optional Retirement Program.
REVVA ITEM24
<PAGE>
SIGNATURES
__________
As required by the Securities Act of 1933, and under the Investment
Company Act of 1940, the Registrant, Midland National Life Separate
Account C has caused this Registration Statement to be signed on
its behalf in the City of Sioux Falls, South Dakota on the 12th day
of February, 1998.
Midland National Life Separate Account C
(Seal) By: Midland National Life Insurance Company
By:_/s/Michael_M._Masterson______________
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
Directors of Midland National Life Insurance Company in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
_________________________ Chairman of the Board February 12, 1998
John C. Watson
/s/Michael_M._Masterson_____ Director, Chief February 12, 1998
Michael M. Masterson Executive Officer
and President
/s/John_J._Craig_II_________ Director, Executive February 12, 1998
John J. Craig II Vice President
/s/Russell_A._Evenson_______ Director, Senior Vice February 12, 1998
Russell A. Evenson President and Chief
Actuary
/s/Steven_C._Palmitier______ Director, Senior Vice February 12, 1998
Steven C. Palmitier President and Chief
Marketing Officer
/s/Thomas_M._Meyer__________ Vice President and February 12, 1998
Thomas M. Meyer Chief Financial
Officer
______________________ Director February 12, 1998
Robert W. Korba
______________________ Director February 12, 1998
James N. Whitson
REVVA MNLVA
<PAGE>
Registration No. 33-64016
POST EFFECTIVE AMENDMENT NO. 5
______________________________________________________________________________
______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________
EXHIBITS
TO
FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOR
MNL SEPARATE ACCOUNT C
AND
MIDLAND NATIONAL LIFE INSURANCE COMPANY
______________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
N-4EXH VAMNL
<PAGE>
EXHIBIT INDEX
Item 24.
(b) (1) Resolution of the Board of Directors of Midland National Life
Insurance Company authorizing establishment of Separate
Account C.
(b) (3) (a) Principal Underwriting Agreement between Midland National
Life Insurance Company and Walnut Street Securities
(b) Registered Representative Contract
(b) (4) (a) Form A053A1 Flexible Premium Deferred Variable Annuity Contract
(b) Maturity Date Endorsement for Qualified Contracts
(c) Endorsement for Tax Sheltered Annuity
(d) Form A057A1 Flexible Premium Deferred Variable Annuity
Contract
(b) (5) (a) Form of Application for Flexible Premium Deferred Variable
Annuity Contract
(b) Supplement to Application
(b) (6) (a) Articles of Incorporation of Midland National Life Insurance
Company
(b) By-laws of Midland National Life Insurance Company
(b) (8) (a) Form of Participation Agreement between Midland National Life
Insurance Company and Fidelity VIP I and VIP II
(b) Form of Participation Agreement between Midland National Life
Insurance Company and Fidelity VIP III
(c) Form of Participation Agreement between Midland National Life
Insurance Company and American Century Investment Services
Inc.
(b) (9) Opinion and Consent of Counsel
(b)(10) (a) Consent of Counsel
(b) Consent of Independent Auditors
REVVA INDX
<PAGE>
Item 24. (b) (1) Resolution of the Board of Directors of Midland National
Life Insurance Company authorizing establishment of Separate
Account C.
RESOLUTION
BE IT RESOLVED, that the Company pursuant to the provisions of Chapter 58-28
of the South Dakota Insurance Code, hereby establishes a separate account
designated, "Midland National Life Separate Account C" (hereinunder "Separate
Account C") for the following use and purposes, and subject to such
conditions as are hereinafter set forth;
FURTHER RESOLVED, that the Separate Account C shall be established for the
purpose of providing for the issuance by the Company of such variable annuity
contracts (Contracts) as the Board of Directors may designate and shall
consti-
tute a separate account into which allocated amounts are paid to or held by
the Company under such Contracts; and
FURTHER RESOLVED, that the income, gains and losses, whether or not realized,
from assets allocated to the Separate Account C shall, in accordance with
the Contracts, be credited to or charged against such account without regard to
other income, gains, or losses of the Company; and
FURTHER RESOLVED, that the fundamental investment policy of the Separate
Account C shall be to invest or reinvest the assets of the Separate Account
C in securities issued by such investment companies registered under the
Investment Company Act of 1940 as may be specified in the respective
Contracts; and
FURTHER RESOLVED, that Separate Account C shall be divided into Investment
Divisions, each of which shall invest in the shares of an investment company,
and net premiums under the Contracts shall be allocated to the eligible
portfolios set further in the Contracts in accordance with instructions
received from owners of the Contracts; and
FURTHER RESOLVED, that the Board of Directors expressly reserves
the right to
add, combine, or remove any Investment Divisions of Separate Account C
as it may hereafter deem necessary or appropriate; and
FURTHER RESOLVED, that any two of the following: the President, any Vice
President, the Secretary, the Treasurer and the Controller be, and hereby
are authorized to specify from time to time by written instrument, duly
attached to and made a part of the records of the Company;
(1) Those persons who shall be authorized to deposit such
amount in the Separate Account C or in each investment
division thereof as may be necessary or appropriate to
facilitate the commencement of the Separate Account C's
operations;
(2) Those persons who shall be authorized to transfer funds
from time to time between the Company's general account
and the Separate Account C as deemed necessary or approp-
riate and consistent with the terms of the Contracts.
FURTHER RESOLVED, that the Board of Directors of the Company be, and hereby
is authorized to change the designation of the Separate Account C to such
other designation as it may deem necessary or appropriate; and
FURTHER RESOLVED, that the appropriate officers of the Company, with such
assistance from the Company's auditors, legal counsel, and independent
consultants or others as they may require, be, and they hereby are,
authorized
and directed to take all action necessary to: (a) Register the Separate
Account C as a unit investment trust under the Investment Company Act
of 1940,
as amended; (b) Register the Contracts in such amounts, which may be an
indefinite amount, as the officers of the Company shall from time to time
deem appropriate under the Securities Act of 1933; and (c) Take all other
actions which are necessary in connection with the offering of said Contracts
for sale and the operation of the Separate Account C in order to comply with
the Investment Company Act of 1940, the Securities Exchange Act of 1934, the
Securities Act of 1933, and other applicable federal laws, including the
filing of any amendments to registration statements, any undertakings, and
any applications for exemptions from the Investment Company Act of 1940 or
other applicable federal laws as the officers of the Company shall deem
necessary or appropriate; and
FURTHER RESOLVED, that the President, any Vice President, and the Secretary,
and each of them with full power to act without the others, hereby are
severally authorized and empowered to prepare, execute, and cause to be filed
with the Securities and Exchange Commission on behalf of the Separate Account C
and by the Company as sponsor and depositor, a Form of Notification of
Registration Statement under the Securities Act of 1933 registering the
Contracts, and any and all amendments to the foregoing on behalf of the
Separate Account C and the Company and on behalf of and as attorneys for the
principal executive officer and/or the principal financial officer and/or the
principal accounting officer and/or any other officer of the Company; and
FURTHER RESOLVED, that Jack L. Briggs and Frederick R. Bellamy are hereby
appointed as agents for service under any such registration statement duly
authorized to receive communication and notices from the Securities and
Exchange Commission with respect thereto; and
FURTHER RESOLVED, that the appropriate officers of the Company be, and they
hereby are, authorized on behalf of the Separate Account C and on behalf
of the Company to take any and all action that they may deem necessary or
advisable in order to sell the Contracts, including any registrations, filings,
and qualifications of the Company, its officers, agents and employees, and
the Contracts under the insurance and securities laws of any of the states of
the United States of America or other jurisdictions, and in connection there
with to prepare, execute, deliver, and file all such applications, reports,
covenants, resolutions, applications for exemptions, consents to service or
process and other papers and instruments as may be required under such laws,
and to take any and all further action which said officers or counsel of the
Company may deem necessary or desirable (including entering into whatever
agreements and contracts as may be necessary) in order to maintain such
registrations or qualifications for as long as said officers or counsel
deem it to be in the best interest of the Separate Account C and the
Company; and
FURTHER RESOLVED, that the President, any Vice President, and the Secretary
be, and hereby are, authorized in the names and on behalf of the Separate
Account C and the Company to execute and file irrevocable written consents
on the part of the Separate Account C and the Company to be used in such states
where such consents
to service of process may be requisite under the insurance or securities
laws therein in connection with said registration or qualification of
Contracts and to appoint the appropriate state official, or such other person
as may be allowed by said insurance or securities laws, agent of the Separate
Account C and of the Company for the purpose of receiving and accepting
process; and
FURTHER RESOLVED, that the President of the Company be, and hereby is
authorized to establish procedures under which the Company will institute
procedures for providing voting rights for owners of such Contracts with
respect to securities owned by the Separate Account C; and
FURTHER RESOLVED, the the President of the Company is hereby authorized to
execute such agreement or agreements as are deemed necessary and appropriate
(i) with North American Management, Inc. ("NAM"), or other qualified
entity under which NAM or such other entity will be appointed principal under-
writer and distributor for the Contracts and (ii) with one or more qualified
entities to provide administrative and/or custodial services in connection
with the establishment and maintenance of the Separate Account C and the
design, issuance, and administration of the Contracts.
FURTHER RESOLVED, that, since it is expected that the Separate Account C will
invest in the securities issued by one or more investment companies, the
appropriate officers of the Company are hereby authorized to execute
whatever agreement or agreements as may be necessary or appropriate to enable
such investments to be made.
FINALLY RESOLVED, that the appropriate officers of the Company, and each
of them, are hereby authorized to execute and deliver all such documents and
papers and to do or cause to be done all such acts and things as are deemed
necessary or desirable to carry out the foregoing resolutions and the intent
and purposes thereof.
SECRESO SEPACTC
<PAGE>
Item 24.(b)(3)(a) Principal Underwriting Agreement between Midland
National Life Insurance Company and Walnut Street Securities
PRINCIPAL UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT made this 1st day of June, 1996, by and
between Walnut Street Securities (hereinafter called "WSS") and
Midland National Life Insurance Company (hereinafter called the
"Company"), on its own behalf and on behalf of Midland National Life
Insurance Separate Account A and Separate Account C (hereinafter
"Separate Accounts"), separate accounts of the Company, witnessed
that:
WHEREAS, the Separate Accounts were established under authority of a
resolution of the Company's Board of Directors so the Company could
set aside and invest assets attributable to certain flexible premium
variable life contracts and variable deferred annuity contracts
(hereinafter called the "Contracts") issued by the Company;
WHEREAS, the Company has registered the Separate Accounts as unit
investment trusts under the Investment Company Act of 1940 (the
"Investment Company Act") and has registered the Contracts under
the Securities Act of 1933;
WHEREAS, the Company and the Separate Accounts desire to have
Contracts sold and distributed through WSS and WSS is willing to sell
and distribute such Contracts under the terms stated hereinafter.
NOW THEREFORE, for and in consideration of these premises and the
covenants and agreements hereinafter stated, the parties hereto agree
as follows:
1. The Company grants to WSS the right to be, and WSS agrees to serve
as, a distributor and principal underwriter of the Contracts during
the term of this Agreement. WSS agrees to use its best efforts to
solicit applications for the Contracts, and to undertake, at its own
expense, to provide all sales services relative to the Contracts and
otherwise to perform all duties and functions which are necessary and
proper for the distribution of the Contracts.
2. All premiums for the Contracts shall be remitted promptly in full
together with such application forms and any other required
documentation to the Company. Checks or money orders in payment of
premium shall be drawn to the order of "Midland National Life
Insurance Company."
3. WSS agrees to offer the Contracts for sale in accordance with the
prospectus therefor then in effect. WSS is not authorized to give
any information or to make any representations concerning the
Contracts other than those contained in the current prospectus
therefor filed with the Securities and Exchange Commission or in such
sales literature as may be authorized by the Company. Neither WSS
nor any person, entity, agent or representative or associated through
it shall make, use or provide any advertisement, sales document,
circular, or any other document to a customer in connection with a
solicitation or sale unless with the prior approval of the Company.
4. On behalf of the Separate Accounts, the Company shall furnish WSS with
copies of all prospectuses, financial statements and other documents
which WSS reasonably requests for use in connection with the
distribution of the Contracts.
5. WSS represents that it is duly registered as a broker-dealer under
the Securities Exchange Act and is a member in good standing of the
NASD and, to the extent necessary to offer the Contracts, shall be
duly registered or otherwise qualified under the securities and
insurance laws of any state or other jurisdiction. WSS shall be
responsible for carrying out its sales and underwriting obligations
hereunder in continued compliance with the NASD Rules of Fair
Practice and federal and state securities and insurance laws and
regulations. Without limiting the generality of the foregoing, WSS
agrees that it shall be fully responsible for:
(a) ensuring that no person shall offer or sell the Contracts on
its behalf until such person is duly registered as a
representative of WSS, duly licensed and appointed by the
Company, and appropriately licensed, registered, or otherwise
qualified to offer and sell such Contracts under the federal
securities and insurance laws and any applicable securities and
insurance laws of each state or other jurisdiction in which such
Contracts may be lawfully sold, in which the Company is licensed
to sell the Contracts, and in which such persons shall offer or
sell the Contracts; and
(b) training, supervising, and controlling of all such persons for
purposes of complying on a continuous basis with the NASD Rules
of Fair Practice and with federal and state securities and
insurance law requirements applicable in connection with the
offering and sale of the Contracts. In this connection WSS
shall:
(1) conduct such training (including the preparation and utilization
of training materials) as in the opinion of WSS is necessary to
accomplish the purposes of this Agreement;
(2) establish and implement reasonable written procedures for
supervision of sales practices of WSS agents, representatives,
or brokers selling the Contracts; and
(3) take all reasonable and appropriate steps to ensure that its
associated persons shall not sell a Contract in the absence of
reasonable grounds to believe that the purchase of the Contract
is suitable for such applicant.
6. Notwithstanding anything in this Agreement to the contrary, the
Company through WSS, may enter into sales agreements with other
independent broker-dealers for the sale of the Contracts. All such
sales agreements entered into by WSS shall provide that each
independent broker-dealer will assume full responsibility for
continued compliance by itself and its associated persons with the
NASD Rules of Fair Practice and applicable federal and state
securities and insurance laws. All associated persons of such
independent broker-dealers soliciting applications for the Contracts
shall be duly and appropriately licensed, contracted or appointed by
the Company for the sale of the Contracts under the insurance laws of
the applicable states or jurisdictions in which such Contracts may be
lawfully sold.
7. The Company shall apply for the proper insurance licenses in the
appropriate states or jurisdictions for the designated persons
associated with WSS or with other independent broker-dealers which
have entered into agreements with WSS for the sale of the Contracts,
provided that the Company reserves the right in its sole discretion
to refuse to appoint any proposed registered representative as an
agent or broker, and to terminate the insurance license, contract or
appointment of an agent or broker once appointed. Agents and
representatives associated with WSS and other independent broker-
dealers are deemed independent contractors and nothing in this
Agreement shall be construed to create the relationship of employer
and employee.
8. The Company and WSS shall cause to be maintained and preserved for
the periods prescribed such accounts, books, and other documents as
are required of them by the Investment Company Act, the Security
Exchange Act, the NASD, and any other applicable laws and
regulations. The books, accounts and records of the Company, the
Separate Accounts, and WSS as to all transactions hereunder shall be
maintained so as to disclose clearly and accurately the nature and
details of the transactions. The Company shall maintain such books
and records of WSS pertaining to the sale of the Contracts and
required by the Security Exchange Act or the NASD as may be mutually
agreed upon from time to time by the Company and WSS; provided that
such books and records shall be jointly owned property of WSS and the
Company, and shall at all times be subject to such reasonable
periodic, special or other examination by the SEC, the NASD, and all
other regulatory bodies having jurisdiction. The Company shall have
complete use of, and right to the information contained in such books
and records. The Company shall be responsible for sending all
required confirmations on customer transactions in compliance with
applicable regulations, as modified by any exemptions or other relief
obtained by the Company. WSS shall cause the Company to be promptly
furnished with such reports as the Company may reasonably request for
the purpose of meeting its reporting and recordkeeping requirements
under all Federal and State Laws and Regulations, the Investment
Company Act, Security Exchange Act, the NASD, and the insurance laws
of the State of South Dakota and any other applicable states or
jurisdictions.
9. The Company shall have the responsibility for paying (i) all
commissions or other fees to its licensed or appointed representatives
and agents which are due for the sale of the Contracts and (ii) any
compensation to other independent broker-dealers and their associated
persons due for the sale of the Contracts under the terms of any sales
agreements between the Company and with such broker-dealers.
Notwithstanding the preceding sentence, no associated person or
broker-dealer shall have an interest in any deductions or other fees
payable to WSS as set forth herein.
10. WSS and the Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding
arising in connection with the Contracts distributed under this
Agreement. WSS and the Company further agree to cooperate fully in
any securities regulatory inspection, inquiry, investigation or
proceeding or any judicial proceeding with respect to the Company,
WSS, their affiliates and their representatives to the extent that
such inspection, inquiry, investigation or proceeding is in
connection with Contracts distributed under this Agreement.
Without limiting the foregoing:
(a) WSS will be notified promptly of any customer complaint or
notice of any regulatory inspection, inquiry, investigation or
proceeding received by the Company with respect to WSS or any
representative or which may affect the Company's issuance of any
Contract marketed under this Agreement.
(b) WSS will promptly notify the Company of any customer complaint or
notice of any regulatory inspection, inquiry, investigation or
proceeding received by WSS or its affiliates with respect to WSS
or any representative in connection with any Contract distributed
under this Agreement or any activity in connection with any such
Contract. In the case of a customer complaint, WSS and the
Company will cooperate in investigating such complaint and arrive
at a mutually satisfactory response.
11. The services of WSS to the Separate Accounts hereunder are not to be
deemed exclusive and WSS shall be free to render similar services to
others so long as its services hereunder are not impaired or
interfered with thereby.
12. (a) This Agreement may be terminated by either party hereto upon 60
days' written notice to the other party.
(b) This Agreement may be terminated upon written notice of one party
to the other party hereto in the event of bankruptcy or insolvency
of such party to which notice is given.
(c) This Agreement may be terminated at any time upon the mutual
written consent of the parties thereto.
(d) This Agreement shall automatically be terminated in the event of
its assignment.
(e) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts
hereunder, including payments of premiums or contributions
subsequently received for Contracts in effect at the time of
termination of the Contracts issued pursuant to applications
received by the Company prior to termination.
13. All notices, requests, demands, and other communications required or
permitted under this Agreement shall be in writing and shall be
deemed to have been duly given and made upon being delivered either
by courier or fax delivery to the Party for whom it is intended,
provided that a copy thereof is deposited, postage prepaid, certified
or registered mail, return receipt requested, in the United States
mail, bearing the address shown in this Section 13 for, or such other
address as may be designated in writing hereafter by, such part;
(a) If to WSS: Walnut Street Securities, Inc.
670 Mason Ridge Center Drive
Suite 300
St. Louis, Missouri 63141
Attention: Nancy L. Gucwa
(b) If to the Company: Midland National Life Insurance
Company
One Midland Plaza
Sioux Falls, South Dakota 57193
Attention: Michael M. Masterson
14. This Agreement shall be subject to the provisions of Investment
Company Act and the Securities Exchange Act and the rules,
regulations, and rulings thereunder and of the NASD, from time to
time in effect, including such exemptions from the Investment Company
Act as the Securities and Exchange Commission may grant, and the
terms hereof shall be interpreted and construed in accordance
therewith. Without limiting the generality of the foregoing, the
term "assigned" shall not include any transaction exempted from
section 15(b)(2) of the Investment Company Act.
WSS shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of the Separate Accounts, present or
future, any information, reports or other material which any such body
by reason of this Agreement may request or require pursuant to
applicable laws or regulations.
15. The Company agrees to reimburse WSS the estimated annual costs WSS
incurs in connection with certain financial reporting WSS has to make
relating to the sale of the Contracts described herein. Such
estimated annual costs shall be mutually agreed upon by WSS and the
Company for each calendar year on or before September of the preceding
year, except that the estimated costs for 1996 of Sixty-Five Hundred
Dollars ($6,500) shall be paid by the Company to WSS within 20 days
following the execution of this Agreement by both parties. Within 20
days following the end of each calendar year during the term of this
Agreement, the Company shall make a payment to WSS for the mutually
agreed upon estimated costs.
16.Company shall indemnify and hold WSS, its officers, employees, agents,
and affiliated companies, harmless from all claims, actions, suits,
judgments, liabilities, losses, costs and expenses, including
reasonable attorneys' fees, which result, directly or indirectly,
from any negligent act, omission or misrepresentation of Company,
arising out of the sale of the Contracts or for breach of the
Agreement.
WSS shall indemnify and hold the Company, its officers, employees,
agents, and its affiliated companies harmless from any and all
claims, actions, suits, judgments, liabilities, losses, costs and
expenses, including reasonable attorneys' fees, which result,
directly or indirectly, from any negligent act, omission or
misrepresentation of WSS arising out of the sale of the Contracts
or any of its representatives or agents, or for breach of the
Agreement.
The agreements of indemnification contained in this Paragraph 16
shall survive the termination of this Agreement and be binding on
the successors and assigns of the parties hereto.
17. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
18. This Agreement shall be construed and enforced in accordance with
the governed by the laws of the State of South Dakota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officials thereunder duly authorized
and seals to be affixed, as of the day and year first above written.
MIDLAND NATIONAL LIFE INSURANCE COMPANY
Attest: __Jack_L._Briggs__
Jack L. Briggs, Secretary
By: __Michael_M._Masterson__
Michael M. Masterson, President
WALNUT STREET SECURITIES
Attest:
, Secretary
By: __Nancy_L._Gucwa__
Nancy L. Gucwa, Chief Operating Officer
0012DRA2 PMP
<PAGE>
Item 24. (b) (3) (b) Registered Representative Contract
REGISTERED REPRESENTATIVE AGREEMENT
BETWEEN
WALNUT STREET SECURITIES, INC.
AND
MIDLAND NATIONAL LIFE INSURANCE COMPANY
This Agreement is by and between Walnut Street Securities, Inc.
(hereafter referred to as "Company") , and the undersigned Registered
Representative (hereafter referred to as "Contractor") .
Whereas, Company is a securities broker/dealer licensed and
qualified to transact business pursuant to rules and regulations
promulgated by the Securities and Exchange Commission (SEC) , the National
Association of Securities Dealers, Inc. (NASD) , and certain state
administrative authorities; and
Whereas, Contractor is currently a duly qualified and licensed
Registered Representative in good standing pursuant to the rules and
regulations of all applicable State and Federal administrative
authorities and regulatory associations; and
Whereas, the parties mutually desire to enter into this Agreement
so that Contractor may transact securities sales through Company under
the following terms and conditions:
Now therefore, in consideration of the mutual promises, conditions
and covenants as hereinafter set forth, the parties hereto agree as
follows:
1. BASIC ENGAGEMENT
Contractor is hereby engaged by the Company as an independent
contractor to solicit and obtain applications and orders for the
purchase and sale of investment company shares and other securities
and investments approved by Company. Contractor will represent
Company only in states where Company and Contractor are properly
licensed, and only with respect to the types of activities in which
Company and Contractor are legally permitted to engage. Contractor
shall make no solicitation for any securities until he/she has been
authorized by Company to do so.
2. DUTIES OF CONTRACTOR
Regulatory Compliance: Contractor shall familiarize himself/
herself with and at all times during the term of this Agreement
shall comply with, the rules and interpretations of the NASD,
regulations and rules of the SEC, and all other statutes,
regulations, and rules of the federal government and any state
governmental or regulatory agency which may now or thereafter
apply to Contractor's activities.
Licenses: Contractor shall timely apply for, obtain, and maintain
all necessary licenses, permits, and registrations as are required
by any statute, rule or regulation in connection with Contractor's
activities thereunder.
Supervisory Procedures Manual: Contractor shall at all times
strictly follow and adhere to the requirements and standards set
forth in Company's Supervisory Procedures Manual, including any
amendments added to it in the future, and any company policies not
contained in the Manual.
Sales Literature: Contractor shall not use in connection with his
activities hereunder, whether by direct mail, personal distribu-
tion of printed material, newspaper, radio, telephone, television,
or by any other media, any sales or advertising literature not
specifically authorized by Company for that purpose.
Selling Through Registered Representatives: Contractor shall
perform all securities selling and distribution activities alone
or only in conjunction with other Registered Representatives or
associated persons of Company unless otherwise approved in writing
by a Supervisory Officer of Company.
Work Schedule: Contractor shall be free to determine his/her own
working hours. However, Contractor shall be expected to attend
all staff meetings, briefings, and supervisory and educational
sessions to which he is invited by a Supervisory Officer of
Company.
Record Keeping: Contractor shall complete and maintain such files
and records as Company may require in its written supervisory
procedures.
Solicitation:
In soliciting the purchase or sale of any security, Contractor
shall fully disclose all material facts relating thereto (which
shall include delivery of a current prospectus, memorandum or
offering circular relating to such security , shall not make
any untrue statement or misrepresentation, or omit any material
fact concerning the securities involved, and shall fully
explain the terms of any contractual arrangements relating
thereto to the prospective purchaser or seller.
Contractor agrees, in connection with all solicitations, not to
take or recommend any action which he/she has reason to believe
is not suitable for or in the best interests of his/her client
or customer.
Contractor agrees to indemnify Company against any violations
of Paragraphs 2(H (I) or 2(H) (ii).
Approved Products: Contractor shall offer for sale and sell only
products that have been approved in advance by Company. Without
express prior written approval of Company, Contractor shall not
act for any customer in any dealings in securities except as a
representative of Company, and will not accept remuneration in any
form, directly or indirectly, on account of dealings in unapproved
securities.
Prohibition Against Commingling: Under no circumstances shall
Contractor commingle funds received from investors for securities
purchased with Contractor's own funds, whether in a personal,
business, trust, or special account. All funds so received shall
forthwith be forwarded to Company.
Production Standards: Contractor shall meet such sales production
standards as are announced by Company from time to time.
Indemnification: Contractor shall indemnify, protect, defend and
hold harmless Company against any claims, charges, fines, damages,
assessments, and any legal expenses incurred by Company arising
from Contractor's negligence or failure to comply with the
provisions of any applicable law or regulation, the rules of the
NASD or any other regulatory association, or the procedures and
policies established by Company.
Customer Fails: Contractor shall be liable and fully responsible
for any loss which the Company sustains as a result of any
transaction entered into involving a customer or customer account
which is under Contractor's management including, but not limited
to, all costs of client reneges, failure to comply with margin
calls and all other matters which involve the failure of a
customer to meet his or her just financial responsibility, and
Contractor will indemnify the Company for any and all such losses
including the Company's attorney's fees and other related legal
fees and costs, damages, expenses, claims or liabilities resulting
from such customer transactions.
3. COMPENSATION
Rate: Contractor's sole compensation from Company shall be in the
form of commissions earned on securities sold by Contractor and such
bonuses as Company shall determine. Company's commission schedule
may vary according to production standards or the type of security
being sold. However, unless otherwise agreed between the parties,
Contractor shall receive a percentage of the dealer's concession or
other commission received by Company on account of his sales. This
percentage and other compensation terms are set forth in the
commission schedule hereto and incorporated herein by reference.
For these purposes, a securities "sale" shall occur if and only if a
transaction has been concluded, all applicable offering and
subscription documents have been duly executed, and the issuer or
escrow agent has distributed the dealer's concession to Company in
connection with such transaction. Company reserves the right to
impose a service charge on certain transactions executed through
Company's clearing correspondent(s .
For "staged" or installment sales of securities, Company shall owe
the agreed-upon share of the dealers concession to Contractor only
as to the portion of the installment which is then paid in cash to
the issuer and provided the issuer in turn has paid a dealer's
concession to Company. If Company and issuer agree to any form of
accelerated payment schedule regarding dealer's concessions paid on
staged-payment transactions, the Contractor shall also participate
in such accelerated payment schedule.
In the event that any securities transaction is rescinded or revoked
and Company is required to refund its dealer's concession to the
issuer as to such sale, then Company has the right to require
Contractor to refund any commission he/she received in connection
with such securities transaction, and may offset this amount against
money owed to Contractor.
When Due: Contractor hereby waives any and all rights to receive
payment of commissions due until such time as Company is in receipt
of the dealer's concessions. Contractor affirms that Company's
liability of dealer's concessions payable is limited to the proceeds
of dealer's concessions associated with his sales actually received.
Furthermore, no commissions shall be payable by Company relative to
any security sale for which all documentation required by Company
is incomplete, not in Company's possessions, or the transaction was
completed in a manner not consistent with Company's policies and
procedures.
Offsets and Minimums: Company shall have the right to offset
against commissions any charges to the Contractor occasioned by
improper activity, dishonored installment payments, failed trades
or deliveries, and similar items, including expenses. Company shall
also have the right of offset against commissions due to Company's
parent (General American Life Insurance Company) or any of Company's
affiliates which have arisen by or on behalf of Contractor.
Company will pay no commissions on securities sales which generate
commissions of less than $1.00. The Company will pay no commission
for any payment period in which the total of commissions due
Contractor is less than $100.00. Commissions due of less than
$100.00 per payment period will be carried forward by Company and
paid to Contractor when the total due exceeds this amount.
Payment of Commissions Upon Termination: All unpaid commissions
earned by Contractor, including, but not limited to, commissions
earned in customer accounts by reason of subsequent installment
payments, dividend reinvestment, etc., shall be paid by Company to
Contractor for one month following termination of this Agreement
unless this Agreement is terminated by Company due to violation of
its terms or for production which does not meet Company standards,
in which event all unpaid commissions due Contractor shall be
forfeited.
Company shall have the right to offset against commission any
charges to Contractor occasioned by improper activity or dishonored
installment payments, failed trades or deliveries, expenses of
termination, and similar items. Company shall also have the right
to offset all expenses of investigation and reasonable attorney's
fees.
The minimum payment standards outlined in 3(C above will apply to
payments after termination.
Death or Disability of Contractor: In the event that this Agreement
is terminated by reason of the death or permanent and total dis-
ability of Contractor, Company shall pay to the legal representative
of the deceased or to the former Contractor as the case may be, all
commissions due pursuant to this Agreement, subject to the limita-
tions contained in Paragraph 3(C . The rate of commissions shall be
the same rate the Contractor was receiving at the time of his death,
disability or termination.
4. COMPANY'S OBLIGATIONS
The Company's only obligation hereunder is to pay the agreed-upon
compensation and to take all steps necessary to assure that
Company always complies with all requirements of the SEC, the
NASD, and the various state securities regulators.
5. RELATIONSHIP OF THE PARTIES
Nothing herein shall be construed to create the relation of
employer and employee between Company and Contractor. Contractor
may exercise his/her own judgment as to those persons from whom
he/she will solicit subscriptions and orders for securities, the
method of solicitation, and the time and place of solicitation;
provided however, that in such activities Contractor shall conform
to such supervision and policies as may be established by Company
in order to comply with all applicable statutes, rules and
regulations governing the solicitation of subscriptions and orders
for the purchase or sale of securities.
"Supervision" as used herein is a technical term defined by the
Rules of Fair Practice of the NASD and certain securities
regulators, and relates only to the propriety or impropriety of
making offers, sales and purchases of securities. Contractor will
not have to report to any employee of the Company on matters not
related to securities compliance. He/she is free to work as much
or as little as he/she chooses in any location he/she chooses.
Contractor will have complete control over the details of her/her
work.
Fringe Benefits: Contractor shall receive no fringe benefits
under this Agreement whatsoever: no insurance benefits, no
disability income, no vacation pay, and no expense reimbursement.
Contractor is not entitled to participate in any profit-sharing
or pension retirement plan provided for Company's employees.
Contractor's Expenses: Contractor shall be solely responsible for
all his/her expenses, including but not limited to travel, enter-
tainment, office expense, telephone, education expense, dues,
subscriptions, and shall receive no renumeration or reimbursement
of any nature whatsoever other than the commission referred to
herein.
Area: Contractor is neither assigned nor limited to any
geographical or demographically territory for client soliciations
other than those imposed by his/her licenses or registrations.
Records: Contractor shall maintain his/her own books and records
in whatever format he/she elects, provided he/she supplies
Company the information it specifies in a readiliy accessible and
recognizable form.
UNIQUE RELATIONSHIP
This Agreement and Contractor's relationship with Company are unique
and separate from any Agreement Company may have with any other
person. Contractor's rights and obligations with respect to the
Company are entirely dependent upon this Agreement. Contractor
agrees, however, not to sell any securities except through Company
unless Company agrees in writing to a sale through another broker/
dealer. Company maintains the right to enter into other independent-
contractor agreements with other Registered Representatives on terms
which may be more or less favorable than those contained herein,
without affording Contractor any rights under such other Agreements.
EMPLOYEES OF CONTRACTOR
Contractor agrees that any persons whom Contractor shall employ to
assist him in the performance of his/her duties hererunder shall be
the employees of Contractor and not employees or agents of Company.
Contractor shall take such steps as are necessary and appropriate to
ensure that none of his/her employees thinks himself/herself to be a
Company employee, and that no employee who does not have his/her own
contract with Company purports to represent Company in dealing with
the public.
NO IMPLIED AUTHORITY TO CONTRACT
Contractor shall have no authority to bind Company by any statement,
promise, representation, agreement or contract of any kind, or to
waive any of Company's rights, or to obligate Company in any way
unless specifically authorized to do so by Company in writing.
NO AUTHORITY TO ASSIGN
This Agreement is one for the services of Contractor, who shall not
be entitled to assign or delegate to any other person the authority
and obligations assumed or any rights, claims or interests granted
or arising hereunder without first obtaining Company's written
consent.
AUTHORIZATION TO RECORD
Contractor acknowledges and agrees that telephone conversation with
company and its employees in which purchase or sale orders or their
requests in conjunction with this Agreement are made, or may be made,
may be recorded by Company in order to resolve any questions which
may arise out of such orders or requests. Contractor hereby consents
to the recording of such telephone conversations, and agrees to be
bound by the statements made and recorded.
TERMINATION
This Agreement shall continue indefinitely unless and until
terminated by either party. Termination of this Agreement by either
party may be with or without cause and is accomplished at such time
either party mails or delivers to the other written notice.
Upon termination of this Agreement, Contractor agrees to return to
Company the Supervisory Procedures Manual and any other manuals or
records as may be requested by Company. Contractor also agrees that
all stationery, brochures, etc. which disclose Contractor's relation-
ship with Company shall be immediately destroyed upon termination of
this Agreement.
APPLICABLE LAW
This Agreement shall be controlled, construed, and enforced in
accordance with the laws of the State of Missouri.
NO WAIVER
No waiver, express or implied, by Company of a default by Contractor
under this Agreement shall constitute a waiver of any subsequent
default; and following a waiver, express or implied, a demand for
strict compliance thereafter need not be served on Contractor.
PARTIAL INVALIDITY
If any term, condition, or provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforce-
able, the remainder of the provisions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired
or invalidated.
CAPTIONS
The captions of this Agreement are for convenience and reference
only, and the words contained therein shall in no way be held to
explain, modify, amplify, or aid in the interpretation, construction,
or meaning of the provisions of this Agreement.
INTERPRETATION AND DEFINITIONS
Unless otherwise provided in this Agreement, the masculine gender
includes the feminine, the singular number includes the plural, and
the word "person" includes corporation, partnership, firm, or
association wherever the context so requires.
ENTIRE AGREEMENT
This Agreement supersedes all previous agreements, whether oral or
written, between Company and Contractor, and embodies all representa-
tions, inducements, understandings and agreements of the parties
hereto relating to the subject matter hereof. The terms hereof may
not be changed except in writing duly signed by Company and
Contractor or as otherwise specified by the terms of this Agreement.
TIME OF THE ESSENCE NOTICE
Time is of the essence with respect to this Agreement.
NOTICE
Contractor shall immediately advise Company of any action or fact
whatsoever which comes to Contractor's knowledge which may possibly
constitute a violation of any securities laws or regulations with
respect to Company or Contractor or with respect to any party who is,
has been, or may be doing business with Company. Contractor shall
promptly notify Company of any past, present, or future investiga-
tions or inquires by governmental agencies and will send to Company
copies of all correspondence sent to or received from such govern-
mental agencies as and when sent or received. All notices called for
in this Agreement shall be in writing and shall be sufficient if sent
by ordinary mail to the addresses specified below or to such other
address as shall be designated by one party in writing to the other
party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by one of its corporate officers, and the
Contractor has set his hand to this Agreement as of the day and year
written below.
Dated: _____________________________
"CONTRACTOR" "COMPANY"
___________________________________
_________________________________
Signature Signature
___________________________________ Name:
___________________________
Print Name
Title: _____________________________
Walnut Street Securities, Inc.
1801 Park 270 Drive, Ste. 220
St. Louis, MO 63146
Address:
___________________________________
___________________________________
SEC WSSREP
<PAGE>
Item 24.(b)(4)(a) Form A053A1 Flexible Premium Deferred Variable
Annuity Contract
In this Contract, the terms "We", "Our", and "Us" are used to refer to
Midland National Life Insurance Company; the terms "You" and "Your"
refer to the Owner of this Contract.
If the Annuitant and Owner are living on the Maturity Date, We will pay a
monthly life income to the Annuitant starting on the Maturity Date, or We
will pay the Maturity Value to You upon request.
If We receive due proof of the Annuitant's death prior to the Maturity
Date, We will pay the Death Benefit of the Contract at the time We
receive due proof of the Annuitant's death and an election of how the Death
Benefit is to be paid.
This Contract is a legal contract between You and Midland National Life
Insurance Company. READ YOUR CONTRACT CAREFULLY. A guide to its contents
is on Page 2. A summary is on Page 3. If there is a question about it,
or if there is a claim, contact Your Midland Agent or Our Home Office.
Right To Examine Contract
You may examine this Contract and if for any reason You are not
satisfied with it, You may return it to Us by delivering or mailing
it to the Agent through whom it was purchased or to Our Home Office.
This must be done ten days after the Contract Date. We will then
deem this Contract void from the start and refund the greater of 1)
the premiums paid; or 2) the Contract Value plus the sum of all
charges deducted from the Contract Value.
Signed for the Company at its Home Office on the Contract Date.
Jack L. Briggs
Secretary
Michael M. Masterson
President
FLEXIBLE PREMIUM VARIABLE ANNUITY
Deferred Annuity. Death Benefit Payable If Death Occurs Before
Maturity Date. Flexible Premiums. Optional Maturity Date. Not Eligible
for Dividends. Contract Values will Reflect the Investment Experience
of Our Separate Account and Interest Earned in the General Account.
Contract Summary
We offer this summary to help You understand this Contract.
This summary does not go into detail. We do not intend that it
change any of the provisions of this Contract. You should read the
actual provisions for full information and any limits which may
apply. The "Contract Provisions" section on the inside of the
front cover shows where the provisions may be found.
This is a flexible premium deferred variable annuity contract.
Premium payments after the first one may vary in amount and frequency
within certain limits. This Contract is designed to provide a retirement
income to the Annuitant. If the Annuitant and Owner are living on the
Maturity Date, We will pay the Annuitant a monthly income unless another choice
has been made. We will pay a death benefit if the Annuitant dies before
the Maturity Date and while this Contract is in force. This money often
is not taken in one sum. For all or part of it, another form of payment
may be available.
Your Contract Value will change in proportion to the investment
experience of the Investment Divisions You have chosen.
If the Annuitant dies and the choice of payment has not been made,
the person who is entitled to receive the money may be able to do so.
There are other rights available to You during the lifetime
of the Annuitant. Unless We amend it to say otherwise, the Contract
gives You these rights, among others:
You may assign this Contract.
You may change the Owner or any Beneficiary.
You may surrender this Contract for its Withdrawal Value.
You may make a Partial Withdrawal.
You may change the Maturity Date.
Definitions
We define here some of the main words and phrases used in this Contract.
We explain others, not defined here, in other parts of the Contract.
Annuitant - the person whose name is shown on page 1. He or she need
not be the Owner.
Example: Suppose We issue a Contract with Your spouse named as the Annuitant.
You applied for it and named no one else as Owner. Your spouse is the
Annuitant and You are the Owner.
Issue Age - the Annuitant's age, on the birthday nearest to the Contract
Date, as shown on page 1.
Attained Age - the Issue Age plus the number of completed contract years
since the Contract Date.
Owner - the person who has control of the rights and values provided in
this Contract. Often the Annuitant is the Owner, but not always. The Owner
is Specified on page 1. "You" or "Your" is used to refer to the Owner in this
Contract.
Policy - this basic document plus any amendments, not including the
application or any riders.
Contract - this Policy, together with the application and any riders.
Contract Date - the date, shown on page 1, that this Contract goes into
effect.
Income Date - the annuity starting date as defined in the Internal Revenue
Code.
Anniversary or Contract Anniversary - the same month and day as the
Contract Date in each later year.
Example:
If the Contract Date is January 9, 1993, the first contract anniversary is
January 9, 1994, the second contract anniversary is January 9, 1995, and
so on.
Contract Year - a year which starts on the Contract Date or on an
anniversary.
Example:
If the Contract Date is June 3, 1993, the first contract year starts on June 3,
1993, and ends on June 2, 1994; the second contract year starts on June 3,
1994, and ends on June 2, 1995, and so on.
Contract Month - a month which starts on the same day as the Contract
Date in each month.
Example:
If the Contract Date is June 3, 1993, the first contract month starts on June
3,1993, and ends on July 2, 1993; the second contract month starts on July
3,1993, and ends on August 2, 1993, and so on.
Business Day - Day when We and the New York Stock Exchange are open
for business.
Valuation Period - A Valuation Period is the interval of time beginning at
the close of the New York Stock Exchange on each Business Day and ending
at the close of the New York Stock Exchange on the next Business Day.
Premiums
The Total First Premium and the Proposed Annual Premium are shown on page 1.
Premiums paid after the first may be in any amount, except that no one premium
may be less than $50. Total premiums paid in any one Contract Year cannot
exceed $50,000. Premiums paid after the first may vary in frequency.
Premium payments may not continue after the Maturity Date. Premiums are to be
paid to Us at Our Home Office or through an agent authorized to receive premium
payments. A receipt, signed by Our President or Secretary, will be furnished
and countersigned by such authorized agent.
Your Investment Options
The Separate Account.
Our Separate Account is a unit investment trust registered with the
Securities Exchange Commission (SEC) under the Investment Company Act of
1940. It is also subject to the laws of South Dakota. We own the assets of
ao the Account; We keep
them separate from the assets of Our General Account. We established the
account to support variable annuity contracts.
Initial Allocation.
Your Total First Premium will be allocated to the Money Market Investment
Division regardless of the allocation percentages You have indicated.
Fifteen days from the Contract Date, the value in the Money Market Investment
Division
will be transferred to the Investment Divisions as specified by You in the
application. Any additional premiums received before this transfer will
also be placed in the Money Market Investment Division and transferred fifteen
days after the Contract Date.
Allocations.
The Separate Account has several Investment Divisions. We list them on
the application. You determine, using percentages, how premium amounts
will be allocated to Our General Account or among the Investment Divisions.
You may
choose to allocate nothing to Our General Account or to a particular Investment
Division. But any allocation You make must be at least 10 percent; You
may not choose a fractional percent.
Example: You may choose a percentage of 0, or 100, or 10, 11, 12, and
so on, up to 90. But You may not choose a percentage of 1 through 9, or 91
through 99,
or any percent that is not a whole number. The total for all percentages
must be 100 percent.
The allocation of premium amounts that take effect fifteen days after the
Contract Date is shown in the application. You may change the allocation
for future premium amounts at any time if the Contract is not in default. To
do so, You must notify Us in writing in a form that meets Our needs. The
change will take effect on the date We receive Your notice at Our Home Office.
Transfers.
You may request in writing to transfer monies from one Investment Division to
another. The minimum amount You may transfer is $200. This minimum
need not come from any one Investment Division or be transferred to any one
Investment Division. The minimum applies to the net amounts being
transferred by Your
request. Transfers will be effective the day We receive the request and
will be based on the Accumulation Unit Values of the Investment Divisions for
that Valuation Period. You may make up to four transfers in each Contract
Year without charge. For each additional transfer there is a charge of $25.
We will deduct this charge from the Investment Divisions from which the
is being made in equal proportions to such Investment Divisions. Only two
transfers are allowed from the General Account per Contract Year.
The maximum amount that can be transferred from the General Account to the
Separate Account in any Contract Year is the larger of:
1. 25 percent of the amount in the General Account at the beginning of the
contract year; or
2. $1,000.
The maximum amount that can be deposited in the General Account through
allocation of premiums and net transfers (amount transferred in less amounts
transferred out) over the life of the Contract is $250,000.
The Funds.
The word Funds, where We use it in this Contract without qualification, means
the Funds We identify in the application. The Funds are registered with the
SEC under the Investment Company Act of 1940 as open-end diversified management
investment companies. The Funds have several portfolios; there is a
portfolio that corresponds to each of the Investment Divisions of Our Separate
Account. We list the Investment Divisions in the application.
Account Investments.
We use the assets of Our Separate Account to buy shares in the Funds. The
assets of each Investment Division are invested in a corresponding portfolio.
Income and realized and unrealized gains and losses from assets in each
Investment Division are credited to, or charged against, the Investment
Division. This is without regard to income, gains, or losses in Our other
investment accounts.
We will always keep assets in the Separate Account with a total value at least
equal to the amount of the Contract Values under Contracts like this one.
To the extent those assets do not exceed this amount, We use them only to
support
those Contracts; We do not use those assets to support any other business
We conduct. We may use any excess over this amount in any way We choose.
Change in Investment Policy.
A portfolio of the Funds might make a material change in its investment policy.
In that case, We will send You a notice of the change. Within 60 days after
You receive the notice, or within 60 days after the effective date of the
change, if later, You may exchange monies You have allocated to another
Investment Division of Our Separate Account.
Change of Fund.
A portfolio might, in Our judgement, become unsuitable for investment by an
Investment Division. This might happen because of a change in the investment
contract, or a change in the laws or regulations, or because the shares are
no longer available for investment, or for some other reason. If that occurs,
We
have the right to substitute another portfolio of the Funds, or to invest in a
Fund other than the ones We show on the application. But We would first seek
approval from the SEC and, where required, the insurance regulator where this
Contract is delivered.
Contract Values
Contract Value.
The Contract Value at any time is equal to the sum of the amounts You then have
in Our General Account and in the Investment Divisions of Our Separate Account
under this Contract.
Accumulation Units.
We will credit the premium in the form of Accumulation Units. The number of
Accumulation Units to be credited to any Investment Division will be determined
by dividing the premium deposited in that Investment Division by the
Accumulation Unit Value of the Investment Division. Accumulation Units will be
credited as of the Valuation Period during which the premium is received.
A transfer into an Investment Division will increase the number of Accumulation
Units credited to the Contract in the Investment Division. The number of
Accumulation Units credited to the Contract in the Investment Division
will be reduced by:
1. Any Contingent Deferred Sales Charge deducted from the Contract
Value;
2. The Contract Maintenance Charge;
3. Any transfer charge;
4. Any transfer out of an Investment Division;
5. Any partial withdrawal.
Accumulation Unit Value.
The Accumulation Unit Value of each Investment Division was set at $10 at the
end of the first Valuation Period of the Investment Division. The Accumulation
Unit Value for each subsequent Valuation Period is then determined at the end
of the Valuation Period and is the Net Investment Factor for that period
multiplied by the Accumulation Unit Value for the immediately preceding
Valuation Period. The Accumulation Unit Value for a Valuation Period applies
to each day in the period. The Accumulation Unit Value may increase or
decrease from one Valuation Period to the next.
Your Value in Our Separate Account.
The amount You have in Our Separate Account at any time will be the sum of the
values of all Accumulation Units credited to the Contract.
Net Investment Factor.
The Net Investment Factor is an index used to measure the investment performa
of an Investment Division from one Valuation Period to the next. The Net
Investment Factor can be greater or less than one; therefore, the value of
an Investment Division unit may increase or decrease.
The Net Investment Factor for each Investment Division for a Valuation Period
is determined by adding (1) and (2), subtracting (3)and then dividing the
result by (1) where:
1. is the value of the assets at the end of the preceding Valuation
Period;
2. is the investment income and capital gains, realized or
unrealized, credited during the current Valuation Period;
3. is the sum of:
a. the capital losses, realized or unrealized, charged during
the current Valuation Period plus any amount charged or set
aside for taxes during the current Valuation Period; plus
b. the deduction from the Investment Division during the current
Valuation Period representing a daily charge equivalent to an
effective annual rate of 1.40 percent.
Charges Against The Investment Division.
In determining the values for both the Accumulation and Annuity Units, We
make adaily charge equivalent to an effective annual rate of 1.40 percent
against the
assets of each Investment Division. This charge consists of 1.25 percent a
year for mortality and expense risks that We assume and .15 percent a year for
administrative costs relating to Our Separate Account.
The earnings of the Separate Account are taxed as part of Our operations. At
the present time, We do not expect to incur taxes on earnings of any Investment
Division to the extent the earnings are credited under the Contract. If We
incur additional taxes due to the operation of the Separate Account, We may
make charges for such taxes against the Investment Divisions.
Contract Maintenance Charge.
At each Anniversary on or before the Maturity Date, We will deduct a Contract
Maintenance Charge of $33. The charge is deducted from each Investment Divis
and the General Account based on the proportion of Your interest in each
Investment Division and the General Account to the total Contract Value.
If the total Contract Value is withdrawn before the Anniversary, We will deduct
the Contract Maintenance Charge for the current Contract Year at that time.
Your Value in Our General Account.
The amount You have in Our General Account at any time is equal to the
amounts allocated and transferred to it under this Contract, plus the the
credited to it, minus amounts deducted, transferred and withdrawn from it
under this Contract.
We will credit amounts in Our General Account with interest at effective annual
rates We determine. The rates may be different for unloaned and loaned amounts.
Such effective annual interest rates will not be less than 3.00 percent. Any
interest in excess of 3.00 percent will be at the SOLE DISCRETION of
Our Board of Directors.
Contract Value Deductions.
The following will be deducted from Our General Account or the Separate
Account
based on the proportion of Your interest in the General Account and the
Investment Divisions of Our Separate Account to the total Contract Value,
unless You choose otherwise:
1. Any partial withdrawals, and
2. The Contract Maintenance Charge.
Withdrawal of Contract Value.
You may, upon written request to Us, withdraw part or all of the Contract
Value. We will pay the amount withdrawn, less any Contingent Deferred Sales
Charge, to
You. Such payment may be deferred for a period not more than 6 months after
Your request, unless this would be contrary to the laws of the state in which
this Contract is issued. No withdrawals can be less than $500 or the total
Contract Value, whichever is less, nor can a withdrawal be requested more often
than three times per Contract Year. If after a partial withdrawal the
remaining Contract Value would be less than $1,000, the withdrawal request
will be treated
as a request for the total Contract Value. If the total Contract Value is
withdrawn, this Contract will end. Withdrawals from the General Account
will reduce the most recent premium payment(s) not already withdrawn from
the General Account, along with any accrued interest.
Contingent Deferred Sales Charge.
During the first six years of this Contract, a Contingent Deferred Sales
Charge
will be deducted from any partial or total withdrawal of the premiums paid
under
this Contract. For purposes of determining the Contingent Deferred Sales
Charge, withdrawals will be considered premiums first and then accrued
interest. The Contingent Deferred Sales Charge is equal to:
1. The amount of the premium withdrawn; multiplied by
2. the percentage shown in the following table for the appropriate
Contract Year.
Contingent Deferred Sales Charge Table
If the Withdrawal The Percent
Is Made During is
Contract Year
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 + 0%
There will be no Contingent Deferred Sales Charge if:
1. The withdrawal occurs after the first Contract Year, the withdrawal is
the first in a Contract Year and the amount withdrawn is less than 10 percent
of the total premiums paid.
2. A total withdrawal of Contract Value is made after this Contract has been
in force for three years, with the total amount of withdrawal used to purchase
a life income under the Proceeds Payment Options of this Contract.
3. The Annuitant dies.
Beneficiary
Designation.
The Beneficiary named in the application for this Contract will receive the
Death Benefit unless You have changed this designation.
Change.
You may change any Beneficiary designation while the Annuitant is alive, unless
the previous designation provides otherwise. Such change will take effect
only after We receive Your written request in a form approved by Us. Any
previous
beneficiary's interest will end then even if the Annuitant is not living when
We receive the request. We reserve the right to require that this Contract
accompany such request.
Class of Beneficiary.
The priority of a Beneficiary may be shown by using numbered classes.
The class
of first priority is called Class 1, the class of second priority is called
Class 2, and so on. When We use numbered classes, these statements
apply to beneficiaries unless otherwise stated.
1. One who survives the Annuitant will have the right to be paid only if
no one in a prior class survives the Annuitant.
2. One who has the right to be paid will be the only one paid if no one
else in the same class survives the Annuitant.
3. Two or more in the same class who have the right to be paid will be
paid in equal shares.
4. If none survives the Annuitant, the Owner will be paid.
Example:
Suppose the Class 1 Beneficiary is Jane and the Class 2 Beneficiaries are Paul
and John. We owe Jane the Death Benefit if she is living at the Annuitant's
death. We owe Paul and John the Death Benefit if they are living then but Jane
is not. But if only one of them is living, We owe him the Death Benefit. If
none of them is living, We owe the Owner.
Maturity Date
The Maturity Date of this Contract is the Attained Age 90 of the Annuitant.In
no event can the Maturity Date be earlier than the 10th Contract Anniversary.
Optional Maturity Date.
You may elect an Optional Maturity Date, by filing a written request to Us at
least 31 days before the requested Maturity Date. The Optional Maturity
Date shall be any Contract Anniversary prior to the Annuitant's Attained Age
90, which is not earlier than the 10th Contract Anniversary.
Annual Report of Contract Status
We will send You an Annual Report, at no charge, which shows the Contract Value
of this Contract. All payments received 30 days or more before the
Anniversary will be included.
General Provisions:
The Contract.
This Policy, the application, and any riders attached to this Policy form the
entire Contract. We assume that all statements in the application were
made to
the best of the knowledge and belief of the person(s) who made them; in the
absence of fraud, they are deemed to be representations and not warranties.
We relied on those statements when We issued the Contract. We will not use
any statement to void the Contract or deny a claim unless such statement is
made in the application and a copy of the application is attached.
Incontestability.
We will not contest this Contract after it has been in force during the
Annuitant's lifetime for two years from the Contract Date except for any
provisions granting disability benefits.
Contract Modifications.
Only the President, a Vice President, the Secretary, or an Assistant Secretary
of Our Company may agree to modify this Contract and then only in writing.
Ownership and Control.
Unless inconsistent with the terms of any Beneficiary designation or any
assignment or change of ownership:
1. the Owner of the Contract is as shown on page 1; and
2. before the Maturity Date and when the Annuitant
is living, the Owner alone is entitled to:
a. any Contract benefit and value; and
b. the exercise of any right and privilege granted by the
Contract or by Us.
Contingent Owner.
The Owner, if other than the Annuitant, may name or change a contingent owner
while the Annuitant is alive. Upon the death of the Owner, the contingent
owner will become the Owner. If no contingent owner has been named or is
living, ownership will pass to the Owner's estate.
Assignment.
We will not be bound by any assignment of this Contract unless We receive the
assignment, or a copy of it, at Our Home Office. We are not obliged to see
that an assignment is valid or sufficient.
Misstatement of Age or Sex.
If the age or sex of the Annuitant has been misstated, the benefits available
under this Contract will be those which the Proceeds would have purchased for
the correct age and sex. Any overpayments or underpayments will be corrected
with the interest at the rate of 6% per year.
Non-Participation.
This Contract does not pay dividends or otherwise share in the profits of
the Company.
Proceeds
Proceeds means the amount of money that is payable under this Contract
on the Option Date.
Option Date.
Option Date means the date of any ending of this Contract, such as:
Maturity;
1. The date We receive due proof of the Annuitant's death and an
election of how the Death Benefit is to be paid; or
2. Total Contract Value withdrawal.
Maturity Value.
The Maturity Value of this Contract equals the Contract Value on the Maturity
Date. On the Maturity Date, We will pay the Annuitant a monthly income for
life, with payments guaranteed for 120 months and, unless You choose otherwise,
the portion of the Contract Value in the General Account will be used to
pay a fixed monthly income and the portion of the Contract Value in the
Separate Account will be used to pay a variable monthly income. You may choose
another form of payment. Other choices for this sum are:
1. You may take it in one sum; or
2. You may choose to apply it under a Payment Option.
Death Benefit.
The phrase Death Benefit means the amount We will pay when We receive due proof
of the death of the Annuitant and an election of how the Death Benefit is to be
paid. At the time We receive the required information, the Death Benefit will
be the greater of:
1. The Contract Value; or
2. The sum of the premiums paid less withdrawals.
Unless one of the Payment Options has been selected within 90 days after We
receive due proof of death, the Death Benefit will be paid in a lump sum at
that time.
Claims of Creditors.
To the extent allowed by law, the Proceeds will not be subject to any
claims of a Payee's creditors.
Payment Options
Election of Payment Options.
By Owner:
While the Annuitant is living, You may choose, or change the choice of any
Payment Option, unless the previous choice provides otherwise.
By Payee:
When the Proceeds are payable and if they may be paid in one sum to the Payee,
the Payee may choose, or change the choice of any Payment Option. The word
Payee means any person who has the right to receive the Proceeds under
this Contract.
Payment of Proceeds.
The Proceeds may be paid in one sum or all or part of this sum may be applied
to any Payment Option. If no Payment Option is chosen, We will pay the
Proceeds as
described in the Proceeds Provision above.
If the Annuitant is the Owner and the Annuitant dies before the Income
Date,
then the Proceeds, other than amounts payable to or for the benefits of the
surviving spouse of the Annuitant, must be paid out within five years of
the
death of the Annuitant. If the Annuitant is not the Owner, the Owner dies
before the Income Date, and the surviving spouse of the Owner has not
been named
as the Contingent Owner, the Contract ends and the entire Contract Value must
be paid out within five years of the death of the Owner. If the Owner dies
on or after the Income Date, then any amounts remaining to be paid, other
than amounts payable to or for the benefit of the surviving spouse of the
Owner, must
be paid out at least as rapidly as benefits were being paid at the time of the
Owner's death.
Conditions.
Any choice must be in writing in a form approved by Us. Our consent is needed
for a Payment Option to be used for any Payee under any of these conditions:
1. The Payee is not a natural person.
2. The Payee will be paid as assignee.
3. The amount to be applied for the Payee is less than $1,000.
4. Each payment to the Payee would be less than $20.00.
Fixed Payment Options
Payments and earnings under the Fixed Payment Options are not affected
by the investment experience of any Investment Division of Our Separate
Account. Payments made under Options 2 and 5 will not increase or decrease.
Interest credited on all other Fixed Options will never be less than 2.75%
Payment Option 1. -- Payment for a Specified Period.
We will make equal monthly payments which will start on the Option
Date and will
run for one to thirty years, as chosen. The guaranteed minimum monthly
payments
will be based on Table 1. The payments may be increased by additional
interest.
Monthly Income Per $1,000 of Proceeds
Payments For a Specified Period
Table 1
No. of Years Amount of
Payable Monthly Payment
1 $ 84.37
2 42.76
3 28.89
4 21.96
5 17.80
6 15.03
7 13.06
8 11.57
9 10.42
10 9.50
11 8.75
12 8.13
13 7.60
14 7.15
15 6.75
16 6.41
17 6.11
18 5.85
19 5.61
20 5.39
21 5.18
22 5.02
23 4.86
24 4.72
25 4.59
26 4.46
27 4.35
28 4.24
29 4.15
30 4.06
Monthly Income Per $1,000 of Proceeds
Monthly Payments for Life
Table 2
Age Last Birthday
Male Female Life 5 Years 10 Years 20 Years
20 and 25 and Certain Certain Certain
under under 2.89 $2.89 $2.88 $2.88
21 26 2.91 2.91 2.90 2.90
22 27 2.93 2.93 2.93 2.92
23 28 2.95 2.95 2.95 2.94
24 29 2.97 2.97 2.97 2.96
25 30 3.00 3.00 2.99 2.99
26 31 3.02 3.02 3.02 3.01
27 32 3.05 3.05 3.05 3.04
28 33 3.08 3.08 3.07 3.06
29 34 3.11 3.10 3.10 3.09
30 35 3.13 3.13 3.13 3.12
31 36 3.17 3.16 3.16 3.15
32 37 3.20 3.20 3.19 3.18
33 38 3.23 3.23 3.23 3.21
34 39 3.27 3.27 3.26 3.24
35 40 3.31 3.30 3.30 3.27
36 41 3.35 3.34 3.34 3.31
37 42 3.39 3.38 3.38 3.35
38 43 3.43 3.43 3.42 3.38
39 44 3.47 3.47 3.46 3.42
40 45 3.52 3.52 3.51 3.46
41 46 3.57 3.57 3.56 3.51
42 47 3.62 3.62 3.61 3.55
43 48 3.68 3.67 3.66 3.60
44 49 3.74 3.73 3.72 3.64
45 50 3.80 3.79 3.77 3.69
46 51 3.86 3.85 3.83 3.74
47 52 3.92 3.92 3.89 3.79
48 53 3.99 3.98 3.96 3.85
49 54 4.06 4.05 4.03 3.90
50 55 4.14 4.13 4.10 3.96
51 56 4.22 4.21 4.17 4.02
52 57 4.30 4.29 4.25 4.08
53 58 4.39 4.37 4.33 4.14
54 59 4.48 4.46 4.41 4.20
55 60 4.58 4.56 4.50 4.27
56 61 4.68 4.66 4.60 4.33
57 62 4.79 4.77 4.70 4.40
58 63 4.91 4.88 4.80 4.46
59 64 5.03 5.00 4.91 4.53
60 65 5.17 5.13 5.03 4.60
61 66 5.31 5.27 5.15 4.66
62 67 5.46 5.42 5.28 4.73
63 68 5.63 5.57 5.41 4.79
64 69 5.80 5.74 5.56 4.85
65 70 5.99 5.92 5.70 4.91
66 71 6.19 6.11 5.85 4.97
67 72 6.40 6.30 6.01 5.02
68 73 6.63 6.51 6.17 5.07
69 74 6.87 6.74 6.34 5.12
70 75 7.14 6.97 6.51 5.16
71 76 7.42 7.22 6.69 5.20
72 77 7.71 7.49 6.87 5.23
73 78 8.03 7.76 7.05 5.26
74 79 8.38 8.05 7.23 5.29
75 80 8.75 8.36 7.41 5.31
76 81 9.14 8.68 7.58 5.33
77 82 9.56 9.02 7.76 5.35
78 83 10.02 9.37 7.93 5.36
79 84 10.51 9.74 8.09 5.37
80 85 11.03 10.11 8.25 5.38
81 86 and 11.03 10.11 8.25 5.38
over
82 11.03 10.11 8.25 5.38
83 11.03 10.11 8.25 5.38
84 11.03 10.11 8.25 5.38
85 11.03 10.11 8.25 5.38
86 and 11.03 10.11 8.25 5.38
over
Monthly Income Per $1,000 of Proceeds
Table 3
Variable Payment Option Rates
Male Female 5 Years 10 Years 20 Years
Age Age Life Only Certain Certain Certain
20 & 25 &
under under 4.40 4.40 4.39 4.38
21 26 4.41 4.41 4.41 4.40
22 27 4.43 4.43 4.42 4.41
23 28 4.45 4.44 4.44 4.43
24 29 4.46 4.46 4.46 4.44
25 30 4.48 4.48 4.48 4.46
26 31 4.50 4.50 4.50 4.48
27 32 4.52 4.52 4.52 4.50
28 33 4.54 4.54 4.54 4.52
29 34 4.57 4.57 4.56 4.54
30 35 4.59 4.59 4.58 4.56
31 36 4.62 4.62 4.61 4.59
32 37 4.64 4.64 4.64 4.61
33 38 4.67 4.67 4.66 4.64
34 39 4.70 4.70 4.69 4.66
35 40 4.74 4.73 4.73 4.69
36 41 4.77 4.77 4.76 4.72
37 42 4.81 4.80 4.79 4.75
38 43 4.85 4.84 4.83 4.78
39 44 4.89 4.88 4.87 4.81
40 45 4.93 4.93 4.91 4.85
41 46 4.98 4.97 4.95 4.88
42 47 5.02 5.02 5.00 4.92
43 48 5.07 5.07 5.05 4.96
44 49 5.13 5.12 5.09 5.00
45 50 5.18 5.17 5.15 5.04
46 51 5.24 5.23 5.20 5.08
47 52 5.30 5.29 5.26 5.13
48 53 5.37 5.35 5.31 5.17
49 54 5.44 5.42 5.38 5.22
50 55 5.51 5.49 5.44 5.27
51 56 5.58 5.56 5.51 5.32
52 57 5.66 5.64 5.58 5.37
53 58 5.74 5.72 5.66 5.43
54 59 5.83 5.81 5.74 5.48
55 60 5.93 5.90 5.82 5.54
56 61 6.03 6.00 5.91 5.59
57 62 6.13 6.10 6.00 5.65
58 63 6.25 6.21 6.10 5.71
59 64 6.37 6.33 6.21 5.77
60 65 6.50 6.45 6.32 5.83
61 66 6.65 6.59 6.43 5.88
62 67 6.80 6.73 6.56 5.94
63 68 6.96 6.89 6.68 6.00
64 69 7.14 7.05 6.82 6.05
65 70 7.33 7.23 6.96 6.10
66 71 7.53 7.41 7.10 6.15
67 72 7.74 7.61 7.25 6.20
68 73 7.97 7.82 7.41 6.24
69 74 8.22 8.04 7.57 6.29
70 75 8.49 8.27 7.73 6.32
71 76 8.77 8.52 7.89 6.36
72 77 9.07 8.78 8.06 6.39
73 78 9.40 9.05 8.23 6.41
74 79 9.75 9.34 8.40 6.44
75 80 10.12 9.65 8.57 6.46
76 81 10.52 9.96 8.74 6.47
77 82 10.96 10.30 8.90 6.49
78 83 11.42 10.64 9.06 6.50
79 84 11.92 11.00 9.21 6.51
80 & 85 & 12.45 11.36 9.36 6.52
over over
Payment Option 2. -- Payment of Life Income.
We will make equal monthly payments which will start on the Option
Date
and will run as long as the Payee lives.
The amount of the payment will depend on the age and sex of the Payee
on the
Option Date and will be based on Table 2. We must have proof of the
Payee's
date of birth. Either of the following terms may be chosen.
1. Life Income, Guaranteed Period -- The payments will run for the life of
the
Payee with guaranteed payments for five, ten, or twenty years, as chosen.
2. Life Income Only -- The payments will run only during the lifetime of
the
Payee.
3. We reserve the right to require proof that the Payee is alive when each
payment is due.
Payment Option 3. -- Payment of a Specified Amount.
We will make equal payments every one, three, six, or twelve months, as
chosen.
The payments will start on the Option Date and will run until the Proceeds
applied, together with interest at the rate of at least 2.75% a year on the
unpaid balance, are fully paid. The final payment will be any balance
equal to
or less than one payment. The payments may be increased by additional
interest.
Payment Option 4. -- Proceeds Left at Interest.
The Proceeds may be left with Us for any length of time agreed upon.
Interest
will be at the rate of at least 2.75% a year. The interest may be left with
Us
to accumulate, or it may be paid every one, three, six, or twelve months, as
chosen. If the interest is to be paid, the first payment will be at the end of
the first interest period.
Payment Option 5. -- Annuity.
We will make payments like those of any life annuity We then regularly
issue
which is bought by a single sum. (This does not include contracts which
are
used to qualify for special Federal Income Tax treatment as a retirement
plan.)
Each payment will be 103% of the amount We would pay if the Proceeds
were used
to buy such an annuity on the Option Date. The first payment will be at the
end
of the first installment period. We must have proof of the Payee's date of
birth.
Basis of Guaranteed Payment Rates.
Guaranteed interest rate for Table 1 is 2.75%. Table 2 is based on the
1983a
Standard Annuity Table, at 2.75%.
Other Payment Options Available.
We may agree to pay the Proceeds in any other manner.
Variable Payment Options
Payments under the Variable Payment Options are affected by the
investment
experience of the Investment Divisions of Our Separate Account.
Therefore, the
amount of the Variable Payments may increase or decrease, depending on
the
investment experience of the Investment Division.
The dollar amount of the first Variable Payment is computed by
multiplying the
amount in each Investment Division, calculated as of a date not more than
ten
business days prior to the date of the first payment, by the appropriate rate
for the option selected. The payment from each Investment Division is
then
converted to Annuity Units which will be used to determine subsequent
payments.
The number of Annuity Units credited to each Investment Division is:
1. the portion of the first Variable Payment from the Investment Division;
divided by
2. the Investment Division's Annuity Unit Value as of the date used to
calculate the first Variable Payment.
The dollar amount of each subsequent payment for an Investment Division
is equal
to:
1. the number of Annuity Units for that Investment Division;
multiplied by
2. The Annuity Unit Value for that Investment Division as of a uniformly
applied date not more than ten business days before the date of the
payment.
The Variable Payment made to the Annuitant is the sum of the payment
amounts for
each Investment Division.
Annuity Unit Value.
The Annuity Unit Value of each Investment Division was set at $10.00 at
the end
of the first Valuation Period of the Investment Division. The unit value
for
each subsequent Valuation Period is then determined at the end of the
Valuation
Period and is equal to:
1. the Annuity Unit Value for the immediately preceding Valuation
Period; multiplied by;
2. the Net Investment Factor for that period; multiplied by
3. .99986634 for each day in the Valuation Period.
Transfers.
After Variable Payments have begun You may request in writing one
transfer per
Contract Year. There will be no charge for this transfer. No transfers are
allowed between Fixed Payment Options and Variable Payment Options.
Transfers
made after Variable Payments have begun will be effective the day We
receive the
request and based on the Annuity Unit Values of the Investment Divisions
for
that Valuation Period.
Payment Option 1. -- Payment of Life Income.
We will make variable monthly payments which will start on the Option
Date
and will run as long as the Payee lives.
The amount of the payment will depend on the age and sex of the Payee
on the
Option Date and the initial payment will be based on Table 3. We must
have
proof of the Payee's date of birth. Either of the following terms may be
chosen.
1. Life Income, Guaranteed Period -- The payments will run for the life of
the
Payee with guaranteed payments for five, ten, or twenty years, as chosen.
2. Life Income Only -- The payments will run only during the lifetime of
the
Payee.
We reserve the right to require proof that the Payee is alive when each
payment
is due.
Payment Option 2. -- Annuity.
We will make payments like those of any life annuity We then regularly
issue
which is bought by a single sum. (This does not include contracts which
are
used to qualify for special Federal Income Tax treatment as a retirement
plan.)
The first payment will be at the end of the first installment period. We
must
have proof of the Payee's date of birth.
Basis of Initial Payment Rates.
Table 3 is based on the 1983a Standard Annuity Table, at 5.00%
Payment Contracts
Issue.
When a Payment Option is chosen, We will issue a Payment Contract in
exchange
for this Contract. The effective date of the Payment Contract will be the
Option
Date.
Assignment.
Payment Contracts may not be assigned.
Withdrawal of Proceeds.
The Payee has the right to withdraw the Proceeds under a Fixed Payment
Option if
so provided in the Payment Contract. The payee cannot withdraw
Proceeds under
any of the Variable Payment Options. Under Fixed Payment Option 1, the
sum of
the remaining guaranteed payments, discounted at the rate used to
compute each
payment, compounded annually, may be withdrawn. Under Fixed
Payment Options 3
and 4, all or part of the remaining Proceeds and any interest earned but
unpaid
may be withdrawn. The Proceeds may not be withdrawn under Fixed
Payment Options
2 or 5. Any withdrawals must not be less than $100. If the amount
remaining
under a Payment Option is less than $1,000, We have the right to pay in
one sum.
We may postpone payment of any amount to be withdrawn for not more
than six
months from the date We receive the written request for withdrawal at Our
Home
Office.
Changing Options.
A Payee under Fixed Payment Options 1, 3, or 4 may change to another
option
using the sum which the Payee could withdraw on the date the new option
is to
start. In some cases, the Payee will need Our consent to change an option.
We
describe these cases under Conditions.
Death of Payee.
If any payments remain to be paid under a Payment Option at the death of
the
Payee, payment will be made according to the terms of the Payment
Contract.
Claims of Creditors.
To the extent allowed by law, the Proceeds will not be subject to any
claims of
a Payee's creditors.
A053A1 SCRIPT
<PAGE>
Item 24.(b)(4)(b) Maturity Date Endorsement for Qualified Contracts
Maturity Date Endorsement
This Endorsement amends the Contract as follows:
General. The Maturity Date may not be earlier than the date on which
the Annuitant attains the age of 59 1/2 or five years from the Contract
Date,
whichever is later. However, in no event can the Maturity Date be later
than
April 1 of the calendar year immediately following the calendar year in
which
the Annuitant attains age 70 1/2.
Change of Date. The Maturity Date is the Anniversary nearest the
Annuitant's 70th birthday, as shown on Page 1. The Owner may elect a
different Maturity Date than that which is shown on Page 1 by sending
Us a written request at least 31 days prior to the requested new date.
The new date must meet the requirements stated above.
E56688 SCRIPT
<PAGE>
Item 24.(b)(4)(c) Endorsement for Tax Sheltered Annuity
Endorsement For Tax Sheltered Annuity
This Endorsement amends the Contract as follows:
The following Definitions are added:
First Distribution Calendar Year. The calendar year in which the
Annuitant attains age 70 1/2. Thereafter, Distribution Calendar
Years will begin each January 1 and end each December 31.
Required Beginning Date. The first day of April following the end
of the calendar year in which the Annuitant attains age 70 1/2.
Withdrawal Value. The Contract Value less any Contingent Deferred Sales
Charges.
The following provisions are added:
CONTRACT LOANS
General. At any time prior to the Maturity Date, the Owner may
request a loan using this Contract as security. Should the Owner be
married, written consent of the spouse is required before the Contract
can be used as security for a loan. All or part of the outstanding loan
may be repaid at any time prior to the Option Date. The amount loaned
must
not exceed the Withdrawal Value less any outstanding prior loans less loan
interest to the end of the next Contract Year. Each loan must be at least
$2,000. Only one Contract Loan can be made within a 12 month period.
When You make a loan, you may tell Us how much of the loan is to be
allocated to Your unloaned value in Our General Account and to Your
value
in each Investment Division. If You do not specify how the loan is to be
allocated, We will allocate it based on the proportion of Your unloaned
interest in the General Account and the Investment Divisions of Our
Separate
Account to the Withdrawal Value less any outstanding loans of loan
interest.
To request a loan, the Owner must:
a. send Us a written request;
b. assign this Contract to Us as sole security for the loan; and
c. complete a loan agreement
The total loan plus accumulated Loan Interest will be deducted
from any amount applied under a Payment Option or otherwise payable
under this Contract. We have a prior lien against the Contract for
any money owed to Us by the Owner pursuant to a Contract Loan.
The loan agreement will describe the amount, duration and
restrictions on the loan. The Owner may be subject to income tax or
penalty if the amount or duration of the loan violates Internal Revenue
Service requirements. We may be required to report a loan as income to
the Owner if such requirements are violated. We are not liable for any
tax or tax penalties resulting from failure to comply with any repayment
requirements the Internal Revenue Service may impose on such loans. A
tax
advisor should be consulted regarding the possible tax consequences of
any
such noncompliance.
Loan Payment. Cash loans will be made to the Owner in one lump
sum. We may, by law, delay the payment of any loan for up to 6
months, unless this would be contrary to the laws of the state in
which this Contract is issued, after receiving the Owner's
request for a loan. If We delay such payment for more than 30
days after the request is received, the amount requested will
continue to earn interest at a rate of at least 3% per year compounded
from the date We receive the loan request to the date We make Our
payment.
Loan Interest. We will charge interest on loans at the rate of 5%
per year compounded annually. Loan Interest is due and payable on each
Anniversary. Interest not paid within 31 days after it becomes due
will be added to the loan and also bear interest. If the loan is
repaid or the Contract is terminated on other than an Anniversary,
a pro rata amount of interest will be due.
During the existence of a loan, that portion of the Contract Value
which is equal to the loan will be kept as part of the General Account and
will earn interest at 3% per year.
Excess Contract Loan. At such time as the total loan plus Loan
Interest equals or exceeds the Withdrawal Value, less any
applicable withholding taxes, the Contract will terminate with no
further value. In that event, We will give the Owner at least 31
days written notice. Such notice will be mailed to the Owner's
last known address, as shown in Our records.
RESTRICTIONS ON WITHDRAWALS
General. Although the Contract provisions permit withdrawals of
all or part of the Contract Value, no such withdrawal will be
permitted with respect to any part of the Contract Value
attributable to amounts contributed pursuant to a salary reduction
agreement (as defined in Section 403(b) of the Internal Revenue
Code) prior to the date the Owner attains age 59 1/2, dies or
becomes disabled (as defined in Section 72(m)(7) of the Internal
Revenue Code) or in the case of hardship (as defined by the
Internal Revenue Code or published authority thereunder). Withdrawal
of earnings attributable to such contributions are not
permitted in the case of hardship.
E56698 SCRIPT
<PAGE>
Item 24.(b)(4)(d) Form A057A1 Flexible Premium Deferred Variable
Annuity
Contract
In this Contract, the terms "We", "Our", and "Us" are used to refer to
Midland National Life Insurance Company; the terms "You" and "Your"
refer to the Owner of this Contract.
If the Annuitant and Owner are living on the Maturity Date, We will pay a
monthly income to the Annuitant, or We will pay the Maturity Value to
You upon
request.
If We receive due proof of the Annuitant's death prior to the Maturity
Date, We will pay the Death Benefit of the Contract at the time We
receive
due proof of the Annuitant's death and an election of how the Death
Benefit
is to be paid.
This Contract is a legal contract between You and Midland National Life
Insurance Company. READ YOUR CONTRACT CAREFULLY. A guide
to its contents
is on Page 2. A summary is on Page 3. If there is a question about it,
or if there is a claim, contact Your Midland Agent or Our Home Office.
Right To Examine Contract
You may examine this Contract and if for any reason You are not
satisfied with it, You may return it to Us by delivering or mailing
it to the Agent through whom it was purchased or to Our Home Office.
This must be done within ten days after the Contract Date. We will then
deem this Contract void from the start and refund the greater of 1)
the premiums paid; or 2) the Contract Value plus the sum of all
charges deducted from the Contract Value.
Signed for the Company at its Home Office on the Contract Date.
FLEXIBLE PREMIUM VARIABLE ANNUITY
Deferred Annuity. Death Benefit Payable If Death Occurs Before
Maturity
Date. Flexible Premiums. Optional Maturity Date. Not Eligible
for Dividends. Contract Values will Reflect the Investment Experience
of Our Separate Account and Interest Earned in the General Account.
Contract Summary
We offer this summary to help You understand this Contract. This
summary does
not go into detail. We do not intend that it change any of the provisions of
this Contract. You should read the actual provisions for full information
and
any limits which may apply. The "Contract Provisions" section on the
inside of
the front cover shows where the provisions may be found.
This is a flexible premium deferred variable annuity contract. Premium
payments
after the first one may vary in amount and frequency within certain limits.
This Contract is designed to provide a retirement income to the Annuitant.
If
the Annuitant and Owner are living on the Maturity Date, We will pay the
Annuitant a monthly income unless another choice has been made. We
will pay a
death benefit if the Annuitant dies before the Maturity Date and while this
Contract is in force. This money often is not taken in one sum. For all or
part of it, another form of payment may be available.
Your Contract Value will change in proportion to the investment
experience of
the Investment Divisions You have chosen.
If the Annuitant dies and the choice of payment has not been made,
the person who is entitled to receive the money may be able to do so.
There are other rights available to You during the lifetime of the
Annuitant.
Unless We amend it to say otherwise, the Contract gives You these rights,
among
others:
a. You may assign this Contract.
b. You may change the Owner or any Beneficiary.
c. You may surrender this Contract.
d. You may make a Partial Withdrawal.
e. You may change the Maturity Date.
Definitions
We define here some of the main words and phrases used in this
Contract. We explain others, not defined here, in other parts of
the Contract.
Annuitant- the person whose name is shown on page 1. He or she need
not be the
Owner.
Suppose We issue a Contract with Your spouse named as the Annuitant.
You applied
for it and named no one else as Owner. Your spouse is the Annuitant and
You are
the Owner.
Issue Age - the Annuitant's age, on the birthday nearest to the Contract
Date,
as shown on page 1.
Attained Age - the Issue Age plus the number of completed Contract
Years since
the Contract Date.
Owner - The person who has control of the rights and values provided in
this
Contract. Often the Annuitant is the Owner, but not always. The Owner
is
Specified on page 1. "You" or "Your" is used to refer to the Owner in this
Contract.
Policy - this basic document plus any amendments, not including the
application
or any riders.
Contract - this Policy, together with the application and any riders.
Contract Date - the date, shown on page 1, that this Contract goes into
effect.
Income Date - the annuity starting date as defined in the Internal Revenue
Code.
Anniversary or Contract Anniversary - the same month and day as the
Contract
Date in each later year.
If the Contract Date is January 9, 1999, the first contract anniversary is
January 9, 2000, the second contract anniversary is January 9, 2001, and
so on.
Contract Year - a year which starts on the Contract Date or on an
anniversary.
If the Contract Date is June 3, 1998, the first contract year starts on June 3,
1998, and ends on June 2, 1999; the second contract year starts on June 3,
1999,
and ends on June 2, 2000, and so on.
Contract Month - a month which starts on the same day as the Contract
Date in
each month.
If the Contract Date is June 3, 1998, the first contract month starts on June
3,
1998, and ends on July 2, 1998; the second contract month starts on July
3,
1998, and ends on August 2, 1998, and so on.
Business Day - Day when We and the New York Stock Exchange are
open for
business.
Valuation Period - A Valuation Period is the interval of time beginning at
the
close of the New York Stock Exchange on each Business Day and ending
at the
close of the New York Stock Exchange on the next Business Day.
Premiums
The Total First Premium and the Proposed Annual Premium are shown
on page 1. Premiums paid after the first may be in any amount, except
that no one premium may be less than $50. Premiums paid after the first
may
vary in frequency. Premium payments may not continue after the
Maturity
Date. Premiums are to be paid to Us at Our Home Office or through
an agent authorized to receive premium payments. A receipt, signed by
Our President or Secretary, will be furnished and countersigned by such
authorized agent.
Your Investment Options
The Separate Account
The Separate Account. Our Separate Account is a unit investment trust
registered with the Securities Exchange Commission (SEC) under the
Investment
Company Act of 1940. It is also subject to the laws of South Dakota. We
own
the assets of the account; We keep them separate from the assets of Our
General
Account. We established the account to support variable annuity
contracts.
Initial Allocation. Your Total First Premium will be allocated to the
Money
Market Investment Division regardless of the allocation percentages You
have
indicated. Fifteen days from the Contract Date, the value in the Money
Market
Investment Division will be transferred to the Investment Divisions as
specified
by You in the application. Any additional premiums received before this
transfer will also be placed in the Money Market Investment Division and
transferred fifteen days after the Contract Date.
Allocations. The Separate Account has several Investment Divisions. We
list
them on the application. You determine, using percentages, how premium
amounts
will be allocated to Our General Account or among the Investment
Divisions. You
may choose to allocate nothing to Our General Account or to a particular
Investment Division. But any allocation You make must be at least 10
percent;
You may not choose a fractional percent.
Example: You may choose a percentage of 0, or 100, or 10, 11, 12,
and so on, up to 90. But You may not choose a percentage of 1 through
9, or 91 through 99, or any percent that is not a whole number. The
total for all percentages must be 100 percent.
The allocation of premium amounts that take effect fifteen days
after the Contract Date is shown in the application. You may change the
allocation for future premium amounts at any time if the Contract is not
in default. To do so, You must notify Us in writing in a form that meets
Our needs. The change will take effect on the date We receive Your
notice at Our Home Office.
Transfers. You may request in writing to transfer monies from one
Investment
Division to another. The minimum amount You may transfer is $200.
This minimum
need not come from any one Investment Division or be transferred to any
one
Investment Division. The minimum applies to the net amounts being
transferred
by Your request. Transfers will be effective the day We receive the
request and
will be based on the Accumulation Unit Values of the Investment
Divisions for
that Valuation Period. You may make up to fifteen transfers in each
Contract
Year without charge. For each additional transfer there is a charge of $25.
We will deduct this charge from the Investment Divisions from which the
transfer
is being made in equal proportions to such Investment Divisions. Only two
transfers are allowed from the General Account per Contract Year.
The maximum amount that can be transferred from the General
Account to the Separate Account in any Contract Year is the larger of:
a. 25 percent of the amount in the General Account at the
beginning of the Contract Year; or
b. $1,000.
The maximum amount that can be deposited in the General Account
through allocation of premiums and net transfers (amount transferred in
less amounts transferred out) over the life of the Contract is $250,000.
The Funds. The word Funds, where We use it in this Contract without
qualification, means the Funds We identify in the application. The Funds
are
registered with the SEC under the Investment Company Act of 1940 as
open-end
diversified management investment companies. The Funds have several
portfolios;
there is a portfolio that corresponds to each of the Investment Divisions of
Our
Separate Account. We list the Investment Divisions in the application.
Account Investments. We use the assets of Our Separate Account to buy
shares in
the Funds. The assets of each Investment Division are invested in a
corresponding portfolio. Income and realized and unrealized gains and
losses
from assets in each Investment Division are credited to, or charged
against, the
Investment Division. This is without regard to income, gains, or losses in
Our
other investment accounts.
We will always keep assets in the Separate Account with a total
value at least equal to the amount of the Contract Values under
Contracts like this one. To the extent those assets do not exceed
this amount, We use them only to support those Contracts; We do not
use those assets to support any other business We conduct. We may
use any excess over this amount in any way We choose.
Change in Investment Policy. A portfolio of the Funds might
make a material change in its investment policy. In that case, We
will send You a notice of the change. Within 60 days after You receive
the notice, or within 60 days after the effective date of the
change, if later, You may exchange monies You have allocated to another
Investment Division of Our Separate Account.
Change of Fund. A portfolio might, in Our judgement, become unsuitable
for
investment by an Investment Division. This might happen because of a
change in
the investment contract, or a change in the laws or regulations, or because
the
shares are no longer available for investment, or for some other reason. If
that occurs, We have the right to substitute another portfolio of the Funds,
or
to invest in a Fund other than the ones We show on the application. But
We
would first seek approval from the SEC and, where required, the insurance
regulator where this Contract is delivered.
Contract Values
Contract Value.
The Contract Value at any time is equal to the sum of the amounts
You then have in Our General Account and in the Investment Divisions of
Our Separate Account under this Contract.
Your Value in Our Separate Account. The amount You have in Our
Separate
Account at any time will be the sum of the values in each Investment
Division.
The value in each Investment Division is equal to (a) multiplied by (b)
where:
a. is the number of Accumulation Units in the Investment
Division;
b. is the Accumulation Unit Value as of the end of the Valuation
Period for which the value in the Investment Division is determined.
The amount You have in the Separate Account cannot reside in more than
ten Investment Divisions.
Accumulation Units. We will credit the premium in the form of
Accumulation
Units. The number of Accumulation Units to be credited to any
Investment
Division will be determined by dividing the premium deposited in that
Investment
Division by the Accumulation Unit Value of the Investment Division.
Accumulation Units will be credited as of the Valuation Period during
which the premium is received.
A transfer into an Investment Division will increase the number of
Accumulation
Units credited to the Contract in the Investment Division. The number of
Accumulation Units credited to the Contract in the Investment Division
will be
reduced by:
a. Any Contingent Deferred Sales Charge deducted from the Contract
Value;
b. The Contract Maintenance Charge;
c. Any transfer charge;
d. Any transfer out of an Investment Division;
e. Any partial withdrawal; and
f. Any Systematic Withdrawal.
Accumulation Unit Value. The Accumulation Unit Value of each
Investment
Division was set at $10 at the end of the first Valuation Period of the
Investment Division. The Accumulation Unit Value for each subsequent
Valuation
Period is then determined at the end of the Valuation Period and is the Net
Investment Factor for that period multiplied by the Accumulation Unit
Value for
the immediately preceding Valuation Period. The Accumulation Unit
Value for a
Valuation Period applies to each day in the period. The Accumulation
Unit Value may increase or decrease from one Valuation Period to the
next.
Net Investment Factor. The Net Investment Factor is an index used to
measure the investment performance of an Investment Division from one
Valuation
Period to the next. The Net Investment Factor can be greater or less than
one;
therefore, the value of an Investment Division unit may increase or
decrease.
The Net Investment Factor for each Investment Division for a Valuation
Period is
determined by adding (a) and (b), subtracting (c) and then dividing the
result
by (a) where:
a. is the value of the assets at the end of the preceding Valuation
Period;
b. is the investment income and capital gains, realized or
unrealized, credited during the current Valuation Period;
c. is the sum of:
1. the capital losses, realized or unrealized, charged during
the current Valuation Period plus any amount charged or set
aside for taxes during the current Valuation Period; plus
2. the deduction from the Investment Division during the current
Valuation Period representing a daily charge equivalent to an
effective annual rate of 1.40 percent.
Charges Against The Investment Division. In determining the values for
both the Accumulation and Annuity Units, We make a daily charge
equivalent to an
effective annual rate of 1.40 percent against the assets of each Investment
Division. This charge consists of 1.25 percent a year for mortality and
expense
risks that We assume and .15 percent a year for administrative costs
relating to
Our Separate Account.
The earnings of the Separate Account are taxed as part of Our operations.
At
the present time, We do not expect to incur taxes on earnings of any
Investment
Division to the extent the earnings are credited under the Contract. If We
incur
additional taxes due to the operation of the Separate Account, We may
make
charges for such taxes against the Investment Divisions.
Premium Tax. State Premium Tax, if applicable, will be deducted from
Your Premiums or from Your Contract Value when incurred by Us.
Contract Maintenance Charge. At each Anniversary on or before the
Maturity
Date, We will deduct a Contract Maintenance Charge of $35. The charge
is
deducted from each Investment Division and the General Account based
on the
proportion of Your interest in each Investment Division and the General
Account
to the total Contract Value. If the total Contract Value is withdrawn
before
the Anniversary, We will deduct the Contract Maintenance Charge for the
current
Contract Year at that time.
Your Value in Our General Account. The amount You have in Our General
Account at any time is equal to the amounts allocated and transferred to it
under this Contract, plus the the interest credited to it, minus amounts
deducted, transferred and withdrawn from it under this Contract.
We will credit amounts in Our General Account with interest at effective
annual
rates We determine. The rates may be different for unloaned and loaned
amounts.
Such effective annual interest rates will not be less than 3.00 percent. Any
interest in excess of 3.00 percent will be at the SOLE DISCRETION of
Our Board
of Directors. Any excess interest will be declared at the beginning of each
Calendar Year and is guaranteed until the end of the Calendar Year.
Contract Value Deductions. The following will be deducted from Our
General
Account or the Separate Account based on the proportion of Your interest
in the
General Account and the Investment Divisions of Our Separate Account
to the total Contract Value, unless You choose otherwise:
a. Any partial withdrawals,
b. The Contract Maintenance Charge, and
c. Any Systematic Withdrawal.
Withdrawal of Contract Value. You may, upon written request to Us,
withdraw
part or all of the Contract Value. We will pay the amount withdrawn, less
any
Contingent Deferred Sales Charge, to You. Such payment may be
deferred for a
period not more than 6 months after Your request, unless this would be
contrary to the laws of the state in which this Contract is issued. No
withdrawals can be less than $500 or the total Contract Value, whichever
is less, nor can a withdrawal other than a Systematic Withdrawal, be
requested
more often than three times per Contract Year. If after a partial
withdrawal
the remaining Contract Value would be less than $1,000, the withdrawal
request
will be treated as a request for the total Contract Value. If the total
Contract Value is withdrawn, this Contract will end. Withdrawals from
the
General Account will reduce the most recent premium payment(s) not
already
withdrawn from the General Account, along with any accrued interest.
Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge
is calculated separately for each Premium. Premiums paid more than eight
years
before the date of withdrawal will not be subject to a Contingent Deferred
Sales
Charge. For purposes of determining the Contingent Deferred Sales
Charge, We
assume that Premium payments are withdrawn on a "first-in-first-out"
basis, and
that all Premiums are withdrawn before any earnings are withdrawn.
The Contingent Deferred Sales Charge is calculated as a percentage of the
Premiums withdrawn. This percentage is based on the length of time
between each
premium payment and the withdrawal as shown in the following table.
CONTINGENT DEFERRED SALES CHARGE
Years between Charge as a Percent
Premium Payment of Premium
and Withdrawal Payments Withdrawn
0-1 8%
1-2 8%
2-3 7%
3-4 7%
4-5 6%
5-6 5%
6-7 4%
7-8 2%
8+ 0%
There will be no Contingent Deferred Sales Charge if:
a. The amount withdrawn is less than
1. Ten Percent of all Premiums paid: minus
2. Any previous withdrawals made during the prior 12 Contract Months.
b. A total withdrawal of Contract Value is made after this Contract has
been in force for three years, with the total amount of withdrawal used to
purchase a life income under the Payment Options of this
Contract,
c. The Annuitant dies,
d. After the first Contract Year, written proof is given to Us at Our Home
Office that the Owner is confined in a state licensed in-patient nursing
facility for a total of 90 days, provided We receive Your withdrawal
request
within 90 days after discharge from such facilities, or
e. After the first Contract Year, a licensed Physician approved by Us,
provides a written statement to Us that the Owner is expected with
reasonable
medical certainty to die within the next twelve months due to a
non-correctable medical condition. The licensed Physician cannot be
the Owner or part of the Owner's immediate family.
Systematic Withdrawal Option
General. You may elect a Systematic Withdrawal Option if all of the
following requirements are satisfied as of the date we receive your request:
a. Your Contract Value is greater than $25,000,
b. The Annuitant is living,
c. The Contract has not reached the Maturity Date, and
d. The Free Look Period has expired.
Under this option, periodic partial withdrawals will be made from the
Contract
Value in a predetermined fashion. Withdrawals may be made monthly,
quarterly,
semi-annually or annually. However, we reserve the right to change the
frequency of payments or discontinue payments if the payment is less than
$200.
Systematic Withdrawals will be delayed until the last day of the Valuation
Period in which they fall.
Systematic Withdrawals made over the life expectancy of the Annuitant
and
Co-Annuitant with or without age recalculation (as described in c., d., e.,
&
f.) will be exempt from any applicable Contingent Deferred Sales Charge,
regardless of amount. Such withdrawals will, however, be included in the
total of all withdrawals in the prior 12 months for the purposes of
determining
the Contingent Deferred Sales Charge applicable to any Unscheduled
Withdrawals.
In all other cases (as described in a. and b.), Systematic Withdrawals are
subject to any applicable Contingent Deferred Sales Charge.
The balance remaining in the Contract Value will continue to increase or
decrease, depending on the investment experience of the Investment
Divisions in which Your Contract Value resides. If Your Contract Value
declines due to Unscheduled Withdrawals or due to the investment
experience, Your Contract Value may no longer support Systematic
Withdrawals. All payments and Our obligations will cease when the
Contract Value has been completely distributed. If the balance of the
Contract Value falls below $1,000, We reserve the right to withdraw the
remaining balance and make a lump sum payment. If We exercise this
right, We will not impose any Contingent Deferred Sales Charge.
Life expectancies used to calculate the amount of withdrawal under a
Systematic Withdrawal Option will be determined with reference to the
unisex life expectancy table for the applicable Treasury Regulation. For
this
purpose, age will be determined as of the birthday on or immediately
following the date such calculation is made.
Systematic Withdrawal Options. The following Systematic Withdrawal
Options are provided:
A. Distribution of a Fixed Amount. Periodic withdrawals of a specified
amount are made while this Contract is in force. These withdrawals will
start at the beginning of the earliest Contract Month that occurs at least
31
days after We receive Your written request to begin Distribution of a
Fixed
Amount. This option is not available after Attained Age 70 on qualified
contracts. The amount of the withdrawal may be changed at any time
and any
change will take effect for payments that occur at least 31 days after we
receive Your request. Upon death of the Annuitant prior to the Maturity
Date, the Death Benefit will be paid to the Beneficiary. Upon Maturity,
Systematic Withdrawals will end.
B. Distribution over a Fixed Period. Periodic withdrawals are made over a
specified period while this Contract is in force, beginning on the earliest
Contract Anniversary that occurs at least 31 days after We receive Your
request to begin Systematic Withdrawals. The fixed period cannot
extend
beyond the Annuitant's Life Expectancy for qualified contracts. Once
You
elect this option, You cannot change the specified period or discontinue
Systematic Withdrawals. The amount of the withdrawal will be
calculated
annually by dividing the then current Contract Value by the number of
installments remaining in the specified period. Upon death of the
Annuitant,
payments will continue to be made to the Beneficiary. In addition, if the
Annuitant's death occurs prior to the Maturity Date, We will pay the
Beneficiary the difference, as of the date we determine the Death
Benefit,
between the Death Benefit and the Contract Value. Unless You choose
another
form of payment upon Maturity, payments will continue to the end of
the Fixed
Period even if the Fixed Period extends beyond the Maturity Date.
C. Distribution Over Life Expectancy (Without Age Recalculation).
Periodic withdrawals are made over the Annuitant's life expectancy
without
age recalculation, beginning on the earliest Contract Anniversary that
occurs
at least 31 days after we receive Your request to begin Systematic
Withdrawals. Once You elect this option, You cannot choose a different
option or discontinue Systematic Withdrawals. The amount of
withdrawal
will be calculated annually by dividing the then current Contract Value
by
the number of installments remaining in the period determined by the
Annuitant's life expectancy on the Contract Anniversary Systematic
Withdrawals began. Upon death of the Annuitant, payments will
continue
to be made to the Beneficiary. In addition, if the Annuitant's death
occurs
prior to the Maturity Date, we will pay the Beneficiary the difference, as
of
the date we determine the Death Benefit, between the Death Benefit and
the
Contract Value. Unless You choose another form of payment upon
Maturity,
payments will continue for the Annuitant's life expectancy even if the
life
expectancy extends beyond the Maturity Date.
D. Distribution Over Life Expectancy (With Age Recalculation).
Periodic withdrawals are made over the Annuitant's life expectancy with
age
recalculation, beginning on the earliest Contract Anniversary that occurs
at
least 31 days after we receive Your request to begin Systematic
Withdrawals.
Once You elect this option, You cannot choose a different option or
discontinue Systematic Withdrawals. The amount of withdrawal will be
calculated annually by dividing the then current Contract Value by the
number
of installments remaining in the period determined by the Annuitant's
life
expectancy at that time. With the calculation on or immediately
following
the Annuitant's death, the Annuitant's life expectancy will be adjusted to
zero. At such time, the balance of the Contract Value will be paid in a
lump
sum to the Beneficiary. In addition, if the Annuitant's death occurs prior
to the Maturity Date, We will pay the Beneficiary the difference, as of
the
date We determine the Death Benefit, between the Death Benefit and the
Contract Value. Unless You choose another form of payment upon
Maturity,
payments will continue until the Annuitant's death, even if this occurs
after
the Maturity Date.
E. Distribution Over Joint and Last Survivor Life Expectancy (Without
Age
Recalculation). Periodic withdrawals are made over the joint and last
survivor life expectancy of the Annuitant and Co-Annuitant without age
recalculation, beginning on the earliest Contract Anniversary that occurs
at
least 31 days after we receive Your request to begin Systematic
Withdrawals. Once You elect this option, You cannot choose a different
option or discontinue Systematic Withdrawals. The amount of
withdrawal
will be calculated annually by dividing the then current Contract Value
by
the number of installments remaining in the period determined by the
joint
and last survivor life expectancy of the Annuitant and Co-Annuitant on
the
Contract Anniversary Systematic Withdrawals began. Upon death of the
last survivor, payments will continue to be made to the Beneficiary.
In addition, if the Annuitant's death occurs prior to the Maturity Date, we
will pay the Beneficiary the difference, as of the date we determine the
Death Benefit, between the Death Benefit and the Contract Value.
Unless You
choose another form of payment upon Maturity, payments will continue
for the
joint and last survivor's life expectancy even if the life expectancy
extends
beyond the Maturity Date.
F. Distribution Over Joint and Last Survivor Life Expectancy (With Age
Recalculation). Periodic withdrawals are made over the joint and last
survivor life expectancy of the Annuitant and Co-Annuitant with age
recalculation, beginning on the earliest Contract Anniversary that occurs
at
least 31 days after we receive Your request to begin Systematic
Withdrawals.
Once You elect this option, You cannot choose a different option or
discontinue Systematic Withdrawals. The amount of withdrawal will be
calculated annually by dividing the then current Contract Value by
the number of installments remaining in the period determined by the
joint
and last survivor life expectancy of the Annuitant and Co-Annuitant, if
surviving, at that time. This option is available only where the
designated
Co-Annuitant is the Annuitant's Spouse. Upon death of ether the
Annuitant
or Co-Annuitant, whichever dies first, the annual calculation will be
based
on the recalculated single life expectancy of the survivor. With the
calculation on or immediately following the last survivor's death, the last
survivor's life expectancy will be adjusted to zero. At such time, the
balance of the Contract Value will be paid in a lump sum to the
Beneficiary.
In addition, if the Annuitant's death occurs prior to the Maturity Date, we
will pay the Beneficiary the difference, as of the date we determine the
Death Benefit, between the Death Benefit and the Contract Value.
Unless You choose another form of payment upon Maturity, payments
will
continue until the last survivor's death, even if this occurs after the
Maturity Date.
Unscheduled Withdrawals. Under any Systematic Withdrawal Option, the
remaining balance of the Contract Value may be withdrawn by the Owner
at
any time. Each Unscheduled Withdrawal must be for a minimum of $500.
However, We reserve the right to limit Unscheduled Withdrawals to three
every Contract Year. Unscheduled Withdrawals are subject to any
applicable Contingent Deferred Sales Charge.
Beneficiary
Designation. The Beneficiary named in the application for this Contract
will
receive the Death Benefit unless You have changed this designation.
Change. You may change any Beneficiary designation while the Annuitant
is alive,
unless the previous designation provides otherwise. Such change will take
effect
only after We receive Your written request in a form approved by Us. Any
previous beneficiary's interest will then end. Even if the Annuitant is not
living when We receive the request, We will change the Beneficiary
designation
if the Annuitant was alive when You completed the change request. We
reserve
the right to require that this Contract accompany such request.
Class of Beneficiary. The priority of a Beneficiary may be shown by using
numbered classes. The Primary Beneficiary is the class of first priority
and is
called Class 1, the Contingent Beneficiary is the Class of second priority
and
is Class 2, the Second Contingent Beneficiary is the class of third priority
and
is Class 3, and so on. The following statements apply to Beneficiaries
unless
otherwise stated:
a. One will have the right to be paid only if he or she survives the
Annuitant
and only if no one in a prior class survives the Annuitant;
b. One who has the right to be paid will be the only one paid
if no one else in the same class survives the Annuitant;
c. Two or more in the same class who have the right to be
paid will be paid in equal shares, unless otherwise provided; and
d. If none survives the Annuitant, the Owner will be paid.
Suppose the Class 1 Beneficiary is Jane and the Class 2 Beneficiaries are
Paul
and John. We owe Jane the Proceeds if she is living at the Annuitant's
death. We
owe Paul and John the Proceeds if they are living then but Jane is not. But
if
only one of them is living, We owe him the Proceeds. If none of them is
living,
We owe the Owner.
Maturity Date
Maturity Date. The Maturity Date of this Contract is the Attained Age 90
of the
Annuitant. In no event can the Maturity Date be earlier than the 10th
Contract
Anniversary.
Optional Maturity Date. You may elect an Optional Maturity Date, by
filing a
written request to Us at least 31 days before the requested Maturity Date.
The
Optional Maturity Date shall be any Contract Anniversary prior to the
Annuitant's Attained Age 90, which is not earlier than the 10th Contract
Anniversary.
Annual Report of Contract Status
We will send You an Annual Report, at no charge, which shows the
Contract Value
of this Contract. All payments received 30 days or more before the
Anniversary
will be included.
General Provisions
The Contract. This Policy, the application, and any riders attached to this
Policy form the entire Contract. We assume that all statements in the
application were made to the best of the knowledge and belief of the
person(s)
who made them; in the absence of fraud, they are deemed to be
representations
and not warranties. We relied on those statements when We issued the
Contract.
We will not use any statement to void the Contract or deny a claim unless
such
statement is made in the application and a copy of the application is
attached.
Incontestability. We will not contest this Contract after it has been in force
during the Annuitant's lifetime for two years from the Contract Date
except for
any provisions granting disability benefits.
Contract Modifications. Only the President, a Vice President, the
Secretary, or
an Assistant Secretary of Our Company may agree to modify this Contract
and then
only in writing.
Ownership and Control. Unless inconsistent with the terms of any
Beneficiary
designation or any assignment or change of ownership:
a. the Owner of the Contract is as shown on page 1; and
b. before the Maturity Date and when the Annuitant is living, the Owner
alone is entitled to:
1. any Contract benefit and value; and
2. the exercise of any right and privilege granted by the
Contract or by Us.
Contingent Owner. The Owner, if other than the Annuitant, may name or
change a
contingent owner while the Annuitant is alive. Upon the death of the
Owner, the
contingent owner will become the Owner. If no contingent owner has been
named or
is living, ownership will pass to the Owner's estate.
Assignment. We will not be bound by any assignment of this Contract
unless We
receive the assignment, or a copy of it, at Our Home Office. We are not
obliged
to see that an assignment is valid or sufficient.
Misstatement of Age or Sex. If the age or sex of the Annuitant has been
misstated, the benefits available under this Contract will be those which
the
Proceeds would have purchased for the correct age and sex. Any
overpayments or
underpayments will be corrected with the interest at the rate of 6% per
year.
Non-Participation. This Contract does not pay dividends or otherwise
share in
the profits of the Company.
Proceeds
Proceeds. Proceeds means the amount of money that is payable
under this Contract on the Option Date.
Option Date. Option Date means the date of any ending of
this Contract, such as:
a. Maturity;
b. The date We receive due proof of the Annuitant's death and an
election of how the Death Benefit is to be paid; or
c. Total Contract Value withdrawal.
Maturity Value. The Maturity Value of this Contract equals the Contract
Value
on the Maturity Date. If, prior to the Maturity Date, you have elected
Option
b., c., d., e., or f. under the Systematic Withdrawal Option, we will
continue
to make payments according to the Systematic Withdrawal Option You
chose. If
You have not elected Option b., c., d., e., or f. under the Systematic
Withdrawal Option, on the Maturity Date We will pay the Annuitant a
monthly
income for life, with payments guaranteed for 120 months and, unless You
choose
otherwise, the portion of the Contract Value in the General Account will
be used
to pay a fixed monthly income and the portion of the Contract Value in the
Separate Account will be used to pay a variable monthly income. You may
choose
another form of payment. Other choices for this sum are:
a. You may take it in one sum; or
b. You may choose to apply it under a Payment Option.
Death Benefit. The phrase Death Benefit means the amount We will pay
when We
receive due proof of the death of the Annuitant, prior to the Maturity Date,
and an election of how the Death Benefit is to be paid. At the time We
receive the required information, the Death Benefit will be the greater of:
a. The Contract Value less any outstanding loan and loan interest;
b. The sum of the premiums paid less withdrawals less any outstanding
loan and loan interest;
c. The Guaranteed Minimum Death Benefit less any outstanding loan
and loan interest.
Unless one of the Payment Options has been selected within 90
days after We receive due proof of death, the Death Benefit will be
paid in a lump sum at that time.
Guaranteed Minimum Death Benefit. Prior to the first Contract
Anniversary, the Guaranteed Minimum Death Benefit will be set to zero.
On each Contract Anniversary that occurs prior to the Annuitant's Attained
Age
81, the Guaranteed Minimum Death Benefit will be set to the higher of:
a. the Contract Value on that Contract Anniversary, and
b. the Guaranteed Minimum Death Benefit on that Contract Anniversary.
The Guaranteed Minimum Death Benefit will also be reset on any date
We receive a premium payment, and on any date We process a
withdrawal.
On the date We credit Your premium payment to the Contract Value, We
will increase the Guaranteed Minimum Death Benefit by the amount of the
premium You paid. On any date a withdrawal is taken from Your
Contract Value,
the Guaranteed Minimum Death Benefit will be reduced by:
a. The Guaranteed Minimum Death Benefit in effect at the end of the
previous day; times
b. The amount withdrawn, including any Contingent Deferred Sales
Charge; divided by
c. The Contract Value at the end of the previous day.
For Contracts with an Issue Age of 80, the Guaranteed Minimum Death
Benefit will never be greater than zero. The Guaranteed Minimum Death
Benefit will be set to zero when Your Contract reaches the Maturity Date,
and when you withdraw your total Contract Value.
Claims of Creditors. To the extent allowed by law, the Proceeds will not
be
subject to any claims of a Payee's creditors.
Payment Options
Election of Payment Options.
By Owner: While the Annuitant is living, You may choose, or change the
choice of
any Payment Option, unless the previous choice provides otherwise.
By Payee: When the Proceeds are payable and if they may be paid in one
sum to
the Payee, the Payee may choose, or change the choice of any Payment
Option.
The word Payee means any person who has the right to receive the
Proceeds under
this Contract.
Payment of Proceeds. The Proceeds may be paid in one sum or all or part
of this
sum may be applied to any Payment Option. If no Payment Option is
chosen, We
will pay the Proceeds as described in the Proceeds Provision above.
If the Annuitant is the Owner and the Annuitant dies before the
Income Date, then the Proceeds, other than amounts payable to or
for the benefits of the surviving spouse of the Annuitant, must be
paid out within five years of the death of the Annuitant. If the
Annuitant is not the Owner, the Owner dies before the Income Date,
and the surviving spouse of the Owner has not been named as the
Contingent Owner, the Contract ends and the entire Contract Value must
be paid out within five years of the death of the Owner. If the
Owner dies on or after the Income Date, then any amounts remaining
to be paid, other than amounts payable to or for the benefit of the
surviving spouse of the Owner, must be paid out at least as rapidly
as benefits were being paid at the time of the Owner's death.
Conditions. Any choice must be in writing in a form approved by Us. Our
consent
is needed for a Payment Option to be used for any Payee under any of
these
conditions:
a. The Payee is not a natural person.
b. The Payee will be paid as assignee.
c. The amount to be applied for the Payee is less than $1,000.
d. Each payment to the Payee would be less than $20.00.
Fixed Payment Options
Payments and earnings under the Fixed Payment Options are not
affected by the investment experience of any Investment Division of
Our Separate Account. Payments made under Options 2 and 5 will not
increase or decrease. Interest credited on all other Fixed Options
will never be less than 2.75 percent.
Payment Option 1. -- Payment for a Specified Period.
We will make equal monthly payments which will start on the
Option Date and will run for one to thirty years, as chosen. The
guaranteed minimum monthly payments will be based on Table 1. The
payments may be increased by additional interest.
Monthly Income Per $1,000 of Proceeds
Table 1
Payments for a Specified Period
Number of Amount of Number of Amount of
Years Monthly Years Monthly
Payable Payments Payable Payments
1 $84.37 16 6.41
2 42.76 17 6.11
3 28.89 18 5.85
4 21.96 19 5.61
5 17.80 20 5.39
6 15.03 21 5.18
7 13.06 22 5.02
8 11.57 23 4.86
9 10.42 24 4.72
10 9.50 25 4.59
11 8.75 26 4.46
12 8.13 27 4.35
13 7.60 28 4.24
14 7.15 29 4.15
15 6.75 30 4.06
Payment Option 2. -- Payment of Life Income. We will make equal
monthly payments
which will start on the Option Date and will run as long as the Payee lives.
The amount of the payment will depend on the age and sex of the Payee
on the
Option Date and will be based on Table 2. We must have proof of the
Payee's
date of birth. Either of the following terms may be chosen.
Monthly Income Per $1,000 of Proceeds
TABLE 2
Age Near Monthly Payments For Life Age Near Monthly Payments
for Life
Birthday 10 years 20 years Birthday 10 years 20 years
Male Life Certain Certain Female Life Certain Certain
20 and 20 and
Under 2.83 2.83 2.82 Under 2.75 2.75 2.75
21 2.85 2.85 2.84 21 2.77 2.77 2.76
22 2.87 2.86 2.86 22 2.78 2.78 2.78
23 2.88 2.88 2.88 23 2.80 2.80 2.80
24 2.91 2.90 2.90 24 2.82 2.82 2.82
25 2.93 2.93 2.92 25 2.84 2.84 2.83
26 2.95 2.95 2.94 26 2.86 2.86 2.85
27 2.97 2.97 2.96 27 2.87 2.87 2.87
28 3.00 3.00 2.99 28 2.90 2.90 2.89
29 3.02 3.02 3.01 29 2.92 2.92 2.91
30 3.05 3.05 3.04 30 2.94 2.94 2.94
31 3.07 3.07 3.06 31 2.96 2.96 2.96
32 3.10 3.10 3.09 32 2.99 2.99 2.98
33 3.13 3.13 3.12 33 3.01 3.01 3.01
34 3.16 3.16 3.15 34 3.04 3.04 3.03
35 3.20 3.20 3.18 35 3.07 3.07 3.06
36 3.23 3.23 3.21 36 3.10 3.10 3.09
37 3.27 3.27 3.25 37 3.13 3.13 3.12
38 3.31 3.30 3.28 38 3.16 3.16 3.15
39 3.35 3.34 3.32 39 3.19 3.19 3.18
40 3.39 3.38 3.35 40 3.23 3.23 3.21
41 3.43 3.43 3.39 41 3.26 3.26 3.25
42 3.48 3.47 3.43 42 3.30 3.30 3.28
43 3.53 3.52 3.48 43 3.34 3.34 3.32
44 3.58 3.57 3.52 44 3.38 3.38 3.36
45 3.63 3.62 3.56 45 3.43 3.42 3.40
46 3.69 3.67 3.61 46 3.47 3.47 3.44
47 3.74 3.73 3.66 47 3.52 3.52 3.48
48 3.80 3.78 3.71 48 3.57 3.57 3.53
49 3.87 3.85 3.76 49 3.63 3.62 3.58
50 3.93 3.91 3.82 50 3.68 3.67 3.62
51 4.00 3.97 3.87 51 3.74 3.73 3.68
52 4.08 4.04 3.93 52 3.80 3.79 3.73
53 4.15 4.12 3.99 53 3.87 3.85 3.78
54 4.24 4.19 4.05 54 3.94 3.92 3.84
55 4.32 4.27 4.11 55 4.01 3.99 3.90
56 4.41 4.36 4.17 56 4.09 4.06 3.96
57 4.51 4.45 4.23 57 4.17 4.14 4.03
58 4.61 4.54 4.30 58 4.26 4.22 4.09
59 4.72 4.64 4.37 59 4.35 4.31 4.16
60 4.83 4.75 4.43 60 4.45 4.40 4.23
61 4.96 4.86 4.50 61 4.55 4.50 4.30
62 5.09 4.97 4.57 62 4.66 4.60 4.37
63 5.23 5.09 4.63 63 4.78 4.71 4.44
64 5.38 5.22 4.70 64 4.90 4.82 4.52
65 5.54 5.36 4.76 65 5.04 4.94 4.59
66 5.71 5.49 4.83 66 5.18 5.07 4.66
67 5.90 5.64 4.89 67 5.34 5.21 4.73
68 6.09 5.79 4.95 68 5.50 5.35 4.80
69 6.30 5.94 5.00 69 5.68 5.50 4.87
70 6.52 6.10 5.05 70 5.87 5.65 4.94
71 6.76 6.27 5.10 71 6.07 5.82 5.00
72 7.01 6.44 5.14 72 6.30 5.99 5.06
73 7.28 6.61 5.18 73 6.54 6.17 5.11
74 7.57 6.79 5.22 74 6.80 6.36 5.16
75 7.87 6.96 5.25 75 7.08 6.55 5.20
76 8.20 7.14 5.28 76 7.38 6.75 5.24
77 8.55 7.32 5.30 77 7.71 6.95 5.27
78 8.93 7.49 5.32 78 8.07 7.15 5.30
79 9.33 7.67 5.34 79 8.45 7.35 5.32
80 and 9.76 7.84 5.35 80 and 8.87 7.55 5.34
over over
a. Life Income, Guaranteed Period -- The payments will run for the
life of the Payee with guaranteed payments for ten or twenty years,
as chosen.
b. Life Income Only -- The payments will run only during the lifetime of
the
Payee.
We reserve the right to require proof that the Payee is alive when each
payment
is due.
Payment Option 3. -- Payment of a Specified Amount. We will make
equal
payments every one, three, six, or twelve months, as chosen. The
payments will start on the Option Date and will run until the Proceeds
applied, together with interest at the rate of at least 2.75% a year
on the unpaid balance, are fully paid. The final payment will be any
balance equal to or less than one payment. The payments may be increased
by additional interest.
Payment Option 4. -- Proceeds Left at Interest. The Proceeds may be left
with
Us for any length of time agreed upon. Interest will be at the rate of at
least
2.75% a year. The interest may be left with Us to accumulate, or it may be
paid
every one, three, six, or twelve months, as chosen. If the interest is to be
paid, the first payment will be at the end of the first interest period.
Payment Option 5. -- Annuity. You can choose a payment option from any
life
annuity option which We then regularly issue for Contracts purchased by a
single
sum. (This does not include contracts which are used to qualify for special
Federal Income Tax treatment as a retirement plan.) The first payment
will be
at the end of the first installment period. We must have proof of the
Payee's
date of birth.
Basis of Guaranteed Payment Rates. Guaranteed interest rate for Table 1 is
2.75%. Table 2 is based on the Annuity 2000, Sex Distinct, Mortality
Table at
2.75%.
Other Payment Options Available. We may agree to pay the Proceeds in
any other
manner.
Variable Payment Options
Payments under the Variable Payment Options are affected by the
investment
experience of the Investment Divisions of Our Separate Account.
Therefore, the
amount of the Variable Payments may increase or decrease, depending on
the
investment experience of the Investment Division.
The dollar amount of the first Variable Payment is computed by
multiplying the
amount in each Investment Division, calculated as of a date not more than
ten
business days prior to the date of the first payment, by the appropriate rate
for the option selected. The payment from each Investment Division is
then
converted to Annuity Units which will be used to determine subsequent
payments.
The number of Annuity Units credited to each Investment Division is:
a. the portion of the first Variable Payment from the Investment
Division; divided by
b. the Investment Division's Annuity Unit Value as of the date used
to calculate the first Variable Payment.
The dollar amount of each subsequent payment for an Investment
Division is equal to:
a. the number of Annuity Units for that Investment Division;
multiplied by
b. The Annuity Unit Value for that Investment Division as of a
uniformly applied date not more than ten business days before the
date of the payment.
The Variable Payment made to the Annuitant is the sum of the
payment amounts for each Investment Division.
Annuity Unit Value. The Annuity Unit Value of each Investment Division
was set
at $10.00 at the end of the first Valuation Period of the Investment
Division.
The unit value for each subsequent Valuation Period is then determined at
the
end of the Valuation Period and is equal to:
a. the Annuity Unit Value for the immediately preceding Valuation
Period; multiplied by;
b. the Net Investment Factor for that period; multiplied by
c. .99986634 for each day in the Valuation Period.
Transfers. After Variable Payments have begun You may request in
writing one
transfer per Contract Year. There will be no charge for this transfer. No
transfers are allowed between Fixed Payment Options and Variable
Payment
Options. Transfers made after Variable Payments have begun will be
effective
the day We receive the request and based on the Annuity Unit Values of
the
Investment Divisions for that Valuation Period.
Payment Option 1. -- Payment of Life Income. We will make variable
monthly
payments which will start on the Option Date and will run as long as the
Payee
lives.
The amount of the payment will depend on the age and sex of the Payee
on the
Option Date and the initial payment will be based on Table 3. We must
have
proof of the Payee's date of birth. Either of the following terms may be
chosen.
Monthly Income Per $1,000 of Proceeds
TABLE 3
Age Near Monthly Payments For Life Age Near Monthly Payments
for Life
Birthday 10 years 20 years Birthday 10 years 20 years
Male Life Certain Certain Female Life Certain Certain
20 and 20 and
Under 4.34 4.34 4.34 Under 4.28 4.28 4.28
21 4.35 4.35 4.35 21 4.29 4.29 4.29
22 4.37 4.37 4.36 22 4.30 4.30 4.30
23 4.38 4.38 4.38 23 4.31 4.31 4.31
24 4.40 4.40 4.39 24 4.32 4.32 4.33
25 4.41 4.41 4.41 25 4.34 4.34 4.34
26 4.43 4.43 4.42 26 4.35 4.35 4.35
27 4.45 4.45 4.44 27 4.36 4.36 4.37
28 4.46 4.46 4.46 28 4.38 4.38 4.38
29 4.48 4.48 4.48 29 4.40 4.40 4.40
30 4.51 4.51 4.50 30 4.41 4.41 4.41
31 4.53 4.53 4.52 31 4.43 4.43 4.43
32 4.55 4.55 4.54 32 4.45 4.45 4.45
33 4.57 4.57 4.56 33 4.47 4.47 4.47
34 4.60 4.60 4.58 34 4.49 4.49 4.48
35 4.63 4.63 4.61 35 4.51 4.51 4.51
36 4.66 4.66 4.63 36 4.53 4.53 4.53
37 4.69 4.69 4.66 37 4.56 4.56 4.55
38 4.72 4.72 4.69 38 4.58 4.58 4.57
39 4.76 4.75 4.72 39 4.61 4.61 4.60
40 4.79 4.79 4.75 40 4.64 4.64 4.62
41 4.83 4.83 4.78 41 4.67 4.67 4.65
42 4.88 4.87 4.82 42 4.70 4.70 4.68
43 4.92 4.91 4.85 43 4.74 4.74 4.71
44 4.96 4.95 4.89 44 4.78 4.77 4.74
45 5.01 5.00 4.93 45 4.81 4.81 4.78
46 5.06 5.04 4.97 46 4.85 4.85 4.81
47 5.12 5.09 5.01 47 4.90 4.89 4.85
48 5.17 5.15 5.05 48 4.94 4.93 4.89
49 5.23 5.20 5.10 49 4.99 4.98 4.93
50 5.29 5.26 5.14 50 5.04 5.03 4.97
51 5.36 5.32 5.19 51 5.10 5.08 5.01
52 5.43 5.38 5.24 52 5.15 5.14 5.06
53 5.50 5.45 5.29 53 5.21 5.19 5.11
54 5.58 5.52 5.34 54 5.28 5.25 5.15
55 5.66 5.60 5.40 55 5.35 5.32 5.21
56 5.75 5.68 5.45 56 5.42 5.39 5.26
57 5.84 5.76 5.51 57 5.50 5.46 5.32
58 5.94 5.85 5.57 58 5.58 5.53 5.37
59 6.04 5.94 5.62 59 5.67 5.61 5.43
60 6.16 6.04 5.68 60 5.76 5.70 5.49
61 6.28 6.15 5.74 61 5.86 5.79 5.56
62 6.41 6.26 5.80 62 5.97 5.89 5.62
63 6.55 6.37 5.86 63 6.08 5.99 5.68
64 6.70 6.50 5.92 64 6.20 6.10 5.75
65 6.86 6.62 5.97 65 6.33 6.21 5.81
66 7.03 6.76 6.03 66 6.47 6.33 5.88
67 7.22 6.89 6.08 67 6.62 6.46 5.94
68 7.42 7.04 6.13 68 6.79 6.60 6.00
69 7.63 7.18 6.18 69 6.96 6.74 6.07
70 7.85 7.34 6.22 70 7.15 6.89 6.12
71 8.09 7.49 6.27 71 7.36 7.05 6.18
72 8.34 7.65 6.30 72 7.58 7.21 6.23
73 8.61 7.82 6.34 73 7.83 7.38 6.27
74 8.91 7.98 6.37 74 8.09 7.56 6.32
75 9.22 8.15 6.40 75 8.37 7.74 6.35
76 9.55 8.32 6.42 76 8.68 7.93 6.39
77 9.90 8.48 6.45 77 9.01 8.12 6.42
78 10.29 8.65 6.46 78 9.37 8.32 6.44
79 10.69 8.81 6.48 79 9.77 8.51 6.46
80 and 11.13 8.97 6.49 80 and 10.19 8.70 6.48
over over
a. Life Income, Guaranteed Period -- The payments will run for the life of
the
Payee with guaranteed payments for ten or twenty years, as chosen.
b. Life Income Only -- The payments will run only during the lifetime of
the
Payee.
We reserve the right to require proof that the Payee is alive when each
payment
is due.
Payment Option 2. -- Annuity. You can choose a payment option from any
life
annuity option which We then regularly issue for Contracts purchased by a
single
sum. (This does not include contracts which are used to qualify for special
Federal Income Tax treatment as a retirement plan.) The first payment
will be
at the end of the first installment period. We must have proof of the
Payee's
date of birth.
Basis of Initial Payment Rates. Table 3 is based on the Annuity 2000, Sex
Distinct, Mortality Table at 5.00%
Payment Contracts
Issue. When a Payment Option is chosen, We will issue a Payment
Contract in
exchange for this Contract. The effective date of the Payment Contract
will be
the Option Date.
Assignment. Payment Contracts may not be assigned.
Withdrawal of Proceeds. The Payee has the right to withdraw the Proceeds
under a
Fixed Payment Option if so provided in the Payment Contract. The payee
cannot
withdraw Proceeds under any of the Variable Payment Options. Under
Fixed
Payment Option 1, the sum of the remaining guaranteed payments,
discounted at
the rate used to compute each payment, compounded annually, may be
withdrawn.
Under Fixed Payment Options 3 and 4, all or part of the remaining
Proceeds and
any interest earned but unpaid may be withdrawn. The Proceeds may not
be
withdrawn under Fixed Payment Options 2 or 5. Any withdrawals must
not be less
than $100. If the amount remaining under a Payment Option is less than
$1,000,
We have the right to pay in one sum. We may postpone payment of any
amount to
be withdrawn for not more than six months from the date We receive the
written
request for withdrawal at Our Home Office.
Changing Options. A Payee under Fixed Payment Options 1, 3, or 4 may
change to
another option using the sum which the Payee could withdraw on the date
the new
option is to start. In some cases, the Payee will need Our consent to
change an
option. We describe these cases under Conditions.
Death of Payee. If any payments remain to be paid under a Payment
Option at the
death of the Payee, payment will be made according to the terms of the
Payment
Contract.
Claims of Creditors. To the extent allowed by law, the Proceeds will not
be
subject to any claims of a Payee's creditors.
FLEXIBLE PREMIUM VARIABLE ANNUITY
Deferred Annuity. Death Benefit Payable if Death Occurs Before
Maturity
Date. Flexible Premiums. Optional Maturity Date. Not Eligible
for Dividends. Contract Values will Reflect the Investment Experience
of Our Separate Account and Interest Earned in the General Account.
A057A1 SCRIPT
<PAGE>
Item 24.(b)(5)(a) Form of Application for Flexible Premium Deferred
Variable Annuity Contract
Home Office Use
ANNUITY APPLICATION TO:
MIDLAND NATIONAL LIFE INSURANCE COMPANY, Sioux Falls,
SD 57193
1. PROPOSED ANNUITANT (Last, First, Middle Initial)
MARITAL STATUS
BIRTHDATE
MO. DAY YEAR
STATE OF BIRTH
AGE
SEX
SOCIAL SECURITY #
2. RESIDENCE ADDRESS (Street, City, State, Zip Code)
TELEPHONE NUMBER ( )
3a. FULL NAME OF OWNER (If other than Annuitant) (First, Middle,
Last)
3b OWNER'S TAX I.D. or SOCIAL SECURITY NUMBER
4a. OWNER'S ADDRESS (Street, City, State, Zip Code)
4b. RELATIONSHIP TO ANNUITANT
5a. PRIMARY BENEFICIARY
Relationship to Proposed Annuitant.
5b. CONTINGENT BENEFICIARY
Relationship to Proposed Annuitant.
6a. PLAN OF ANNUITY
6b. WAIVER OF PREMIUM
Complete reverse side of application.
6c. TYPE OF ANNUITY
Non-Qualified
403(b) TSA
IRA (for tax year )
SEP/IRA (for tax year )
IRA (rollover)
Other
PROOF OF AGE REQUIREMENT is required for all Single Premium
Annuities where
annuity benefits are to begin immediately. Submit a photocopy of one of
the
following:
1. Birth Certificate
2. Church Certificate of Birth or Baptism
3. Valid Motor Vehicle Operator's License
7a. AMOUNT PAID WITH APPLICATION
$ (Receipt valid only if amount paid with application is entered
here.)
7b. REPLACEMENT (must complete)
Will the annuity being applied for replace or change any existing Life
Insurance or Annuity Contract?
No Yes
8a. BILLING INFORMATION
Single Premium in the Amount of $
Flexible Premium Billed
Annual Semi-Annual Quarterly Monthly
In the Amount of $
Billing Type:
Check-O-Matic (must complete 8b)
Military Allotment
Direct Billing
List Billing/Salary Savings (must complete 8d)
Civil Service Allotment
8b. FOR CHECK-O-MATIC ONLY:
DRAW DATE
(1st-28th)
Month Day
ACCOUNT TYPE
Checking (enclose voided check)
Savings (must complete 8c)
AUTHORIZED SIGNATURE(S) OF ACCOUNT HOLDER(S)
8c. ROUTING/TRANSIT NUMBER
ACCOUNT NUMBER
FINANCIAL INSTITUTION NAME AND ADDRESS
8d. FOR LIST BILLING/SALARY SAVINGS ONLY: (Employer Name,
Address, Telephone
Number)
9. SPECIAL REQUESTS OR DETAILS
IT IS DECLARED that the statements and answers in this application are
complete
and true to the best knowledge and belief of the persons signing this
application. IT IS AGREED: (1) that such statements shall form the basis
of an
annuity issued by the Company; (2) that any waiver or modification of this
application will not be effective unless in writing and signing by the
President, a Vice President, the Secretary or an Assistant Secretary; (3)
that
the acceptance of any policy issued on this application shall constitute a
ratification of any correction or amendment made by the Company.
I certify, under penalty of perjury, that:
(1) The number shown on this application is my correct taxpayer
identification
number, and;
(2) I am not subject to backup withholding either because I have not been
notified that I am subject to backup withholding as a result of failure to
report all interest or dividends, or the Internal Revenue Service has
notified
me that I am no longer subject to backup withholding.
PROPOSED ANNUITANT if 15 YEARS OR OLDER (Signature)
Make all checks payable to Midland National Life Insurance Company.
OWNER (Signature) (if other than Annuitant.)
SIGNED AT (City, State)
DATE
SOLICITING AGENT (Signature)
To the best of my knowledge, this application is not involved in
replacement
of the insurance or annuities as defined in applicable Insurance
Department
Regulations except as state in Section 7b.
PRINT AGENT'S LAST NAME
CODE NO.
TELEPHONE NUMBER ( )
OTHER AGENT (Please Print)
% CREDIT
CODE NO.
GENERAL AGENT (Please Print)
CODE NO.
Premium checks must be payable to Midland National Life Insurance
Company. Do
not make checks payable to the Agent or leave the Payee blank.
Detach and Deliver this section to the proposed insured.
RECEIPT
Cash
List Billing/Salary Savings or Civil Service Authorization or Military
Allotment
Received from the sum of $ representing
Full Partial payment of the first premium on account of application
made
this date to MIDLAND NATIONAL LIFE INSURANCE COMPANY. If
after investigation
and the completion of all required medical examinations and studies, the
Company shall be satisfied that on the date of the application or medical
examination, whichever is later, each person proposed for insurance was
insurable and entitled under the Company's rules and standards to
insurance on
the plan and for the amount and at the rate of premium applied for, the
insurance protection applied for shall by reason of such payment take
effect
from the date of application or such medical examination or the date
specifically requested in the application, whichever is later, if the sum paid
is equal to or greater than 1/12th of the annual premium required for the
policy applied for. Unless every condition specified in this receipt is
fulfilled exactly, no insurance shall be considered in effect unless and until
the application has been approved and accepted by the Company and the
policy
delivered to and accepted by the Owner, and the full first premium has
been
paid while each person proposed for insurance is alive and while the state
of
health and other conditions affecting insurability are as stated in this
application or examination, if required. This receipt will be void if any
acknowledged authorization is cancelled before payment or if any check or
draft
is not honored when presented. This receipt will be void if altered or
modified in any respect. No agent of the Company and no broker is
authorized
to alter or waive any of such conditions. Failure of the Company to issue
a
policy within 90 days from the date of this receipt shall automatically be
deemed a declination without further notice.
Date
Agent
Signature
Detach and Deliver this section to proposed insured.
MIDLAND NATIONAL LIFE INSURANCE COMPANY, Sioux Falls,
South Dakota 57193-0001
Fair Credit Reporting Act Notification
As part of our underwriting procedure, an investigative consumer report
may be
made which will provide applicable information concerning residence
verification, employment, occupation, general health, habits, reputation,
personal characteristics and mode of living. Such information for the
investigative consumer report will be obtained through personal interviews
with your friends, neighbors, and associates. Upon written request, a
complete and accurate disclosure of the nature and scope of the
investigative
consumer report will be provided.
Medical Information Bureau Notification
Information regarding your insurability will be treated as confidential.
Midland National Life Insurance Company, or its reinsurers, may,
however, make
a brief report thereon to the Medical Information Bureau, a non-profit
membership organization of life insurance companies, which operates an
information exchange on behalf of its members. If you apply to another
Bureau
member company for life or health insurance coverage, or a claim for
benefits
is submitted to such a company, the Bureau, upon request, will supply
such
company with the information in its file. Upon receipt of a request from
you,
the Bureau will arrange disclosure of any information it may have in your
file.
If you question the accuracy of information in the Bureau's file, you may
contact the Bureau and seek a correction in accordance with the
procedures set
forth in the federal Fair Credit Reporting Act. The address of the Bureau's
information office is Post Office Box 105, Essex Station, Boston,
Massachusetts
02112, telephone number (617) 426-3660. Midland National Life
Insurance
Company, or its reinsurers, ma also release information in its file to other
life insurance companies to whom you may apply for life or health
insurance, or
to whom a claim for benefits may be submitted.
WAIVER OF PREMIUM APPLICATION
If WAIVER OF PREMIUM IS REQUESTED, THE FOLLOWING NON-
MEDICAL LIMITS APPLY:
AGE OF ANNUITANT
0-40
41-45
ANNUALIZED PREMIUM
$3,000
1,500
10. OCCUPATION (Described and give exact duties.)
11a. DRIVERS LICENSE NUMBER AND STATE
11b. BUSINESS TELEPHONE NUMBER ( )
11c. CONTACT THE PROPOSED ANNUITANT AT:
RESIDENCE
BUSINESS
TIME A.M. P.M.
12. NON-MEDICAL DECLARATIONS SECTION. (To be completed in
full if Waiver of
Premium is applied for.) To the best of your knowledge and belief have
you
ever had, or been told or received advice or treatment for: (Circle
conditions
answered "yes" and give details below.)
Yes No
(a) High blood pressure, heart, vein or artery trouble, rheumatic fever?
(b) Lung or other respiratory trouble; stomach, gall bladder, intestinal or
rectal trouble; rupture; diabetes?
(c) Any form of tuberculosis; kidney or bladder trouble; prostate trouble,
disease of reproductive system, venereal disease?
(d) Mental or nervous trouble, epilepsy, brain disorder, arthritis,
rheumatism,
back or spinal trouble?
(e) Cancer, tumor or any form of growth; any deformity; loss of hearing;
loss
of, or loss of use of eye or limb?
(f) An immune deficiency disorder, AIDS, ARC (AIDS related complex)
or been
told test results indicate exposure to the AIDS virus?
(g) Any physical conditions, injuries or symptoms of ill health not
mentioned
above?
(h) Have you had any medical advice, examination, consultation, or
treatment
during the past five years?
(i) Height Weight
(j) Are medical records under any other name (maiden name, etc.)? If yes,
please indicate name.
Condition, Injury or Symptoms
Date
Duration
Degree of Recovery
Name and Address of Hospital and Attending Physician
Name and Address of Primary Physician (if not specified above, date last
consulted)
Telephone Number of Primary Physician ( )
APS Pre-Payment Amount $
IT IS DECLARED that the statements and answers given in the Non-
Medical
Section, are complete and true to the best knowledge and belief of the
undersigned. IT IS AGREED that no waiver of premium shall be in effect
under
this application (except as may be provided in the receipt bearing the same
date as this application) unless and until the application has been approved
and accepted by the Company at its Home Office and the policy delivered
to and
accepted by the Owner and the full first premium has been paid while the
person
proposed for waiver of premium is alive and while the state of health and
other
conditions affecting insurability are as stated in this application and
examination, if required. (If Military Allotment is indicated in Section 8a
or
a List Billing/Salary Savings, Civil Service or Military Allotment
Authorization has actually been signed and delivered for the correct
amount,
this shall be considered the same as payment of the full first premium.
I also acknowledge receipt of Fair Credit Reporting Act and Medical
Information
Bureau Notifications.
AUTHORIZATION: I hereby authorize any licensed physician, medical
practitioner,
hospital, clinic or other medical or medically related facility, insurance
company, the Medical Information Bureau or other organization,
institution or
person, that has any records or knowledge of me or my child for whom
insurance
application is made, or my health or my child's health, to give to Midland
National Life Insurance Company, or its reinsurers, any such information.
A
reproduction copy of this authorization shall be as valid as the original.
Make all checks payable to Midland National Life Insurance Company
PROPOSED ANNUITANT IF 15 YEARS OR OLDER (Signature)
DATE
OWNER (Signature) (If other than Annuitant.)
DATE
ANNTYAPP SEC
<PAGE>
Item 24.(b)(5)(b) Supplement to Application
SUPPLEMENTAL TO ANNUITY APPLICATION
ALLOCATION QUESTIONS
Initial Allocation Percentages
(Whole Numbers Only - Smallest Non-Zero Number Must Be At Least
Ten)
Fund Name Premiums Fund Name Premiums
General Account % VIP III Growth & Income %
VIP Money Market % VIP III Balanced %
VIP High Income % VIP III Growth Opportunities %
VIP Equity-Income % ACVP Capital Appreciation %
VIP Growth % ACVP Value %
VIP Overseas % ACVP Balanced %
VIP II Asset Manager % ACVP International %
VIP II Investment Grade Bond % %
VIP II Index 500 % %
VIP II Contrafund % %
VIP II Asset Manager - Growth % %
PROSPECTUS VERIFICATION
Yes No
Have you received a prospectus for the Variable Annuity Contract
AND a prospectus for the Variable Insurance Products Fund/Variable
Insurance Products FundII/Variable Insurance Products Fund III AND
a prospectus for the American Century Portfolios?
Do you believe that this product will meet your insurance needs and
financial objectives?
Would you like to receive the Statement of Additional Information for
this policy?
The undersigned hereby agree(s) that the statements made above shall be a
part
of the application as fully as though made in said application.
PROPOSED ANNUITANT (Signature)
SIGNED AT (City, State)
DATE
OWNER (Signature)
WITNESS (Signature)
APPSUPP SEC
<PAGE>
Item 24.(b)(6)(a) Articles of Incorporation of Midland National Life
Insurance Company
STATE OF SOUTH DAKOTA
STATE OF SOUTH DAKOTA GREAT SEAL 1989
OFFICE OF
THE SECRETARY OF STATE
Department of State
United States of America,
State of South Dakota,
SECRETARY'S OFFICE
This is to certify that the attached instrument of writing is a true, correct
and examined copy of the Restated Articles of Incorporation of
MIDLAND NATIONAL
LIFE INSURANCE COMPANY, filed for record February 10, 1966, and
all Amendments
thereto;
and the whole thereof, and has been carefully compared with the original
now on
file in this office and found correct.
STATE OF SOUTH DAKOTA
GREAT SEAL 1989
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
the Great Seal
of the State of South Dakota at the City of Pierre, the Capital, on this 8th
day of September, 1980.
Secretary of State
By
Deputy
FEES $17.50
<PAGE>
Form 15
Section 61
STATE OF SOUTH DAKOTA
OFFICE OF THE SECRETARY OF STATE
RESTATED CERTIFICATE OF INCORPORATION
OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
The undersigned, as Secretary of State of the State of South Dakota,
hereby
certifies that duplicate originals of Restated Articles of Incorporation of
MIDLAND NATIONAL LIFE INSURANCE COMPANY duly signed
and verified pursuant to
the provisions of the South Dakota Business Corporation Act, have been
received in this office and are found to conform to law.
ACCORDINGLY the undersigned, as such Secretary of State, and by
virtue of the
authority vested in me by law, hereby issues this Restated Certificate of
Incorporation of MIDLAND NATIONAL LIFE INSURANCE
COMPANY and attaches hereto
a duplicate original of the Restated Articles of Incorporation.
Dated February 10, 1966, at 10:30 a.m.
15/ Alma Larson
Secretary of State
(GREAT SEAL OF THE STATE OF SOUTH DAKOTA)
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
We, William A. Rigsbee and Alan L. Austin, President and Secretary,
respec-
tively, of MIDLAND NATIONAL LIFE INSURANCE COMPANY, a
corporation organized
and existing under the Laws of the State of South Dakota, hereby certify
that
said Corporation at an annual meeting of the stockholders of said
Company held
at its office in the City of Watertown, State of South Dakota on the 4th day
of
February, 1966, and acting pursuant to Section 61 of the South Dakota
Business
Corporation Act, begin Chapter 22 of the Session Laws of the State of
South
Dakota for the year 1965, restated its Articles of Incorporation as follows:
RESTATED ARTICLES OF INCORPORATION OF MIDLAND
NATIONAL LIFE INSURANCE COMPANY
ADOPTED PURSUANT TO SECTION 61 OF THE SOUTH DAKOTA
BUSINESS CORPORATION ACT,
CHAPTER 22 OF THE SESSION LAWS OF THE STATE OF SOUTH
DAKOTA FOR THE YEAR 1965.
KNOW ALL MEN BY THESE PRESENTS: that we the undersigned, for
ourselves, and our
associates do hereby associate ourselves together for the organization of a
Corporation, for the purpose of conducting the business of life or accident
insurance under and by virtue of the laws of the State of South Dakota,
and
we do hereby certify and declare as follows, via:
ARTICLE ONE
The name of this Corporation shall be "Midland National Life Insurance
Company."
ARTICLE TWO
The term for which this Corporation shall exist shall be perpetual.
ARTICLE THREE
The purpose for which this Corporation is formed is to generally engage in
the business of writing and underwriting contracts of life, health, accident,
and all other forms of disability insurance upon either the participating or
nonparticipating plans, with authority to issue all types of contracts
usually
and customarily written by legal reserve insurance companies in the
United
States of America, and to generally engage in any business and have
authority
to do anything provided for or permissible now or that may be hereafter
authorized under the laws of the State of South Dakota or any other State
of
the Union or foreign country; to purchase, lease, or otherwise acquire
equipment for the transmission of radio energy in interstate commerce; to
construct, operate and maintain equipment for the transmission of radio
energy in interstate commerce, and to apply for and hold licenses or other
instruments of authorization from the Federal Communication
Commission or such
other body or bodies as may be charged by law with the duty of regulating
the
transmission or radio energy and the administration of laws pertaining,
thereto, and purchase, lease, acquire, construct, operate and maintain any
and
all types of radio or television stations.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have
authority to
issue shall be 50,000 of common stock of the par value of $10.00 each.
Fully
paid capital stock of this Corporation shall be nonassessable and no stock
shall be hereafter issued until fully paid.
ARTICLE FIVE
The fiscal year of the said Company shall commence on the first day of
January
and end on the 31st day of December of each year.
ARTICLE SIX
The address of the registered office of the Company shall be 104 South
Maple
Street, Watertown, South Dakota, and the name of its initial registered
agent
at such address is William A. Rigsbee.
ARTICLE SEVEN
The number of Directors of this Corporation shall be not less than five nor
more than twenty one. Each Director shall be the owner of at least fifty
shares of the common capital stock of the Company, and a majority of the
Directors must be citizens of the State of South Dakota. The number of
Directors to be elected shall be determined annually at the annual
stockholders
meeting, and all Directors shall hereafter be elected annually to serve for a
period of one year, or until their successors are elected and qualified. The
presently elected Directors shall serve until the election of their
successors.
ARTICLE EIGHT
The above and foregoing Restated Articles of Incorporation correctly set
forth
without change the corresponding provisions of the Articles of
Incorporation
as heretofore amended, and the Restated Articles of Incorporation
supersede the
the original Articles of Incorporation and all Amendments thereto.
We further certify that there were subscribed and outstanding at said date
50,000 shares of common stock of said Company and no more, and no
other class
of stock, and that the vote by which said Restated Articles of Incorporation
was adopted was 50,000 votes in favor thereof and no votes against the
same,
so that said Restated Articles of Incorporation were adopted by unanimous
vote of all of the issued and outstanding stock of the Company.
IN WITNESS WHEREOF, WE have hereunder signed this Certificate as
President and
Secretary, respectively, of the said Midland National Life Insurance
Company,
and caused the seal of said Company to be attached thereto.
William A. Rigsbee
President of MIDLAND NATIONAL LIFE INSURANCE COMPANY
Alan L. Austin
Secretary of MIDLAND NATIONAL LIFE INSURANCE COMPANY
(CORPORATE SEAL)
VERIFICATION
STATE OF SOUTH DAKOTA )
SS )
COUNTY OF CODINGTON )
I, Dorothy Antritter, a Notary Public in and for the State of South Dakota,
do
hereby certify that on this 8th day of February, 1966 personally appeared
before me William A. Rigsbee, who, being by me first duly sworn,
declared that
he is the President of Midland National Life Insurance Company, that he
signed
the foregoing Restated Articles of Incorporation as the President of the
Corporation, and that the statements therein contained are true.
WITNESS my hand and Notarial Seal.
SEAL
Dorothy Antritter
Dorothy Antritter, Notary Public, South Dakota
My Commission Expires: August 26, 1966
The above and foregoing Restated Articles of Incorporation of Midland
National
Life Insurance Company are hereby approved this 9th day of February,
1966.
Roy Manning
J. Roy Manning, Commissioner of Insurance of the State of South Dakota
The above and Restated Articles of Incorporation of Midland National
Life
Insurance Company are hereby approved as to form this 9th day of
February,
1966.
Frank L. Farrar
Attorney General
By /S/ Alan Williamson
Assistant Attorney General
<PAGE>
Receipt No. 104413
File No. D-122
Box No.
Filed at request of -
Alan L. Austin
Midland National Life Insurance Company
Watertown, South Dakota 57201
Restated Articles of Incorporation
Of
MIDLAND NATIONAL LIFE INSURANCE COMPANY
State of South Dakota
SS
Office of Secretary of State
Filed in the office of the Secretary of State on the 10th day of February
1966
at 10:30 a.m.
Alma Larson
Secretary of State
By ______________________________
Assistant Secretary of State
Fee Received $20.00
<PAGE>
STATE OF SOUTH DAKOTA
STATE OF SOUTH DAKOTA GREAT SEAL 1889
OFFICE OF THE SECRETARY OF STATE
Certificate of Amendment
I, ALMA LARSON, Secretary of State of the State of South Dakota,
hereby certify
that duplicate originals of Amendment to Articles of Incorporation of
MIDLAND
NATIONAL LIFE INSURANCE COMPANY duly signed and verified,
pursuant to the
provisions of the South Dakota corporation acts, have been received in this
office and are found to conform to law.
ACCORDINGLY and by virtue of the authority vested in me by law, I
hereby issue
this Certificate of Amendment to the Articles of Incorporation of
MIDLAND
NATIONAL LIFE INSURANCE COMPANY and attach hereto a
duplicate original of the
Amendment.
IN TESTIMONY WHEREOF. I have hereunto set my hand and affixed
the Great Seal
of the State of South Dakota, at Pierre, the Capital, this 7th day of October
A.D.. 1969
Alma Larson
Secretary of State
Assistant
<PAGE>
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
Pursuant to the provisions of the South Dakota Business Corporation Act
and
the Insurance Code, the undersigned corporation adopts the following
Articles
of Amendment to its Restated Articles of Incorporation:
FIRST: The name of the corporation is Midland National Life Insurance
Company.
SECOND: The following Amendment of the Restated Articles of
Incorporation was
adopted by the shareholders of the corporation on October 3, 1969 in the
manner
prescribed by said statutes: Articles Four and Seven of the Restated
Articles
of Incorporation were amended so that they will read as follows:
ARTICLE FOUR
"The aggregate number of shares which the corporation shall have
authority to
issue shall be 1,200,000 of common stock of the par value of $1.00 each.
Each
of the 50,000 shares of common stock of the par value of $10.00 each,
now
issued and outstanding, shall e equal to and are hereby changed into ten
fully
paid and nonassessable common shares of this corporation having a par
value of
$1.00 per share. Fully paid capital stock of this corporation shall be
nonassessable and no stock shall be hereafter issued until fully paid."
ARTICLE SEVEN
"The number of directors of this corporation shall be five. The number of
directors to be elected hereafter shall be fixed by the By-Laws of the
Company. The presently elected directors shall serve until the election
and
qualification of their successors."
THIRD: The number of shares of the corporation outstanding at the time
of
such adoption was 50,000 shares of common stock, and the number of
shares
entitled to vote thereon was 50,000.
FOURTH: THe designation and number of outstanding shares of each
class
entitled to vote thereon as a class were as follows: None.
FIFTH: The manner in which the additional number of shares provided
for in
the Amendment to Article Four of the Restated Articles of Incorporation
shall
be issued, is as follows: Each holder of record of one or more shares of
the
capital stock of the Corporation on the date of the filing of Articles of
Amendment in the Office of the Secretary of State of the State of South
Dakota
will e entitled to receive a certificate representing nine additional shares
with a par value of $1.00 per share for each share held at that time. Each
certificate outstanding immediately prior to the change will be retained by
the holder and will continue to represent the same number of shares, but
they
will be shares of a part value of $1.00 per share instead of shares with a
$10.00 par value.
SIXTH: The number of shares voted for such amendment was 49,989 and
the
number of shares voted against such amendment was none, 11 shares not
represented and not voting.
Dated this 3rd day of October, 1969.
MIDLAND NATIONAL LIFE INSURANCE COMPANY
By William A. Rigsbee
Its President
By Alan L. Austin
Its Secretary
(Corporate Seal)
STATE OF SOUTH DAKOTA )
SS )
COUNTY OF CODINGTON )
Before me, Sandra J. DeYoung, a notary public in and for the said County
and
State, personally appeared William A. Rigsbee who acknowledged before
me that
he is the President of Midland National Life Insurance Company, a South
Dakota
Corporation, that he signed the foregoing Articles of Amendment to the
Restated
Articles of Incorporation as his free and voluntary act and deed for the
uses
and purposes therein set forth, that the facts contained therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 3rd
day of
October, 1969.
(Seal)
Sandra J. DeYoung
Sandra J. DeYoung
Notary Public, State of South Dakota
My Commission Expires: August 1, 1975
The above and foregoing Articles of Amendment to the Restated Articles
of
Incorporation of Midland National Life Insurance Company are hereby
approved
as to form this 6th day of October, 1969.
GORDON J. MYDLAND
ATTORNEY GENERAL OF SOUTH DAKOTA
By Gordon J. Mydland
Assistant Attorney General
The above and foregoing Articles of Amendment to the Restated Articles
of
Incorporation of Midland National Life Insurance Company are hereby
approved
and triplicate original thereof was filed in my office this 6th day of
October,
1969.
Warren E. Dirks
Warren E. Dirks
Commissioner of Insurance of the State of South Dakota
<PAGE>
Receipt No.
File No. D-122
Filed at request of -
Midland National Life Insurance Company
Watertown, South Dakota 57201
Articles of Amendment
to the
Restated Articles of Incorporation
Of
MIDLAND NATIONAL LIFE INSURANCE COMPANY
State of South Dakota
SS
Office of Secretary of State
Filed in the office of the Secretary of State on the 7th day of October,
1969.
Alma Larson
Secretary of State
By ____________________________
Assistant Secretary of State
Fee received: $20.00 Filing
$140.00 increased capital
<PAGE>
STATE OF SOUTH DAKOTA
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
OFFICE OF THE SECRETARY OF STATE
Certificate of Amendment
I, ALMA LARSON, Secretary of State of the State of South Dakota,
hereby certify
that duplicate originals of Amendment to Articles of Incorporation of
MIDLAND
NATIONAL LIFE INSURANCE COMPANY duly signed and verified,
pursuant to the
provisions of the South Dakota corporation acts, have been received in this
office and are found to conform to law.
ACCORDINGLY and by virtue of the authority vested in me by law, I
hereby issue
this Certificate of Amendment to the Articles of Incorporation of
MIDLAND
NATIONAL LIFE INSURANCE COMPANY and attach hereto a
duplicate original of the
Amendment.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
the Great Seal
of the State of South Dakota, at Pierre, the Capital, this 11th day of March
A.D. 1971.
Alma Larson
Secretary of State
Assistant
<PAGE>
Dated this 11th day of March, 1971.
(Corporate Seal)
MIDLAND NATIONAL LIFE INSURANCE COMPANY
By William A. Rigsbee
Its President
By Alan L. Austin
Its Secretary
STATE OF SOUTH DAKOTA )
SS )
COUNTY OF CODINGTON )
Before me, E. Elayne Jensen, a notary public in and for the said Company
and
State, personally appeared William A. Rigsbee who acknowledged before
me that
he is the President of Midland National Life Insurance Company, a South
Dakota
corporation, that he signed the foregoing Articles of Amendment to the
Restated
Articles of Incorporation as his free and voluntary act and deed for the
uses
and purposes therein set forth, that the facts contained therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 11th
day of March,
1971.
(SEAL)
______________________________
E. Elayne Jensen
Notary Public, South Dakota
My Commission Expires: April 10, 1978
The above and foregoing Articles of Amendment to the Restated Articles
of
Incorporation of Midland National Life Insurance Company are hereby
approved
as to form this 11th day of March, 1971.
GORDON J. MYDLAND
ATTORNEY GENERAL OF SOUTH DAKOTA
BY ____________________________
Assistant Attorney General
The above and foregoing Articles of Amendment to the Restated Articles
of
Incorporation of Midland National Life Insurance Company are hereby
approved
and triplicate original thereof was filed in my office this 11th day of
March,
1971.
Warren E. Dirks
Warren E. Dirks
Commissioner of Insurance of the
State of South Dakota
<PAGE>
Receipt No. 68656
File No. D-122
Filed at request of -
Mr. Alan Austin
Austin, Hinderaker & Hackett
25 First Avenue South West
Watertown, South Dakota 57201
Articles of Amendment
of
MIDLAND NATIONAL LIFE INSURANCE COMPANY
State of South Dakota
SS
Office of Secretary of State
Filed in the office of the Secretary of State on the 11th day of March,
1971.
Alma Larson
Secretary of State
By
Assistant Secretary of State
Fee received: $20.00
<PAGE>
STATE OF SOUTH DAKOTA
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
OFFICE OF THE SECRETARY OF STATE
Certificate of Amendment
I, LORNA B. HERSETH, Secretary of State of the State of South Dakota,
hereby
certify that duplicate originals of Amendment to Articles of Incorporation
of
MIDLAND NATIONAL LIFE INSURANCE COMPANY duly signed
and verified, pursuant to
the provisions of the South Dakota corporation acts, have been received in
this office and are found to conform to law.
ACCORDINGLY and by virtue of the authority vested in me by law, I
hereby issue
this Certificate of Amendment to the Articles of Incorporation of
MIDLAND
NATIONAL LIFE INSURANCE COMPANY and attach hereto a
duplicate original of the
Amendment.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
the Great Seal
of the State of South Dakota, at Pierre, the Capital, this 6th day of August
A.D. 1974.
Lorna B. Herseth
Secretary of State
Assistant
<PAGE>
August 1971
RECEIVED
SECRETARY OF STATE
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
Pursuant to the provisions of the South Dakota Business Corporation Act
and
the Insurance Code, the undersigned corporation adopts the following
Articles
of Amendment to its Restated Articles of Incorporation:
FIRST: The name of the corporation is Midland National Life Insurance
Company.
SECOND: THe following Amendment to the Restated Articles of
Incorporation was
adopted by the shareholders of the corporation on July 22, 1974 in the
manner
prescribed by said statutes: Article Four of the Restated Articles of
Incorporation was amended so that it will read as follows:
ARTICLE FOUR
"The aggregate number of shares which the corporation shall have
authority to
issue shall be 1,562,500 of common stock of the par value of $1.00 each.
Fully
paid capital stock of this corporation shall be nonassessable and no stock
shall hereafter be issued until fully paid."
THIRD: The number of shares of the corporation outstanding at the time
of
such adoption was 1,200,000 shares of common stock, and the number of
shares
entitled to vote thereon was 1,200,000.
FOURTH: The designation and number of outstanding shares of each
class
entitled to vote thereon as a class were as follows: None
FIFTH: The number of shares voted for such amendment was 1,200,000
and the
number of shares voted against such amendment was none.
Dated this 22nd day of July, 1974.
MIDLAND NATIONAL LIFE INSURANCE COMPANY
By William A. Rigsbee
Its President
By Darwin Shapiro
Its Secretary
(Corporate Seal)
STATE OF SOUTH DAKOTA )
SS )
COUNTY OF CODINGTON )
Before me, Alice Murphy, a notary public in and for the said County and
State, personally appeared William A. Rigsbee who acknowledged before
me that
he is the President of Midland National Life Insurance Company, a South
Dakota corporation, that he signed the foregoing Articles of Amendment
to the
Restated Articles of Incorporation as his free and voluntary act and deed
for
the uses and purposes therein set forth, that the facts contained therein are
true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 22nd
day of
July, 1974.
Filed this 30th day of July, 1974
(SEAL)
Lorna B. Herseth
SECRETARY OF STATE
Alice Murphy
Alice Murphy
Notary Public, South Dakota
My commission expires: 5-15-80
The above and foregoing Articles of Amendment to the Restated Articles
of
Incorporation of Midland National Life Insurance Company are hereby
approved
as to form this 30th day of July, 1974.
KERMIT SANDSS
ATTORNEY GENERAL OF SOUTH DAKOTA
By Kermit Sands
Assistant Attorney General
The above and foregoing Articles of Amendment to the Restated Articles
of
Incorporation of Midland National Life Insurance Company are hereby
approved
and triplicate original thereof was filed in my office this 31st day of July,
1974.
Ralph A. Newman
Ralph A. Newman
Director of Insurance of the
State of South Dakota
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
<PAGE>
Receipt No. 135313
File No. D-122
Filed at request of -
Darwin Shapiro
Midland National Life Insurance Company
Watertown, SD 57201
Articles of Amendment
of
MIDLAND NATIONAL LIFE INSURANCE COMPANY
State of South Dakota
SS
Office of Secretary of State
Filed in the office of the Secretary of State on the 6th day of August, 1974.
Loran B. Herseth
Secretary of State
By
Assistant Secretary of State
Fee received: $20.00 + $50 increased capital
<PAGE>
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
OFFICE OF THE SECRETARY OF STATE
Certificate of Amendment
I, LORNA B. HERSETH, Secretary of State of the State of South Dakota,
hereby
certify that duplicate originals of Amendment to Articles of Incorporation
of
MIDLAND NATIONAL LIFE INSURANCE COMPANY duly signed
and verified, pursuant to
the provisions of the South Dakota corporation acts, have been received in
this office and are found to conform to law.
ACCORDINGLY and by virtue of the authority vested in me by law, I
hereby issue
this Certificate of Amendment to the Articles of Incorporation of
MIDLAND
NATIONAL LIFE INSURANCE COMPANY and attach hereto a
duplicate original of the
Amendment.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
the Great Seal
of the State of South Dakota, at Pierre, the Capital, this 28th day of July
A.D. 1977.
Lorna B. Herseth
Secretary of State
Assistant
Filed this 28th day of
July, 1977.
Lorna B. Herseth
SECRETARY OF STATE
<PAGE>
ARTICLES OF AMENDMENT TO
THE RESTATED ARTICLES OF INCORPORATION
OF MIDLAND NATIONAL LIFE INSURANCE
COMPANY
We, William A. Rigsbee and Darwin Shapiro, President and Secretary,
respectively, of Midland National Life Insurance Company, a corporation
organized and existing under the laws of the State of South Dakota hereby
certify that said corporation, at a special meeting of the stockholders of
said company, held at its home office in the City of Watertown, State of
South Dakota, on the 22nd day of July, 1977, amended Articles Six of the
Restated Articles of Incorporation of Midland National Life Insurance
Company
so that said Restated Articles of Incorporation, as to said Article Six, now
reads as follows:
ARTICLE SIX
The address of the registered office of the Company shall be One Midland
Plaza,
Sioux Falls, South Dakota, and the name of its registered agent at such
address
is William A. Rigsbee.
We further certify that there were subscribed and outstanding at said date
1,512,500 shares of common stock of said company and no more and no
other class
of stock. That the vote by which said amendment was adopted was
1,512,170
shares voted in favor thereof and no votes against the same so that said
amendment was adopted by a vote of 1,512,170 shares of all of the issued
and
outstanding stock of the company.
IN WITNESS WHEREOF we have hereunto signed this Certificate as
President and
and Secretary, respectively, of said Midland National Life Insurance
Company
and caused the seal of said company to be attached thereto this 22nd day
of
July, 1977.
(CORPORATE SEAL)
William A. Rigsbee
President of Midland National Life Insurance Company
Darwin Shapiro
Secretary of Midland National Life Insurance Company
STATE OF SOUTH DAKOTA
SS
COUNTY OF CODINGTON
VERIFICATION
I, Alan L. Austin, a Notary Public in and for the State of South Dakota, do
hereby certify that on this 22nd day of July, 1977, personally appeared
before
me William A. Rigsbee, who, being by me first duly sworn, declared that
he is
President of Midland National Life Insurance Company, that he signed the
foregoing Articles of Amendment to Restated Articles of Incorporation of
Midland National Life Insurance Company as President of the
Corporation, and
that the statements therein contained are true.
Witness my hand and notarial seal.
Alan L. Austin
Notary Public, South Dakota
My Commission Expires: 8/30/81
(SEAL)
The within and foregoing Amendment to Restated Articles of
Incorporation of
Midland National Life Insurance Company are hereby approved this
day of
July, 1977.
_____________________________
Lowell L. Knutson
Director of the Division of Insurance of
the State of South Dakota
The within and foregoing Amendment to Restated Articles of
Incorporation of
Midland National Life Insurance Company are hereby approved this 28th
day of
July, 1977.
WILLIAM J. JANKLOW, Attorney General
of the State of South Dakota
BY: Clair B. Ledbetter
Assistant Attorney General
<PAGE>
CERTIFIED COPY OF AMENDMENT TO BYLAWS
OF MIDLAND NATIONAL LIFE INSURANCE COMPANY
STATE OF SOUTH DAKOTA
SS
COUNTY OF CODINGTON
I, Erwin J. Frey, do hereby certify that I am the duly elected, qualified and
acting Assistant Secretary of Midland National Life Insurance Company,
that a
special meeting of the stockholders held at the offices of the Company at
Watertown, South Dakota, on July 22, 1977, at 11:00 o'clock a.m., the
stockholders, by a vote of 1,512,170 shares out of a total issued and
outstanding of 1,512,500 shares adopted a Resolution to Amend Article II,
Section 1 of the Bylaws of said Company to read as follows:
ARTICLE II
"SECTION 1. ANNUAL MEETING. The annual meeting of the
stockholders of the
Company shall be held at the Home Office of the Company in the City of
Sioux
Falls, Minnehaha County, South Dakota, on the second Thursday in
March,
commencing at 11:00 a.m., to elect a Board of Directors and for the
transaction of such other business as shall properly come before the
meeting."
Witness my hand and the seal of Midland National Life Insurance
Company this
25th day of July, 1977.
(CORPORATE SEAL)
Erwin J. Frey
Assistant Secretary
Midland National Life Insurance Company
<PAGE>
SOUTH DAKOTA
Department of Commerce & Consumer Affairs
Division of Insurance
Pierre, South Dakota 57501
September 16, 1977
To: Office of the Secretary of State Attn: Pat Hofer
From: Lowell L. Knutson, Director of Insurance
Re: Articles of Amendment to the Restated Articles of Incorporation of
Midland National Life Insurance Company dated July 22, 1977.
This is to certify that the above mentioned was approved and signed by me
on
the second day of August, 1977.
Lowell L. Knutson
Lowell L. Knutson
Director of Insurance
<PAGE>
Receipt No. 202694
File No. D-1222
Articles of Amendment
of
MIDLAND NATIONAL LIFE INSURANCE COMPANY
Filed at Request of
Connie Edge
Secretary
Department of Commerce &
Consumer Affairs
Division of Insurance
Pierre, SD 57501
State of South Dakota
SS
Office of Secretary of State
Filed in the office of the Secretary of State on the 28th day of July, 1977.
Lorna B. Herseth
Secretary of State
By ____________________________
Assistant Secretary of State
Fee received: $20
<PAGE>
State of South Dakota
Office of The Secretary Of State
STATE DEPARTMENT
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
United States of America,
State of South Dakota
SECRETARY'S OFFICE
This is to certify that the attached instrument of writing is a true, correct,
and examined copy of the articles of amendment of MIDLAND
NATIONAL LIFE
INSURANCE COMPANY, filed with our office on February 5th, 1990;
and the whole thereof, and has been carefully compared with the original
now
on file in this office and found correct.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
the Great Seal
of the State of South Dakota at the City of Pierre, the Capital, on this 5th
day of February, 1990.
Joyce Hazeltine
Secretary of State
By __________________________
Deputy Secretary of State
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
FEES: $5.00
<PAGE>
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
STATE OF SOUTH DAKOTA
Secretary of State
Certificate of Amendment
I, JOYCE HAZELTINE, Secretary of State of the State of South Dakota,
hereby
certify that duplicate originals of Amendment to Articles of Incorporation
of
MIDLAND NATIONAL LIFE INSURANCE COMPANY duly signed
and verified pursuant to
the provisions of the South Dakota corporation acts, have been received in
this
office and are found to conform to law.
ACCORDINGLY and by virtue of the authority vested in me by law, I
hereby issue
this Certificate of Amendment to the Articles of Incorporation of
MIDLAND
NATIONAL LIFE INSURANCE COMPANY and attach hereto a
duplicate original of the
Amendment.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
the Great Seal of
the State of South Dakota, at Pierre, the Capital, this 5th day of February
A.D. 1990.
Joyce Hazeltine
Secretary of State
Deputy
STATE OF SOUTH DAKOTA
GREAT SEAL 1989
<PAGE>
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
We, William A. Rigsbee and Jack L. Briggs, President and Secretary,
respectively, of Midland National Life Insurance Company, a corporation
organized and existing under the laws of the State of South Dakota, hereby
certify that said corporation, at a special meeting of the stockholders, held
at the offices of the Company, in the City of Sioux Falls, State of South
Dakota, on the 8th day of January, 1990, amended Article Four of the
Articles
of Incorporation so that the same now reads as follows:
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have the
authority
to issue shall be 2,549,439 of common stock of the par value of $1.00
each.
Fully paid capital stock of this Corporation shall be nonassessable and no
stock shall be hereafter issued until fully paid.
We further certify that there were subscribed and outstanding at said date
1,499,670 shares of common stock of said Company and no more and no
other
class of stock. That the vote by which said amendment was adopted was
1,499,340 in favor thereof and no votes against so that said amendment
was
adopted by a unanimous vote of all of the issued and outstanding stock of
the
Company.
IN WITNESS WHEREOF we have hereunto signed this certificate as
President and
Secretary, respectively, of the said Midland National Life Insurance
Company
and caused the seal of said Company to be attached thereto this 8th day of
January, 1990.
(CORPORATE SEAL)
William A. Rigsbee
President of Midland National Life Insurance Company
Jack Briggs
Secretary of Midland National Life Insurance Company
Filed this 5th day of February 1990.
Joyce Hazeltine
SECRETARY OF STATE
Approved as to Form
this 12th day of January 1990
Janice Stareman
ASSISTANT ATTORNEY GENERAL
FILED
January 15, 1990
South Dakota
Director of Insurance
STATE OF SOUTH DAKOTA
SS
COUNTY OF MINNEHAHA
I, Pam Wieker, a Notary Public in and for the State of South Dakota, do
hereby
certify that on this 8th day of January, 1990 personally appeared before me
William A. Rigsbee, who, being by me first duly sworn, declared that he is
the
President of Midland National Life Insurance Company, that he signed the
foregoing Articles of Amendment to the Articles of Incorporation of
Midland
National Life Insurance Company as President of the corporation, and that
the
statements therein contained are true.
Witness my hand and notarial seal.
Pam Wieker
Notary Public, South Dakota
(SEAL)
My commission Expires on August 21, 1997.
The within and foregoing Amendment to the Articles of Incorporation of
Midland
National Life Insurance Company are hereby approved this ______ day of
January,
1990.
___________________________
Mary Jane Cleary
Director of the Division of Insurance
of the State of South Dakota
The above and foregoing Amendment to the Articles of Incorporation of
Midland
National Life Insurance Company are hereby approved this ______ day of
January,
1990.
ROGER TELLINGHUISEN, Attorney General
of the State of South Dakota
By ____________________________
Assistant Attorney General
<PAGE>
State of South Dakota
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
I, JOYCE HAZELTINE, Secretary of State of the State of South Dakota,
hereby
certify that duplicate of the Articles of Amendment to the Articles of
Incorporation of MIDLAND NATIONAL LIFE INSURANCE
COMPANY duly signed and
verified pursuant to the provisions of the South Dakota Corporation Acts,
have been received in this office and are found to conform to law.
ACCORDINGLY and by virtue of the authority vested in me by law, I
hereby issue
this Certificate of Amendment to the Articles of Incorporation and attach
hereto a duplicate of the Articles of Amendment of MIDLAND
NATIONAL LIFE
INSURANCE COMPANY.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
the Great Seal
of the State of South Dakota, at Pierre, the Capital, this August 15, 1997.
Joyce Hazeltine
JOYCE HAZELTINE
Secretary of State
STATE OF SOUTH DAKOTA
GREAT SEAL 1889
<PAGE>
APPROVED BY
SOUTH DAKOTA
DIVISION OF INSURANCE
08-14-97
Larry S. Johnson
Approved as to Form
this 08th day of August, 1997.
Larry S. Johnson
ASSISTANT ATTORNEY GENERAL
Filed this 15th day of
August 1997.
Joyce Hazeltine
SECRETARY OF STATE
ARTICLES OF AMENDMENT TO RESTATED
ARTICLES OF INCORPORATION OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
We, Michael M. Masterson and Jack L. Briggs, President and Secretary,
respectively, of Midland National Life Insurance Company, a corporation
organized and existing under the laws of the State of South Dakota, hereby
certify that at a special meeting of the Stockholders held at the offices of
the Company at Sioux Falls, South Dakota, on June 30, 1997, at 1:00
o'clock
p.m., the stockholders, by a vote of 2,549,439 shares out of a total issued
and outstanding of 2,549,439 shares adopted a Resolution to Amend the
Restated
Articles of Incorporation of said Company to read as follows:
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
The Corporation may, as provided in and to the extent designed in the By-
Laws
as may be adopted from time to time, indemnify any and all persons whom
it may
have the power to indemnify under the South Dakota Business
Corporation Act, as
the same may be amended and supplemented, against any and all of the
expenses,
liabilities and other matters referred to in or covered by said Business
Corporation Act.
IN WITNESS WHEREOF we have hereunto signed this certificate as
President and
Secretary, respectively, of the said Midland National Life Insurance
Company
and caused the seal of said Company to be attached thereto this 11 day of
August, 1997.
(CORPORATE SEAL)
Michael Masterson
President of Midland National
Life Insurance Company
Jack Briggs
Secretary of Midland National
Life Insurance Company
SEC ARTICLES
<PAGE>
Item 24.(b)(6)(b) By-laws of Midland National Life Insurance Company
BY-LAWS
MIDLAND NATIONAL LIFE INSURANCE COMPANY
AS AMENDED AND RESTATED THROUGH
February 20, 1976
ARTICLE I
CORPORATE POWERS
SECTION 1. CORPORATE POWERS. All the Corporate Power of this
Company shall be
exercised by a Board of Directors, by the Executive Committee and by the
officers named and provided for in these by=laws and by such other
officers and
agents as shall be appointed for the performance of specific duties.
ARTICLE II
MEETINGS OF THE STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the
stockholders of the
Company shall be held at the Home Office of the Company in the City of
Watertown, Codington County, South Dakota, on the second Thursday in
March,
commencing at 11:00 a.m., to elect a Board of Directors and for the
transaction
of such other business as shall properly come before the meeting.
SECTION 2. NOTICE OF ANNUAL MEETING. Notice of the annual
meeting of the
stockholders shall be given by the Secretary to each stockholder appearing
as
such on the books of the Company, by duly mailing notice of said meeting
to his
address as shown by the books and records of said Company, at least ten
days
prior to such annual meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the
stockholders of the
Company may be held at the Home Office of the Company upon call in
writing by
the President, the Board of Directors or whenever called in writing by
stockholders holding not less than one-tenth of the shares entitled to vote
at the meeting, provided that written notice of such special meeting,
stating
the day, hour, and place thereof and stating in general terms, the business
to be transacted thereat, shall be mailed at least ten days prior to such
meeting to each stockholder at his address as the same appears on the
books of
the Company.
SECTION 4. QUORUM. A majority of the common stock issued and
outstanding,
represented either in person or by proxy, shall constitute a quorum for the
transaction of business and each stockholder shall be entitled to one vote
for
each share of common stock outstanding in his name on the books of the
Company,
whether represented in person or by proxy.
SECTION 5. ADJOURNED MEETINGS. If a quorum be not present at
any annual or
special meeting, or, if on vote of the stockholders present, it shall be
deemed expedient or advisable to adjourn said meeting, said meeting may
be
adjourned to such other time as shall be agreed upon by them.
If adjournment shall be taken for longer than one day, immediate notice of
the
time to which the adjournment was taken shall be given in writing to all of
the stockholders.
SECTION 6. VOTING BY PROXY. No person shall be entitled to vote
by virtue of
any proxy unless the proxy shall have been on file with the Secretary at
least
one day before the meeting at which it is to be used.
SECTION 7. OFFICERS OF MEETINGS. The President and Secretary
of the
Corporation shall act as President and Secretary respectively of all
stockholders meetings, and they shall constitute a committee to pass on the
authenticity of the proxies.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. NUMBER OF DIRECTORS AND TERM OF OFFICE.
The Directors shall be
elected at the annual meeting and the number to be elected, not less than
five
nor more than twenty-one, shall be determined annually by the
stockholders.
The Directors shall serve for a period of one year or until the election and
qualification of their successors.
SECTION 2. VACANCIES. The Board of Directors shall have power to
fill all
vacancies on the Board for the unexpired term.
SECTION 3. POWERS. THe Board of Directors shall exercise the
corporate powers
of said Corporation, and shall, with the Executive Committee thereof,
hereinafter provided for, be the governing body thereof, and shall have
general management of the business and property of the Company. The
Directors
shall act only as a Board and the individual Directors shall have no power
as
such.
SECTION 4. MEETINGS. Regular meetings of the Board of Directors
shall be held
on the second Thursday in each of the months of March, June, September
and
December, and the meeting on the second Thursday in March shall be the
annual
meeting thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of
Directors may
be called by the President or by a majority of the Board of Directors, and
the
President or the Secretary shall give notice of said special meeting by
mailing
same to each of the Directors at least three days before the date of the
meeting.
SECTION 6. CHAIRMAN OF BOARD OF DIRECTORS. The Board of
Directors at each
annual meeting in March shall select one of their number as Chairman of
the
Board of Directors during the ensuing year, and said Chairman shall
preside at
each regular or special meeting of the Board of Directors. If the Chairman
of
the Board shall at any time be absent, then the President or any Vice
President
shall preside at said meeting.
SECTION 7. QUORUM. A majority of the Directors shall constitute a
quorum for
the transaction of business at any regular, special, or adjourned meeting.
A
lesser number than a quorum may adjourn the meeting to a future date.
SECTION 8. DIRECTORS FEES. Each member of the Board of
Directors, if not an
officer of the Company, shall be paid for attendance at each regular or
special
meeting of the Board of Directors at the rate of $100.00 per day and
expense of
travel.
SECTION 9. MINUTES. Regular minutes of the proceedings of the
Board of
Directors shall be kept by the Secretary of the Company, or such other
person
as may be designated by the Board.
SECTION 10. REMOVAL OF DIRECTORS. At a meeting of the
stockholders call
expressly for that purpose, Directors may be removed as hereinafter
provided.
Any Director or the entire Board of Directors may be removed, with or
without
cause, by vote of the holders of the majority of the shares then entitled to
vote at an election of Directors.
ARTICLE IV
EXECUTIVE COMMITTEE
SECTION 1. ELECTION AND POWERS. The Board of Directors, at its
regular annual
meeting, shall, at the time of electing the officers of the Company, appoint
an
Executive Committee consisting of the President and not less than two nor
more
than four members of the Board of Directors. The Executive Committee,
when the
Board of Directors is not in session, shall have and may exercise all of the
powers of the Board of Directors allowed by law.
SECTION 2. MEETINGS. Meetings of the Executive Committee shall
be held from
time to time as they are called by the President, or by any two members
thereof. No such meeting shall be held unless each member thereof shall
receive personal notice of the time and place of the meeting at least one
day
prior thereto. Notice of any meeting may be waived by any member of the
Executive Committee.
SECTION 3. QUORUM. A majority of the Executive Committee shall
constitute a
quorum.
SECTION 4. MINUTES. Regular minutes of the proceedings of the
Executive
Committee shall be kept by the Secretary of the Company, or such other
person
as may be designated by the Committee.
ARTICLE V
OFFICERS
SECTION 1. ELECTION OF OFFICERS. The officers of this Company
shall consist
of a President, one or more Vice Presidents, the number of which shall be
determined by the Board of Directors, a Secretary, one or more Assistant
Secretaries and a Treasurer, each of whom shall be elected annually by the
board of Directors, and such other officers as may be determined by said
Board,
each of whom shall hold his office during the pleasure of the Board, and
until
his successor is elected and qualified. The Board of Directors, may,
however,
employ officers or other employees of the Company for a longer term than
one
year if it seems advisable. The same person may hold one or more offices.
SECTION 2. DUTIES OF OFFICERS. Company officers shall have
duties as
determined by the Board of Directors from time to time.
SECTION 3. SALARIES. All salaries or other compensation of officers
shall be
fixed by the Board of Directors.
SECTION 4. BOND. The officers shall give bond for the faithful
performance
of their duties, in such form and amount and with such surety as may be
prescribed by the Board of Directors, with the premiums on all bonds
required
to be paid by the Company.
ARTICLE VI
OFFICERS OR DIRECTORS DOING BUSINESS WITH THE
COMPANY
SECTION 1. PROHIBITION AS TO CERTAIN TRANSACTIONS. No
officer or director,
or any member of any committee thereof or an employee of this Company
who is
charged with the duty of investing or handling the funds of the Company
shall
deposit or invest such funds except in the insurer's corporate name; shall
not
borrow the funds of such insurer; shall not be pecuniarily interested in any
loan, pledge or deposit, security, investments, sale, purchase, exchange,
reinsurance, or other similar transaction or property of such insurer except
as a stockholder or member; shall not take or receive to his own use any
fee,
brokerage, commission, gift, or other consideration for or on account of
any
such transaction made by or on behalf of such insurer.
ARTICLE VII
CAPITAL STOCK
SECTION 1. CERTIFICATE OF SHARES. Each holder of stock in this
Company shall
be entitled to a stock certificate in such form and bearing such original or
facsimile signatures as authorized by the Board of Directors.
SECTION 2. TRANSFERS. Shares of the Capital stock of the Company
shall be
transferred on the books of the Company and any transfer agent only by
the
surrender of the original certificate by the holder thereof, or his duly
authorized attorney. The Board of Directors may authorize the use of a
transfer agent and the use of a registrar.
ARTICLE VIII
CORPORATE SEAL
SECTION 1. CORPORATE SEAL. The seal of this Corporation shall be
circular
with the name of the Corporation engraved around the margin and with the
words
GREAT SEAL engraved across the face. The corporate seal shall be in
the
custody of the Secretary of the Company and shall be affixed to all papers
requiring the use of a seal.
ARTICLE IX
AMENDMENTS TO BY-LAWS
SECTION 1. AMENDMENTS. These by-laws may be amended or
repealed, in whole or
in part, at any duly called meeting of th Board of Directors, by an
affirmative
vote of the majority of the Board of Directors, or by the stockholders at
any
annual or special meeting called for such purpose.
<PAGE>
CERTIFIED COPY OF AMENDMENT TO BYLAWS
OF MIDLAND NATIONAL LIFE INSURANCE COMPANY
STATE OF SOUTH DAKOTA
SS
COUNTY OF CODINGTON
I. Erwin J. Frey, do hereby certify that I am the duly elected, qualified and
acting Assistant Secretary of Midland National Life Insurance Company;
that a
special meeting of the stockholders held at the offices of the Company at
Watertown, South Dakota, on July 22, 1977, at 11:00 o'clock a.m., the
stockholders, by a vote of 1,512,170 shares out of a total issued and
outstanding of 1,512,500 shares adopted a Resolution to Amend Article II,
Section 1 of the Bylaws of said Company to read as follows:
ARTICLE II
"SECTION 1. ANNUAL MEETING. The annual meeting of the
stockholders of the
Company shall be held at the Home Office of the Company in the City of
Sioux
Falls, Minnehaha County, South Dakota, on the second Thursday in
March,
commencing at 11:00 a.m., to elect a Board of Directors and for the
transaction
of such other business as shall properly come before the meeting."
Witness my hand and the seal of Midland National Life Insurance
Company this
25th day of July, 1977.
(CORPORATE SEAL)
Erwin J. Frey
Assistant Secretary
Midland National Life Insurance Company
<PAGE>
Receipt No. 202694
File No. D-1222
Articles of Amendment
of
MIDLAND NATIONAL LIFE INSURANCE COMPANY
Filed at Request of
Connie Edge
Secretary
Department of Commerce & Consumer Affairs
Division of Insurance
Pierre, SD 57501
State of South Dakota
Office of Secretary of State
Filed in the office of the Secretary of State on 28th day of July 1977.
_______________________________
Secretary of State
By ____________________________
Assistant Secretary of State
Fee Received $20
<PAGE>
APPROVED BY
SOUTH DAKOTA
DIVISION OF INSURANCE
CERTIFIED COPY OF AMENDMENT TO BY-LAWS OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
STATE OF SOUTH DAKOTA
SS
COUNTY OF MINNEHAHA
I, Jack L. Briggs, do hereby certify that I am the duly elected, qualified
and
acting Secretary of Midland National Life Insurance Company; that on
May 29,
1977, the Board of Directors adopted a Resolution to Amend the By-Laws
of said
Company to read as follows:
ARTICLE IV
EXECUTIVE COMMITTEE
SECTION 1. ELECTION AND POWERS. The Board of Directors, at its
regular annual
meeting, shall, at the time of electing the officers of the Company, appoint
an Executive Committee consisting of the President and two or more
members of
the Board of Directors. The Executive Committee, when the Board of
Directors
is not in session, shall have and may exercise all of the powers of the
Board
of Directors allowed by law.
Witness my hand and the seal of Midland National Life Insurance
Company this
11th day of August, 1977.
(CORPORATE SEAL)
Jack L. Briggs
Secretary
Midland National Life Insurance Company
<PAGE>
APPROVED BY
SOUTH DAKOTA
DIVISION OF INSURANCE
CERTIFIED COPY OF AMENDMENT TO BY-LAWS OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY
STATE OF SOUTH DAKOTA
SS
COUNTY OF MINNEHAHA
I, Jack L. Briggs, do hereby certify that I am the duly elected, qualified
and
acting Secretary of Midland National Life Insurance Company; that at a
special
meeting of the Stockholders held at the offices of the Company at Sioux
Falls,
South Dakota, on June 30, 1977, at 1:00 o'clock p.m., the stockholders, by
a
vote of 2,549,439 shares out of a total issued and outstanding of 2,549,439
shares adopted a Resolution to Amend the By-Laws of said Company to
read as
follows:
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
a) The corporation shall, to the fullest extent permitted by Sections 47-2-
58.1
through 47-2-58.7 of the South Dakota Business Corporation Act, as the
same may
be amended, indemnify every person who is, or was a director, officer or
employee of the corporation, or of any other corporation which he serves
as
such at the request of the corporation, from and against any and all
liability
and reasonable expenses that may be incurred in connection with or
resulting
from any claim, action, suit or other proceeding in which he may be
involved
as a party or otherwise, by reason of his being a director, officer or
employee, whether or not he continues to be such at the time such liability
or
expense shall have been incurred.
b) The right of indemnification in this Section shall be in addition to any
other rights to which such director, officer or employee may otherwise be
entitled by contract, vote of either stockholders or disinterested directors
or as a matter of law; and in the event of such person's death, such rights
shall extend to his heirs and legal representatives. The provisions of this
Section are severable, and if any provision be held invalid, all other
provisions are fully in effect and the invalid provision shall only be
curtailed to the extent necessary to make it enforceable to the fullest extent
allowed by law.
c) Expenses including attorney's fees may be advanced to such director,
officer
or employee as may be determined by the Board of Directors.
d) The Board of Directors, by majority vote, may elect to indemnify other
agents of the corporation on a case-by-case basis.
Witness my hand and the seal of Midland National Life Insurance
Company this
11th day of August, 1977.
(CORPORATE SEAL)
Jack L. Briggs
Secretary
Midland National Life Insurance Company
SEC BYLAWS
<PAGE>
Item 24.(b)(8)(a) Form of Participation Agreement between Midland
National
Life Insurance Company and Fidelity VIP I and VIP II
(b) Form of Participation Agreement between Midland National
Life Insurance Company and Fidelity VIP III
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND III,
FIDELITY DISTRIBUTORS CORPORATION
and
MIDLAND NATIONAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the
3rd day of April, 1997 by and among MIDLAND
NATIONAL LIFE INSURANCE COMPANY, (hereinafter
the "Company"), a South Dakota corporation, on its own
behalf and on behalf of each segregated asset account of the
Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter
referred to as the "Account"), and the VARIABLE
INSURANCE PRODUCTS FUND III, an unincorporated
business trust organized under the laws of the
Commonwealth of Massachusetts (hereinafter the "Fund")
and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter"), a Massachusetts
corporation.
WHEREAS, the Fund engages in business as an open-
end management investment company and is available to
act as the investment vehicle for separate accounts
established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance
Products") to be offered by insurance companies which
have entered into participation agreements with the Fund
and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is
divided into several series of shares, each representing the
interest in a particular managed portfolio of securities and
other assets, any one or more of which may be made
available under this Agreement, as may be amended from
time to time by mutual agreement of the parties hereto
(each such series hereinafter referred to as a "Portfolio");
and
WHEREAS, the Fund has obtained an order from the
Securities and Exchange Commission, dated September 17,
1986 (File No. 812-6422), granting Participating Insurance
Companies and variable annuity and variable life insurance
separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the
Fund to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end
management investment company under the 1940 Act and
its shares are registered under the Securities Act of 1933, as
amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research
Company (the "Adviser") is duly registered as an
investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register
certain variable life insurance and variable annuity
contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly
existing segregated asset account, established by resolution
of the Board of Directors of the Company, on the date
shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable
annuity contracts; and
WHEREAS, the Company has registered or will register
each Account as a unit investment trust under the 1940 Act;
and
WHEREAS, the Underwriter is registered as a broker
dealer with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934, as
amended, (hereinafter the "1934 Act"), and is a member in
good standing of the National Association of Securities
Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable
insurance laws and regulations, the Company intends to
purchase shares in the Portfolios on behalf of each Account
to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell
such shares to unit investment trusts such as each Account
at net asset value;
NOW, THEREFORE, in consideration of their mutual
promises, the Company, the Fund and the Underwriter
agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company
those shares of the Fund which each Account orders,
executing such orders on a daily basis at the net asset value
next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this
Section 1.1, the Company shall be the designee of the Fund
for receipt of such orders from each Account and receipt by
such designee shall constitute receipt by the Fund; provided
that the Fund receives notice of such order by 9:30 a.m.
Boston time on the next following Business Day.
"Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the
Fund calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available
indefinitely for purchase at the applicable net asset value
per share by the Company and its Accounts on those days
on which the Fund calculates its net asset value pursuant to
rules of the Securities and Exchange Commission and the
Fund shall use reasonable efforts to calculate such net asset
value on each day which the New York Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board
of Trustees of the Fund (hereinafter the "Board") may
refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio
if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of
the Fund will be sold only to Participating Insurance
Companies and their separate accounts. No shares of any
Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund
shares to any insurance company or separate account unless
an agreement containing provisions substantially the same
as Articles I, III, V, VII and Section 2.5 of Article II of this
Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the
Company's request, any full or fractional shares of the Fund
held by the Company, executing such requests on a daily
basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the
designee of the Fund for receipt of requests for redemption
from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund
receives notice of such request for redemption on the next
following Business Day.
1.6. The Company agrees that purchases and
redemptions of Portfolio shares offered by the then current
prospectus of the Fund shall be made in accordance with
the provisions of such prospectus. The Company agrees
that all net amounts available under the variable life and
annuity contracts with the form number(s) which are listed
on Schedule A attached hereto and incorporated herein by
this reference, as such Schedule A may be amended from
time to time hereafter by mutual written agreement of all
the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may
be mutually agreed to in writing by the parties hereto, or in
the Company's general account, provided that such amounts
may also be invested in an investment company other than
the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are
substantially different from the investment objectives and
policies of all the Portfolios of the Fund; or (b) the
Company gives the Fund and the Underwriter 45 days
written notice of its intention to make such other
investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the
date of this Agreement and the Company so informs the
Fund and Underwriter prior to their signing this Agreement
(a list of such funds appearing on Schedule C to this
Agreement); or (d) the Fund or Underwriter consents to the
use of such other investment company.
1.7. The Company shall pay for Fund shares on the next
Business Day after an order to purchase Fund shares is
made in accordance with the provisions of Section 1.1
hereof. Payment shall be in federal funds transmitted by
wire. For purpose of Section 2.10 and 2.11, upon receipt
by the Fund of the federal funds so wired, such funds shall
cease to be the responsibility of the Company and shall
become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be
by book entry only. Stock certificates will not be issued to
the Company or any Account. Shares ordered from the
Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the
Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company
hereby elects to receive all such income dividends and
capital gain distributions as are payable on the Portfolio
shares in additional shares of that Portfolio. The Company
reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in
cash. The Fund shall notify the Company of the number of
shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share
for each Portfolio available to the Company on a daily basis
as soon as reasonably practical after the net asset value per
share is calculated (normally by 6:30 p.m. Boston time) and
shall use its best efforts to make such net asset value per
share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the
Contracts are or will be registered under the 1933 Act; that
the Contracts will be issued and sold in compliance in all
material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all
material respects with state insurance suitability
requirements. The Company further represents and
warrants that it is an insurance company duly organized and
in good standing under applicable law and that it has
legally and validly established each Account prior to any
issuance or sale thereof as a segregated asset account under
Section 58-28 of the South Dakota Insurance Code and has
registered or, prior to any issuance or sale of the Contracts,
will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as
a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares
sold pursuant to this Agreement shall be registered under
the 1933 Act, duly authorized for issuance and sold in
compliance with the laws of the State of South Dakota and
all applicable federal and state securities laws and that the
Fund is and shall remain registered under the 1940 Act.
The Fund shall amend the Registration Statement for its
shares under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of
its shares. The Fund shall register and qualify the shares
for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or
the Underwriter.
2.3. The Fund represents that it is currently qualified as
a Regulated Investment Company under Subchapter M of
the Internal Revenue Code of 1986, as amended, (the
"Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company
immediately upon having a reasonable basis for believing
that it has ceased to so qualify or that it might not so
qualify in the future.
2.4. The Company represents that the Contracts are
currently treated as endowment, life insurance or annuity
contracts, under applicable provisions of the Code and that
it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter
immediately upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any
payments to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act or otherwise, although it may
make such payments in the future. The Fund has adopted a
"no fee" or "defensive" Rule 12b-1 Plan under which it
makes no payments for distribution expenses. To the
extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether
any aspect of its operations (including, but not limited to,
fees and expenses and investment policies) complies with
the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain
in compliance with the laws of the State of South Dakota
and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in
material compliance with the laws of the State of South
Dakota to the extent required to perform this Agreement.
2.7. The Underwriter represents and warrants that it is a
member in good standing of the NASD and is registered as
a broker-dealer with the SEC. The Underwriter further
represents that it will sell and distribute the Fund shares in
accordance with the laws of the State of South Dakota and
all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940
Act.
2.8. The Fund represents that it is lawfully organized
and validly existing under the laws of the Commonwealth
of Massachusetts and that it does and will comply in all
material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the
Adviser is and shall remain duly registered in all material
respects under all applicable federal and state securities
laws and that the Adviser shall perform its obligations for
the Fund in compliance in all material respects with the
laws of the State of South Dakota and any applicable state
and federal securities laws.
2.10. The Fund and Underwriter represent and warrant
that all of their directors, officers, employees, investment
advisers, and other individuals/entities dealing with the
money and/or securities of the Fund are and shall continue
to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount
not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as may
be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of
its directors, officers, employees, investment advisers, and
other individuals/entities dealing with the money and/or
securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and
that said bond is issued by a reputable bonding company,
includes coverage for larceny and embezzlement, and is in
an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or
another bond containing these provisions is always in
effect, and agrees to notify the Fund and the Underwriter in
the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with
as many printed copies of the Fund's current prospectus and
Statement of Additional Information as the Company may
reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film
containing the Fund's prospectus and Statement of
Additional Information, and such other assistance as is
reasonably necessary in order for the Company once each
year (or more frequently if the prospectus and/or Statement
of Additional Information for the Fund is amended during
the year) to have the prospectus for the Contracts and the
Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund
and the Statement of Additional Information for the
Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its
Statement of Additional Information in combination with
other fund companies' prospectuses and statements of
additional information. Except as provided in the
following three sentences, all expenses of printing and
distributing Fund prospectuses and Statements of
Additional Information shall be the expense of the
Company. For prospectuses and Statements of Additional
Information provided by the Company to its existing
owners of Contracts in order to update disclosure annually
as required by the 1933 Act and/or the 1940 Act, the cost of
printing shall be borne by the Fund. If the Company
chooses to receive camera-ready film in lieu of receiving
printed copies of the Fund's prospectus, the Fund will
reimburse the Company in an amount equal to the product
of A and B where A is the number of such prospectuses
distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's
prospectus. The same procedures shall be followed with
respect to the Fund's Statement of Additional Information.
The Company agrees to provide the Fund or its designee
with such information as may be reasonably requested by
the Fund to assure that the Fund's expenses do not include
the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed
to existing owners of the Contracts.
3.2. The Fund's prospectus shall state that the Statement
of Additional Information for the Fund is available from the
Underwriter or the Company (or in the Fund's discretion,
the Prospectus shall state that such Statement is available
from the Fund).
3.3. The Fund, at its expense, shall provide the
Company with copies of its proxy statements, reports to
shareholders, and other communications (except for
prospectuses and Statements of Additional Information,
which are covered in Section 3.1) to shareholders in such
quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company
shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
so long as and to the extent that the Securities and
Exchange Commission continues to interpret the 1940 Act
to require pass-through voting privileges for variable
contract owners. The Company reserves the right to vote
Fund shares held in any segregated asset account in its own
right, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the
standards set forth on Schedule B attached hereto and
incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance
Companies.
3.5. The Fund will comply with all provisions of the
1940 Act requiring voting by shareholders, and in particular
the Fund will either provide for annual meetings or comply
with Section 16(c) of the 1940 Act (although the Fund is
not one of the trusts described in Section 16(c) of that Act)
as well as with Sections 16(a) and, if and when applicable,
16(b). Further, the Fund will act in accordance with the
Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee, each piece of sales
literature or other promotional material in which the Fund
or its investment adviser or the Underwriter is named, at
least fifteen Business Days prior to its use. No such
material shall be used if the Fund or its designee reasonably
objects to such use within fifteen Business Days after
receipt of such material.
4.2. The Company shall not give any information or
make any representations or statements on behalf of the
Fund or concerning the Fund in connection with the sale of
the Contracts other than the information or representations
contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus
may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the
Fund or its designee or by the Underwriter, except with the
permission of the Fund or the Underwriter or the designee
of either.
4.3. The Fund, Underwriter, or its designee shall
furnish, or shall cause to be furnished, to the Company or
its designee, each piece of sales literature or other
promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days
prior to its use. No such material shall be used if the
Company or its designee reasonably objects to such use
within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any
information or make any representations on behalf of the
Company or concerning the Company, each Account, or
the Contracts other than the information or representations
contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus
may be amended or supplemented from time to time, or in
published reports for each Account which are in the public
domain or approved by the Company for distribution to
Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except
with the permission of the Company.
4.5. The Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses,
Statements of Additional Information, reports, proxy
statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters,
and all amendments to any of the above, that relate to the
Fund or its shares, contemporaneously with the filing of
such document with the Securities and Exchange
Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses,
Statements of Additional Information, reports, solicitations
for voting instructions, sales literature and other
promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of
the above, that relate to the Contracts or each Account,
contemporaneously with the filing of such document with
the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not
limited to, any of the following that refer to the Fund or any
affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion
pictures, or other public media), sales literature (i.e., any
written communication distributed or made generally
available to customers or the public, including brochures,
circulars, research reports, market letters, form letters,
seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article),
educational or training materials or other communications
distributed or made generally available to some or all
agents or employees, and registration statements,
prospectuses, Statements of Additional Information,
shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except
that if the Fund or any Portfolio adopts and implements a
plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the
Company or to the underwriter for the Contracts if and in
amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise
payable to the Underwriter, past profits of the Underwriter
or other resources available to the Underwriter. No such
payments shall be made directly by the Fund.
5.2. All expenses incident to performance by the Fund
under this Agreement shall be paid by the Fund. The Fund
shall see to it that all its shares are registered and authorized
for issuance in accordance with applicable federal law and,
if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale.
The Fund shall bear the expenses for the cost of registration
and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement,
proxy materials and reports, setting the prospectus in type,
setting in type and printing the proxy materials and reports
to shareholders (including the costs of printing a prospectus
that constitutes an annual report), the preparation of all
statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's
shares.
5.3. The Company shall bear the expenses of
distributing the Fund's prospectus, proxy materials and
reports to owners of Contracts issued by the Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts
will be treated as variable contracts under the Code and the
regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-
5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any
amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by
the Fund, it will take all reasonable steps (a) to notify
Company of such breach and (b) to adequately diversify the
Fund so as to achieve compliance within the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence
of any material irreconcilable conflict between the interests
of the contract owners of all separate accounts investing in
the Fund. An irreconcilable material conflict may arise for
a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-
action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable
life insurance contract owners; or (f) a decision by an
insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists
and the implications thereof.
7.2. The Company will report any potential or existing
conflicts of which it is aware to the Board. The Company
will assist the Board in carrying out its responsibilities
under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the
Board to consider any issues raised. This includes, but is
not limited to, an obligation by the Company to inform the
Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material
irreconcilable conflict exists, the Company and other
Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a
majority of the disinterested trustees), take whatever steps
are necessary to remedy or eliminate the irreconcilable
material conflict, up to and including: (1), withdrawing the
assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the question
whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the
option of making such a change; and (2), establishing a new
registered management investment company or managed
separate account.
7.4. If a material irreconcilable conflict arises because
of a decision by the Company to disregard contract owner
voting instructions and that decision represents a minority
position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the
affected Account's investment in the Fund and terminate
this Agreement with respect to such Account; provided,
however that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal
and termination must take place within six (6) months after
the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the
Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state
regulators, then the Company will withdraw the affected
Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months
after the Board informs the Company in writing that it has
determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal
and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined
by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the
Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the disinterested members of the
Board shall determine whether any proposed action
adequately remedies any irreconcilable material conflict,
but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not
be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material
conflict. In the event that the Board determines that any
proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will
withdraw the Account's investment in the Fund and
terminate this Agreement within six (6) months after the
Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal
and termination shall be limited to the extent required by
any such material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive
relief from any provision of the Act or the rules
promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive
Order) on terms and conditions materially different from
those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as
so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold
harmless the Fund and each trustee of the Board and
officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition
of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts
or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to the
Company by or on behalf of the Fund for use in the
Registration Statement or prospectus for the Contracts or in
the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or
persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the
sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by
or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company, as
limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses,
claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this
Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made
against an Indemnified Party unless such Indemnified Party
shall have notified the Company in writing within a
reasonable time after the summons or other first legal
process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company
from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also
shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice
from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in
connection with the defense thereof other than reasonable
costs of investigation.
8.1(d). The Indemnified Parties will promptly notify
the Company of the commencement of any
litigation or proceedings against them in
connection with the issuance or sale of the
Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold
harmless the Company and each of its directors and officers
and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written
consent of the Underwriter) or litigation (including legal
and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Registration Statement or prospectus or sales literature
of the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company for
use in the Registration Statement or prospectus for the
Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature for the Contracts not supplied by the Underwriter
or persons under its control) or wrongful conduct of the
Fund, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of
the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional
or in good faith or otherwise, to comply with the
diversification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses,
claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this
Agreement or to each Company or the Account, whichever
is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made
against an Indemnified Party unless such Indemnified Party
shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal
process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the
Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the
Indemnified Party against whom such action is brought
otherwise than on account of this indemnification
provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such party of
the Underwriter's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Underwriter
will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the
Underwriter of the commencement of any litigation or
proceedings against it or any of its officers or directors in
connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless
the Company, and each of its directors and officers and
each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written
consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements result
from the gross negligence, bad faith or willful misconduct
of the Board or any member thereof, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of
this Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of
Sections 8.3(b) and 8.3(c) hereof.
8.3(b). The Fund shall not be liable under this
indemnification provision with respect to any losses,
claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under
this Agreement or to the Company, the Fund, the
Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this
indemnification provision with respect to any claim made
against an Indemnified Party unless such Indemnified Party
shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving
information of the nature of the claim shall have been
served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the
Fund of any such claim shall not relieve the Fund from any
liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of
this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense
thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Fund to such
party of the Fund's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Fund will not
be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party
independently in connection with the defense thereof other
than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly
to notify the Fund of the commencement of any litigation
or proceedings against it or any of its respective officers or
directors in connection with this Agreement, the issuance or
sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with
the laws of the Commonwealth of Massachusetts.
9.2. This Agreement shall be subject to the provisions
of the 1933, 1934 and 1940 acts, and the rules and
regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant
(including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and
effect until the first to occur of:
(a) termination by any party for any reason by sixty (60)
days advance written notice delivered to the other parties;
or
(b) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Portfolio
based upon the Company's determination that shares of
such Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Portfolio in
the event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as
the underlying investment media of the Contracts issued or
to be issued by the Company; or
(d) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Portfolio in
the event that such Portfolio ceases to qualify as a
Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision, or if the
Company reasonably believes that the Fund may fail to so
qualify; or
(e) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Portfolio in
the event that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of the
Fund or the Underwriter respectively, shall determine, in
their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the
Fund and the Underwriter, if the Company shall determine,
in its sole judgment exercised in good faith, that either the
Fund or the Underwriter has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(h) termination by the Fund or the Underwriter by
written notice to the Company, if the Company gives the
Fund and the Underwriter the written notice specified in
Section 1.6(b) hereof and at the time such notice was given
there was no notice of termination outstanding under any
other provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of
the Company, continue to make available additional shares of the
Fund pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 shall not apply
to any terminations under Article VII and the effect of such Article
VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the
Company's assets held in the Account) except (i) as necessary to
implement Contract Owner initiated or approved transactions, or
(ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter
referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the
1940 Act. Upon request, the Company will promptly furnish to the
Fund and the Underwriter the opinion of counsel for the Company
(which counsel shall be reasonably satisfactory to the Fund and the
Underwriter) to the effect that any redemption pursuant to clause
(ii) above is a Legally Required Redemption. Furthermore, except
in cases where permitted under the terms of the Contracts, the
Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days
notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by
registered or certified mail to the other party at the address
of such party set forth below or at such other address as
such party may from time to time specify in writing to the
other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, South Dakota
Attention: Russell Evenson
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely
to the property of the Fund for the enforcement of any
claims against the Fund as neither the Board, officers,
agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as
confidential the names and addresses of the owners of the
Contracts and all information reasonably identified as
confidential in writing by any other party hereto and,
except as permitted by this Agreement, shall not disclose,
disseminate or utilize such names and addresses and other
confidential information until such time as it may come
into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for
convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect
their construction or effect.
12.4 This Agreement may be executed simultaneously
in two or more counterparts, each of which taken together
shall constitute one and the same instrument.
12.5 If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise,
the remainder of the Agreement shall not be affected
thereby.
12.6 Each party hereto shall cooperate with each other
party and all appropriate governmental authorities
(including without limitation the SEC, the NASD and state
insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement
or the transactions contemplated hereby. Notwithstanding
the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner
with any information or reports in connection with services
provided under this Agreement which such Commissioner
may request in order to ascertain whether the insurance
operations of the Company are being conducted in a
manner consistent with the California Insurance
Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in
this Agreement are cumulative and are in addition to any
and all rights, remedies and obligations, at law or in equity,
which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and
obligations hereunder may not be assigned by any party
without the prior written consent of all parties hereto;
provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any
affiliate of or company under common control with the
Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter
under this Agreement. The Company shall promptly notify
the Fund and the Underwriter of any change in control of
the Company.
12.9. The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee copies of the following
reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report (prepared
under generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 90 days
after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and
GAAP, if any), as soon as practical and in any event within
45 days after the end of each quarterly period:
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the delivery thereof
to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the Securities
and Exchange Commission or any state insurance regulator,
as soon as practical after the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any annual,
interim or special audit made by them of the books of the
Company, as soon as practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto
has caused this Agreement to be executed in its name and
on its behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified
below.
MIDLAND NATIONAL LIFE INSURANCE COMPANY
By: __Michael_M_Masterson_____________________
Name: Michael M. Masterson
Title: Chief Executive Officer and President
VARIABLE INSURANCE PRODUCTS FUND III
By: __Gary_Burkhead____
J. Gary Burkhead
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: __Paul_J_Hondros__
Paul J. Hondros
President
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of
Contracts Funded
Date Established by Board of Directors By Separate
Account
Midland National Life Separate Account A LT-91
(July 20, 1987) L101A1
L108A1
L109A1
Midland National Life Separate Account C A053A1
March 19, 1991
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding
responsibilities for the handling of proxies relating to the
Fund by the Underwriter, the Fund and the Company. The
defined terms herein shall have the meanings assigned in
the Participation Agreement except that the term
"Company" shall also include the department or third party
assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the
Company by the Underwriter as early as possible
before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation
procedures. At this time the Underwriter will inform
the Company of the Record, Mailing and Meeting
dates. This will be done verbally approximately two
months before meeting.
2. Promptly after the Record Date, the Company will
perform a "tape run", or other activity, which will
generate the names, addresses and number of units
which are attributed to each
contractowner/policyholder (the "Customer") as of
the Record Date. Allowance should be made for
account adjustments made after this date that could
affect the status of the Customers' accounts as of the
Record Date.
Note: The number of proxy statements is determined by
the activities described in Step #2. The Company
will use its best efforts to call in the number of
Customers to Fidelity, as soon as possible, but no
later than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent
to each Customer by the Company either before or
together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual
Report to the Company pursuant to the terms of
Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards
("Cards" or "Card") is provided to the Company by
the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards.
The Legal Department of the Underwriter or its
affiliate ("Fidelity Legal") must approve the Card
before it is printed. Allow approximately 2-4
business days for printing information on the Cards.
Information commonly found on the Cards includes:
a. name (legal name as found on account
registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as
printed by the Fund)
(This and related steps may occur later in the chronological
process due to possible uncertainties relating to the
proposals.)
5. During this time, Fidelity Legal will develop,
produce, and the Fund will pay for the Notice
of Proxy and the Proxy Statement (one
document). Printed and folded notices and
statements will be sent to Company for
insertion into envelopes (envelopes and return
envelopes are provided and paid for by the
Insurance Company). Contents of envelope
sent to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one
document)
c. return envelope (postage pre-paid by
Company) addressed to the Company or its
tabulation agent
d. "urge buckslip" - optional, but
recommended. (This is a small, single sheet of
paper that requests Customers to vote as
quickly as possible and that their vote is
important. One copy will be supplied by the
Fund.)
e. cover letter - optional, supplied by
Company and reviewed and approved in
advance by Fidelity Legal.
6. The above contents should be received by the
Company approximately 3-5 business days
before mail date. Individual in charge at
Company reviews and approves the contents of
the mailing package to ensure correctness and
completeness. Copy of this approval sent to
Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day
solicitation time to the Company as the
shareowner. (A 5-week period is
recommended.) Solicitation time is
calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins.
Tabulation usually takes place in another
department or another vendor depending on
process used. An often used procedure is to
sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and
to begin data entry.
Note: Postmarks are not generally needed. A
need for postmark information would be due to
an insurance company's internal procedure and
has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name
on account registration which was printed on
the Card.
Note: For Example, If the account registration
is under "Bertram C. Jones, Trustee," then that
is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are
illegible or are not signed properly, they are
sent back to Customer with an explanatory
letter, a new Card and return envelope. The
mutilated or illegible Card is disregarded and
considered to be not received for purposes of
vote tabulation. Any Cards that have "kicked
out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why
they did not complete the system. Any
questions on those Cards are usually remedied
individually.
11. There are various control procedures used to
ensure proper tabulation of votes and accuracy
of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories
depending upon their vote; an estimate of how
the vote is progressing may then be calculated.
If the initial estimates and the actual vote do
not coincide, then an internal audit of that vote
should occur. This may entail a recount.
12. The actual tabulation of votes is done in units
which is then converted to shares. (It is very
important that the Fund receives the tabulations
stated in terms of a percentage and the number
of shares.) Fidelity Legal must review and
approve tabulation format.
13. Final tabulation in shares is verbally given by
the Company to Fidelity Legal on the morning
of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier
deadline if required to calculate the vote in time
for the meeting.
14. A Certification of Mailing and Authorization to
Vote Shares will be required from the
Company as well as an original copy of the
final vote. Fidelity Legal will provide a
standard form for each Certification.
15. The Company will be required to box and
archive the Cards received from the Customers.
In the event that any vote is challenged or if
otherwise necessary for legal, regulatory, or
accounting purposes, Fidelity Legal will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally,
but must always be followed up in writing
SCHEDULE C
Other, non-Fidelity Investments investment companies
currently available under variable annuities or variable life
insurance issued by the Company:
American Century Variable Portfolios Inc.
Capital Appreciation Portfolio
Value Portfolio
Balanced Portfolio
International Portfolio
FIDELITY PMP
<PAGE>
Item 24.(b)(8)(c) Form of Participation Agreement between Midland
National Life Insurance Company and American Century Investment
Services Inc.
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT is
made and entered into as of April 11, 1997 by and
between MIDLAND NATIONAL LIFE INSURANCE
COMPANY (the "Company"), and AMERICAN
CENTURY INVESTMENT SERVICES, INC. (the
Distributor).
WHEREAS, the Company offers to the public certain
variable annuity contracts and variable life insurance
contracts (the "Contracts"); and
WHEREAS, the Company wishes to offer as investment
options under the Contracts, TCI Balanced, TCI Growth,
TCI Value and TCI International (the "Funds"), each of
which is a series of mutual fund shares registered under the
Investment Company Act of 1940, as amended, and issued
by TCI Portfolios, Inc. (the Issuer); and
WHEREAS, on the terms and conditions hereinafter set
forth, Distributor and the Issuer desire to make shares of the
Funds available as investment options under the Contracts
and to retain the Company to perform certain administrative
services on behalf of the Funds;
NOW, THEREFORE, the Company and Distributor
agree as follows:
1. Transactions in the Funds. Subject to the terms and
conditions of this Agreement, Distributor will make shares of
the Funds available to be purchased, exchanged, or
redeemed, by the Company on behalf of the Accounts
(defined in Section 6(a) below) through a single account per
Fund at the net asset value applicable to each order. The
Funds' shares shall be purchased and redeemed on a net basis
in such quantity and at such time as determined by the
Company to satisfy the requirements of the Contracts for
which the Funds serve as underlying investment media.
Dividends and capital gains distributions will be
automatically reinvested in full and fractional shares of the
Funds.
2. Administrative Services. The Company shall be
solely responsible for providing all administrative services
for the Contracts owners. The Company agrees that it will
maintain and preserve all records as required by law to be
maintained and preserved, and will otherwise comply with
all laws, rules and regulations applicable to the marketing of
the Contracts and the provision of administrative services to
the Contract owners.
3. Processing and Timing of Transactions.
(a) Distributor hereby appoints the Company as its agent
for the limited purpose of accepting purchase and redemption
orders for Fund shares from the Accounts and/or Record
Owners (each as defined below), as applicable. On each day
the New York Stock Exchange (the "Exchange") is open for
business (each, a "Business Day"), the Company may receive
instructions from the Accounts and/or Record Owners for the
purchase or redemption of shares of the Funds ("Orders").
Orders received and accepted by the Company prior to the
close of regular trading on the Exchange (the "Close of
Trading") on any given Business Day (currently, 3:00 p.m.
Central time) and transmitted to the Issuer by 9:00 a.m.
Central time on the next following Business Day will be
executed by the Issuer at the net asset value determined as of
the Close of Trading on the previous Business Day ("Day
1"). Any Orders received by the Company after the Close of
Trading, and all Orders that are transmitted to the Issuer after
9:00 a.m. Central time on the next following Business Day,
will be executed by the Issuer at the net asset value next
determined following receipt of such Order. The day as of
which an Order is executed by the Issuer pursuant to the
provisions set forth above is referred to herein as the
"Effective Trade Date".
(b) By 5:30 p.m. Central time on each Business Day,
Distributor will provide to the Company, via facsimile or
other electronic transmission acceptable to the Company, the
Funds' net asset value, dividend and capital gain information
and, in the case of income funds, the daily accrual for interest
rate factor (mil rate), determined at the Close of Trading.
(c) By 9:00 a.m. Central time on each Business Day, the
Company will provide to Distributor via facsimile or other
electronic transmission acceptable to Distributor a report
stating whether the Orders received by the Company from
Participants by the Close of Trading on the preceding
Business Day resulted in the Plan being a net purchaser or
net seller of shares of the Funds. As used in this Agreement,
the phrase "other electronic transmission acceptable to
Distributor" includes the use of remote computer terminals
located at the premises of the Company, its agents or
affiliates, which terminals may be linked electronically to the
computer system of Distributor, its agents or affiliates
(hereinafter, "Remote Computer Terminals").
(d) Upon the timely receipt from the Company of the
report described in (c) above, Distributor will execute the
purchase or redemption transactions (as the case may be) at
the net asset value computed as of the Close of Trading on
Day 1. Payment for net purchase transactions shall be made
by wire transfer to the custodial account designated by the
Funds on the Business Day next following the Effective
Trade Date. Such wire transfers shall be initiated by the
Company's bank prior to 3:00 p.m. Central time and received
by the Funds prior to 5:00 p.m. Central time on the Business
Day next following the Effective Trade Date. If payments
for a purchase Order is not timely received, such Order will
be executed at the net asset value next computed following
receipt of payment. Payments for net redemption
transactions shall be made by wire transfer by the Issuer to
the account designated by the appropriate receiving party
within the time period set forth in the applicable Fund's then-
current prospectus; provided, however, Distributor will use
all reasonable efforts to settle all redemptions on the
Business Day following the Effective Trade Date. On any
Business Day when the Federal Reserve Wire Transfer
System is closed, all communication and processing rules
will be suspended for the settlement of Orders. Orders will
be settled on the next Business Day on which the Federal
Reserve Wire Transfer System is open and the Effective
Trade Date will apply.
4. Prospectus and Proxy Materials.
(a) Distributor shall provide to the shareholder of record
copies of the Issuer's proxy materials, periodic fund reports
to shareholders and other materials that are required by law
to be sent to the Issuer's shareholders. In addition, Distributor
shall provide the Company with a sufficient quantity of
prospectuses of the Funds to be used in conjunction with the
transactions contemplated by this Agreement, together with
such additional copies of the Issuer's prospectuses as may be
reasonably requested by Company. If the Company provides
for pass-through voting by the Contract owners, Distributor
will provide the Company with a sufficient quantity of proxy
materials for each Contract owner.
(b) The cost of preparing, printing and shipping of the
prospectuses, proxy materials, periodic fund reports and
other materials of the Issuer to the Company shall be paid by
Distributor or its agents or affiliates; provided, however, that
if at any time Distributor or its agent reasonably deems the
usage by the Company of such items to be excessive, it may,
prior to the delivery of any quantity of materials in excess of
what is deemed reasonable, request that the Company
demonstrate the reasonableness of such usage. If the
Distributor believes the reasonableness of such usage has not
been adequately demonstrated, it may request that the
Company pay the cost of printing (including press time) and
delivery of any excess copies of such materials. Unless the
Company agrees to make such payments, Distributor may
refuse to supply such additional materials and this section
shall not be interpreted as requiring delivery by Distributor
or Issuer of any copies in excess of the number of copies
required by law.
(c) The cost of distribution, if any, of any prospectuses,
proxy materials, periodic fund reports and other materials of
the Issuer to the Contract owners shall be paid by the
Company and shall not be the responsibility of Distributor or
the Issuer.
5. Compensation and Expenses.
(a) The Accounts shall be the sole shareholder of Fund
shares purchased for the Contract owners pursuant to this
Agreement (the "Record Owners"). The Company and the
Record Owners shall properly complete any applications or
other forms required by Distributor or the Issuer from time to
time.
(b) Distributor acknowledges that it will derive a
substantial savings in administrative expenses, such as a
reduction in expenses related to postage, shareholder
communications and recordkeeping, by virtue of having a
single shareholder account per Fund for the Accounts rather
than having each Contract owner as a shareholder. In
consideration of the Administrative Services and
performance of all other obligations under this Agreement by
the Company, Distributor will pay the Company a fee (the
"Administrative Services fee") equal to 15 basis points per
annum of the average aggregate amount invested by the
Company under this Agreement, commencing with the
month in which the average aggregate market value of
investments by the Company (on behalf of the Contract
owners) in the Funds exceeds $10 million. No payment
obligation shall arise until the Company's average aggregate
investment in the Funds reaches $10 million, and such
payment obligation, once commenced, shall be suspended
with respect to any month during which the Company's
average aggregate investment in the Funds drops below $10
million.
(c) The parties understand that Distributor customarily
pays, out of its management fee, another affiliated
corporation for the type of administrative services to be
provided by the Company to the Contract owners. The
parties agree that the payments by Distributor to the
Company, like Distributor's payments to its affiliated
corporation, are for administrative services only and do not
constitute payment in any manner for investment advisory
services or for costs of distribution.
(d) For the purposes of computing the payment to the
Company contemplated by this Section 5, the average
aggregate amount invested by the Accounts in the Funds
over a one month period shall be computed by totaling the
Company's aggregate investment (share net asset value
multiplied by total number of shares of the Funds held by the
Company) on each Business Day during the month and
dividing by the total number of Business Days during such
month.
(e) Distributor will calculate the amount of the payment to
be made pursuant to this Section 5 at the end of each
calendar quarter and will make such payment to the
Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the
calculation of the amounts being paid by Distributor for the
relevant months and such other supporting data as may be
reasonably requested by the Company and shall be mailed to:
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
Attention: Theresa Kuiper
(f) In the event Distributor reduces its management fee
with respect to any Fund after the date hereof, Distributor
may amend the Administrative Services fee payable with
regard to such Fund by providing the Company 30 days'
advance written notice of any such adjustment. The revised
Administrative Services fee shall become effective as of the
latter of 30 days from the date of delivery of the notice or the
date prescribed in the notice.
6. Representations and Warranties.
(a) The Company represents and warrants that: (i) this
Agreement has been duly authorized by all necessary
corporate action and, when executed and delivered, shall
constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has
established the Separate Account A and the Separate
Account C (the "Accounts"), each of which is a separate
account under South Dakota Insurance law, and has
registered each Account as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act") to serve
as an investment vehicle for the Contracts; (iii) each Contract
provides for the allocation of net amounts received by the
Company to an Account for investment in the shares of one
of more specified investment companies selected among
those companies available through the Account to act as
underlying investment media; (iv) selection of a particular
investment company is made by the Contract owner under a
particular Contract, who may change such selection from
time to time in accordance with the terms of the applicable
Contract; and (v) the activities of the Company contemplated
by this Agreement comply with all provisions of federal and
state insurance, securities, and tax laws applicable to such
activities.
(b) Distributor represents that: (i) this Agreement has been
duly authorized by all necessary corporate action and, when
executed and delivered, shall constitute the legal, valid and
binding obligation of Distributor enforceable in accordance
with its terms; and (ii) the investments of the Funds will at
all times be adequately diversified within the meaning of
Section 817(h) of the Internal Revenue Service Code of
1986, as amended (the "Code"), and the regulations
thereunder, and that at all times while this Agreement is in
effect, all beneficial interests in each of the Funds will be
owned by one or more insurance companies or by any other
party permitted under Section 1.817-5(f)(3) of the
Regulations promulgated under the Code.
7. Additional Covenants and Agreements.
(a) Each party shall comply with all provisions of federal
and state laws applicable to its respective activities under this
Agreement.
(b) Each party shall promptly notify the other parties in
the event that it is, for any reason, unable to perform any of
its obligations under this Agreement.
(c) The Company covenants and agrees that all Orders
accepted and transmitted by it hereunder with respect to each
Account on any Business Day will be based upon
instructions that it received from the Contract owners in
proper form prior to the Close of Trading of the Exchange on
that Business Day.
(d) The Company covenants and agrees that all Orders
transmitted to the Issuer, whether by telephone, telecopy, or
other electronic transmission acceptable to Distributor, shall
be sent by or under the authority and direction of a person
designated by the Company as being duly authorized to act
on behalf of the owner of the Accounts. Absent actual
knowledge to the contrary, Distributor shall be entitled to
rely on the existence of such authority and to assume that any
person transmitting Orders for the purchase, redemption or
transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of
the Uniform Commercial Code with respect to the
transmission of instructions regarding Fund shares on behalf
of the owner of such Fund shares. The Company shall
maintain the confidentiality of all passwords and security
procedures issued, installed or otherwise put in place with
respect to the use of Remote Computer Terminals and
assumes full responsibility for the security therefor. The
Company further agrees to be solely responsible for the
accuracy, propriety and consequences of all data transmitted
to Distributor by the Company by telephone, telecopy or
other electronic transmission acceptable to Distributor.
(e) The Company agrees to make every reasonable effort
to market its Contracts. It will use its best efforts to give
equal emphasis and promotion to shares of the Funds as is
given to other underlying investments of the Accounts.
(f) The Company shall not, without the written consent of
Distributor, make representations concerning the Issuer or
the shares of the Funds except those contained in the then-
current prospectus and in current printed sales literature
approved by Distributor or the Issuer.
(g) Advertising and sales literature with respect to the
Issuer or the Funds prepared by the Company or its agents, if
any, for use in marketing shares of the Funds as underlying
investment media to Contract owners shall be submitted to
Distributor for review and approval before such material is
used.
(h) The Company will provide to Distributor at least one
complete copy of all registration statements, prospectuses,
statements of additional information, annual and semi-annual
reports, proxy statements, and all amendments or
supplements to any of the above that include a description of
or information regarding the Funds promptly after the filing
of such document with the SEC or other regulatory authority.
8. Use of Names. Except as otherwise expressly provided
for in this Agreement, neither Distributor nor the Funds shall
use any trademark, trade name, service mark or logo of the
Company, or any variation of any such trademark, trade
name, service mark or logo, without the Company's prior
written consent, the granting of which shall be at the
Company's sole option. Except as otherwise expressly
provided for in this Agreement, the Company shall not use
any trademark, trade name, service mark or logo of the Issuer
or Distributor, or any variation of any such trademarks, trade
names, service marks, or logos, without the prior written
consent of either the Issuer or Distributor, as appropriate, the
granting of which shall be at the sole option of Distributor
and/or the Issuer.
9. Proxy Voting.
(a) The Company shall provide pass-through voting
privileges to all Contract owners so long as the SEC
continues to interpret the 1940 Act as requiring such
privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other
Participating Companies (as defined in Section 11(a) below)
participating in any Fund calculate voting privileges in a
consistent manner.
(b) The Company will distribute to Contract owners all
proxy material furnished by Distributor and will vote shares
in accordance with instructions received from such Contract
owners. The Company shall vote Fund shares for which no
instructions have been received in the same proportion as
shares for which such instructions have been received. The
Company and its agents shall not oppose or interfere with the
solicitation of proxies for Fund shares held for such Contract
owners.
10. Indemnity.
(a) Distributor agrees to indemnify and hold harmless the
Company and its officers, directors, employees, agents,
affiliates and each person, if any, who controls the Company
within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this
Section 10(a)) against any losses, claims, expenses,
reasonable out-of-pocket administrative costs (not including
any internal costs or charges), damages or liabilities
(including amounts paid in settlement thereof) or litigation
expenses (including legal and other expenses) (collectively,
"Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses result from a breach by
Distributor of a material provision of this Agreement,
including, but not limited to, any Losses arising out of or
resulting from the materially incorrect reporting of the daily
net asset value per share or dividend or capital gain
distribution rate. Distributor will reimburse any legal or
other expenses reasonably incurred by the Indemnified
Parties in connection with investigating or defending any
such Losses. Distributor shall not be liable for
indemnification hereunder if such Losses are attributable to
the negligence or misconduct of the Company in performing
its obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless
Distributor and the Issuer and their respective officers,
directors, employees, agents, affiliates and each person, if
any, who controls the Issuer or Distributor within the
meaning of the Securities Act of 1933 (collectively, the
"Indemnified Parties" for purposes of this Section 10(b))
against any Losses to which the Indemnified Parties may
become subject, insofar as such Losses (i) result from a
breach by the Company of a material provision of this
Agreement, or (ii) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement or prospectus of the
Company regarding the Contracts, if any, or arise out of or
are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
(iii) result from the use by any person of a Remote Computer
Terminal. The Company will reimburse any legal or other
expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses.
The Company shall not be liable for indemnification
hereunder if such Losses are attributable to the negligence or
misconduct of Distributor or the Issuer in performing their
obligations under this Agreement.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of action, such
indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified
party otherwise than under this Section 10. In case any such
action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish to, assume the
defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying
party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 10 for any legal or
other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than
reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any
such action, the indemnifying party shall not, without the
prior written consent of the indemnified parties in such
action, settle or compromise the liability of the indemnified
parties in such action, or permit a default or consent to the
entry of any judgment in respect thereof, unless in
connection with such settlement, compromise or consent,
each indemnified party receives from such claimant an
unconditional release from all liability in respect of such
claim.
11. Potential Conflicts.
(a) The Company has received a copy of an application
for exemptive relief, as amended, filed by Distributor on
December 21, 1987, with the SEC and the order issued by
the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the
requested relief set forth in such application for exemptive
relief. As set forth in such application, the Board of
Directors of the Issuer (the "Board") will monitor the Issuer
for the existence of any material irreconcilable conflict
between the interests of the contract owners of all separate
accounts ("Participating Companies") investing in funds of
the Issuer. An irreconcilable material conflict may arise for a
variety of reasons, including: (i) an action by any state
insurance regulatory authority; (ii) a change in applicable
federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action
or interpretative letter, or any similar actions by insurance,
tax or securities regulatory authorities; (iii) an administrative
or judicial decision in any relevant proceeding; (iv) the
manner in which the investments of any portfolio are being
managed; (v) a difference in voting instructions given by
variable annuity contract owners and variable life insurance
contract owners; or (vi) a decision by an insurer to disregard
the voting instructions of contract owners. The Board shall
promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications
thereof.
(b) The Company will report any potential or existing
conflicts of which it is aware to the Board. The Company
will assist the Board in carrying out its responsibilities under
the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board
whenever contract owner voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its
disinterested Board members, determines that a material
irreconcilable conflict exists with regard to contract owner
investments in a Fund, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the
Company is responsible for causing or creating said conflict,
the Company shall at its sole cost and expense, and to the
extent reasonably practicable (as determined by a majority of
the disinterested Board members), take such action as is
necessary to remedy or eliminate the irreconcilable material
conflict. Such necessary action may include but shall not be
limited to:
(i) withdrawing the assets allocable to the Accounts
from the Fund and reinvesting such assets in a
different investment medium or submitting the
question of whether such segregation should be
implemented to a vote of all affected contract owners
and as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life
insurance contract owners, or variable contract
owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to the
affected contract owners the option of making such a
change; and/or
(ii) establishing a new registered management
investment company or managed separate
account.
(d) If a material irreconcilable conflict arises as a result of
a decision by the Company to disregard its contract owner
voting instructions and said decision represents a minority
position or would preclude a majority vote by all of its
contract owners having an interest in the Issuer, the
Company at its sole cost, may be required, at the Board's
election, to withdraw an Account's investment in the Issuer
and terminate this Agreement; provided, however, that such
withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the
Board.
(e) For the purpose of this Section 11, a majority of the
disinterested Board members shall determine whether or not
any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Issuer be required
to establish a new funding medium for any Contract. The
Company shall not be required by this Section 11 to
establish a new funding medium for any Contract if an offer
to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the
irreconcilable material conflict.
12. Termination; Withdrawal of Offering. This
Agreement may be terminated by either party upon 180 days'
prior written notice to the other parties. Notwithstanding the
above, each Issuer reserves the right, without prior notice, to
suspend sales of shares of any Fund, in whole or in part, or to
make a limited offering of shares of any of the Funds in the
event that (A) any regulatory body commences formal
proceedings against the Company, Distributor, affiliates of
Distributor, or any of the Issuers, which proceedings
Distributor reasonably believes may have a material adverse
impact on the ability of Distributor, the Issuers or the
Company to perform its obligations under this Agreement or
(B) in the judgment of Distributor, declining to accept any
additional instructions for the purchase or sale of shares of
any such Fund is warranted by market, economic or political
conditions. Notwithstanding the foregoing, this Agreement
may be terminated immediately (i) by any party as a result of
any other breach of this Agreement by another party, which
breach is not cured within 30 days after receipt of notice
from the other party, or (ii) by any party upon a
determination that continuing to perform under this
Agreement would, in the reasonable opinion of the
terminating party's counsel, violate any applicable federal or
state law, rule, regulation or judicial order. Termination of
this Agreement shall not affect the obligations of the parties
to make payments under Section 3 for Orders received by
the Company prior to such termination and shall not affect
the Issuers' obligation to maintain the Accounts in the name
of the Plans or any successor trustee or recordkeeper for the
Plans. Following termination, Distributor shall not have any
Administrative Services payment obligation to the Company
(except for payment obligations accrued but not yet paid as
of the termination date).
13. Continuation of Agreement. Termination as the
result of any cause listed in Section 12 shall not affect the
Distributor's obligation to cause the Issuer to furnish its
shares to Contracts then in force for which its shares serve or
may serve as the underlying medium (unless such further
sale of Fund shares is proscribed by law or the SEC or other
regulatory body). Following termination, Distributor shall
not have any Administrative Services payment obligation to
the Company (except for payment obligations accrued but
not yet paid as of the termination date).
14. Non-Exclusivity. Each of the parties acknowledges
and agrees that this Agreement and the arrangement
described herein are intended to be non-exclusive and that
each of the parties is free to enter into similar agreements and
arrangements with other entities.
15. Survival. The provisions of Section 8 (use of names)
and Section 10 (indemnity) of this Agreement shall survive
termination of this Agreement.
16. Amendment. Neither this Agreement, nor any
provision hereof, may be amended, waived, discharged or
terminated orally, but only by an instrument in writing
signed by all of the parties hereto.
17. Notices. All notices and other communications
hereunder shall be given or made in writing and shall be
delivered personally, or sent by telex, telecopier, express
delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they
are directed at the following addresses, or at such other
addresses as may be designated by notice from such party to
all other parties.
To the Company:
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
Attention: Russell Evenson
(605) 335-5700 (office number)
(605) 335-3621 (telecopy number)
To the Issuer or Distributor:
American Century Mutual Funds
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4051 (office number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a
manner prescribed in this Section 17 shall be deemed to have
been delivered on receipt.
18. Successors and Assigns. This Agreement may not be
assigned without the written consent of all parties to the
Agreement at the time of such assignment. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
19. Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute
this Agreement by signing any such counterpart.
20. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. Entire Agreement. This Agreement, including the
Attachments hereto, constitutes the entire agreement between
the parties with respect to the matters dealt with herein, and
supersedes all previous agreements, written or oral, with
respect to such matters.
IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the date set forth above.
AMERICAN CENTURY INVESTMENT MIDLAND
NATIONAL LIFE
SERVICES, INC. INSURANCE COMPANY
By: __William_M._Lyons__ By:__Michael_M._Masterson__
William M. Lyons Michael M. Masterson
Executive Vice President President and Chief Executive Officer
AMCENPA PMP
<PAGE>
Item 24.(b)(9) Opinion and Consent of Counsel
February 23, 1998
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
Gentlemen:
With reference to the Registration Statement on Form N-4 as amended,
filed by Midland National Life Insurance Company and Midland National
Life Separate Account C with the Securities and Exchange Commission
covering flexible premium variable annuity contracts, I have examined
such documents and such law as I considered necessary and appropriate,
and on the basis of such examination, it is my opinion that:
1. Midland National Life Insurance Company is duly organized and validly
existing under the laws of the State of South Dakota and has been
duly authorized to issue individual flexible premium variable annuity
policies by the Insurance Department of the state of South Dakota.
2. Midland National Life Separate Account C is a duly authorized and
existing separate account established pursuant to the provisions
of Chapter 58-28 of the Insurance Code of South Dakota.
3. The flexible premium variable annuity contracts, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of Midland National
Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to said N-4
Registration Statement and the use of my name under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
Sincerely,
__Jack_L._Briggs__
Jack L. Briggs
Vice President, Secretary and General Counsel
REVVA JLB
<PAGE>
