<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 14, 1997
REGISTRATION NO. ___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ___ ( )
Post-Effective Amendment No. ___ ( )
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X)
Amendment No. ___ ( )
DELTA LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT VA1
(Exact Name of Registrant)
Delta Life and Annuity Company
(Name of Depositor)
530 Oak Court, Suite 200
Memphis, Tennessee 38117
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (800) 275-3358
Bettye S. Adams, Esquire
Delta Life and Annuity Company
530 Oak Court, Suite 200
Memphis, Tennessee 38117
(Name and Address of Agent for Service)
Copies to:
Michael Berenson, Esquire
Magda El Guindi-Rosenbaum, Esquire
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D.C. 20007-0805
Clayton D. Smith, Esq.
Waring Cox, PLC
1300 Morgan Keegan Tower
50 North Front Street
Memphis, Tennessee 38103-1190
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
<PAGE> 2
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
has elected to register an indefinite amount of securities being offered
pursuant to this Registration Statement.
The Registrant hereby amends this Registration Statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE> 3
PURSUANT TO RULE 481
CROSS REFERENCE SHEET SHOWING LOCATION OF INFORMATION REQUIRED BY FORM N-4
IN PART A (PROSPECTUS), PART B (STATEMENT OF ADDITIONAL INFORMATION)
AND PART C (OTHER INFORMATION) OF REGISTRATION STATEMENT
PART A
<TABLE>
<CAPTION>
N-4 Item No. Prospectus Caption
------------ ------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Highlights; Fees and Expenses
4. Condensed Financial Information Not Applicable
5. General Description of Registrant, Delta and the Variable Account; The Fund
Depositor, and Portfolio Companies
6. Deductions Fees and Expenses; Charges and Deductions
7. General Description of Variable Annuity The Fund; Charges and Deductions; Other Contract
Contracts Features
8. Annuity Period Annuity Provisions
9. Death Benefit Other Contract Features
10. Purchases and Contract Value Premium Payments and Aggregate Value
11. Redemptions Other Contract Features
12. Taxes Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Statement of Table of Contents of Statement of Additional
Additional Information Information
</TABLE>
PART B
<TABLE>
<CAPTION>
N-4 Item No. Statement of Additional Information Caption
------------ -------------------------------------------
<S> <C> <C>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Contract - General Provisions; State
Regulation of Delta
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
18. Services Services to the Variable Account; Safekeeping of
Variable Account Assets
19. Purchase of Securities Being Offered Distribution of the Contract
20. Underwriters Distribution of the Contract
21. Calculation of Performance Data Calculation of Variable Account Values
22. Annuity Payments Historical Performance Data
23. Financial Statements Financial Statements
</TABLE>
PART C
<TABLE>
<CAPTION>
N-4 Item No. Other Information Caption
------------ -------------------------
<S> <C> <C>
24. Financial Statements and Exhibits Financial Statements and Exhibits
25. Directors and Officers of the Depositor Directors and Officers of the Depositor
26. Persons Controlled by or under Common Persons Controlled by or under Common Control
Control with the Depositor or with the Depositor or Registrant
Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
<PAGE> 5
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, JANUARY 14, 1997
DELTA VARIABLE DEFERRED ANNUITY
ISSUED BY
DELTA LIFE AND ANNUITY COMPANY
AND
DELTA LIFE AND ANNUITY COMPANY SEPARATE ACCOUNT VA1
Home Office Location: Mailing Address:
Delta Life and Annuity Company Delta Life and Annuity Company
530 Oak Court, Suite 200 Variable Annuity Service Center
Memphis, TN 38117 300 Berwyn Park
P.O. Box 3031
Berwyn Park, PA 19312-0031
1-800-____-__________
================================================================================
The Delta Variable Deferred Annuity Contract (the "Contract") described in this
Prospectus is issued by Delta Life and Annuity Company ("Delta") and provides
for the accumulation of Cash Value on a fixed or variable basis. The Contract
provides for flexible Premium Payments.
The Contract is primarily designed to aid individuals in long term planning for
retirement. Premium Payments for the Contract will be allocated to one or more
sub-accounts (the "Investment Divisions") of a segregated investment account of
Delta, designated Delta Life and Annuity Company Separate Account VA1 (the
"Variable Account"), or to one or more fixed accounts (the "Fixed Accounts"), or
some combination of them, as selected by the Owner of the Contract.
The Aggregate Value, except for amounts in the Fixed Accounts, will vary in
accordance with the investment performance of the Portfolios of Dreyfus Variable
Investment Fund ("Fund") in which the selected Investment Divisions are
invested. The Owner bears the entire investment risk under a Contract for all
amounts allocated to the Variable Account. Amounts allocated to the Fixed
Accounts will accrue earnings at certain guaranteed minimum interest rates.
There is no guaranteed or minimum withdrawal value for amounts in the Variable
Account; the Cash Value at any point in time could be less than the Premium
Payments invested in a Contract.
This Prospectus, and that of the Fund, should be read carefully before investing
to understand the Contract being offered. A Statement of Additional Information,
which has the same date as this Prospectus, has been filed with the Securities
and Exchange Commission and is available at no charge by calling or writing
Delta's Variable Annuity Service Center as shown above. The Statement of
Additional Information provides
<PAGE> 6
further information about the Contract and is incorporated by reference into
this Prospectus. Its table of contents is at the end of this Prospectus.
The Contract provides multiple funding options. Unless specifically mentioned,
this Prospectus only describes the investment options available to the Variable
Account.
Through the Variable Account, Delta offers ten Portfolios, each with a different
investment objective: the Money Market, Capital Appreciation, Growth and Income,
Managed Assets, Small Cap, Small Company Stock, Disciplined Stock, International
Value, International Equity and Quality Bond Portfolios of the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS FOR
DREYFUS VARIABLE INVESTMENT FUND. BOTH PROSPECTUSES SHOULD BE RETAINED FOR
FUTURE REFERENCE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
AN INVESTMENT IN THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, NOR IS THE CONTRACT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
Prospectus Dated: ____________, 1997
2
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<S> <C>
DEFINITIONS......................................................................
HIGHLIGHTS.......................................................................
FEES AND EXPENSES................................................................
Contract Owner Transaction Fees.........................................
Examples ...............................................................
FINANCIAL INFORMATION............................................................
DELTA AND THE VARIABLE ACCOUNT...................................................
Delta Life and Annuity Company..........................................
Variable Account........................................................
THE FUND ........................................................................
Portfolios..............................................................
Addition, Deletion or Substitution......................................
Voting Rights...........................................................
Administrator...........................................................
PREMIUM PAYMENTS AND AGGREGATE VALUE.............................................
Premium Payments........................................................
Allocation of Premium Payments..........................................
Procedures for Telephone Transfers......................................
Aggregate Value.........................................................
Accumulation Units......................................................
CHARGES AND DEDUCTIONS...........................................................
Surrender Charge........................................................
Mortality and Expense Risk Charge.......................................
Administrative Expense Charge...........................................
Annual Contract Fee.....................................................
Annuity Fee.............................................................
Premium Tax.............................................................
Income Taxes............................................................
Fund Expenses...........................................................
Transfer Fee............................................................
OTHER CONTRACT FEATURES..........................................................
Ownership...............................................................
Assignment..............................................................
Beneficiary.............................................................
Change of Beneficiary...................................................
Annuitant...............................................................
</TABLE>
3
<PAGE> 8
<TABLE>
<S> <C> <C>
Transfers Among Accounts.................................................
Surrenders and Withdrawals...............................................
Systematic Withdrawal....................................................
Dollar Cost Averaging....................................................
Automatic Asset Rebalancing..............................................
Internal Segmented Annuity...............................................
Rider ................................................................
Delay of Payments and Transfers..........................................
Death of the Owner prior to the Maturity Date............................
Death of the Owner on or after the Maturity Date.........................
Death of the Annuitant prior to the Maturity Date........................
Death of the Annuitant on or after the Maturity Date.....................
Change in Operation of Variable Account..................................
Modification.............................................................
Discontinuance...........................................................
ANNUITY PROVISIONS................................................................
Maturity Date............................................................
Change in Maturity Date or Annuity Options...............................
Annuity Options..........................................................
Variable Payments........................................................
Fixed Payments...........................................................
Commutation of Fixed Annuity Payments....................................
Available Annuity Options................................................
Evidence of Survival.....................................................
Endorsement of Annuity Payments..........................................
DISTRIBUTION OF THE CONTRACT......................................................
PERFORMANCE DATA..................................................................
Money Market Investment Division.........................................
Other Investment Divisions...............................................
Performance Ranking......................................................
TAX STATUS........................................................................
FINANCIAL STATEMENTS..............................................................
LEGAL PROCEEDINGS.................................................................
AVAILABLE INFORMATION.............................................................
APPENDIX A - - THE FIXED ACCOUNTS.................................................
</TABLE>
4
<PAGE> 9
DEFINITIONS
ACCUMULATION UNIT: A measuring unit used to calculate the value of the Owner's
interest in each Investment Division of the Variable Account prior to the
Maturity Date.
AGGREGATE VALUE: The value of the Contract at any point in time. It is equal to
the sum of the Variable Account Value and the Fixed Account Value.
ANNUITANT: The person whose life is used to determine the amount of annuity
payments on and after the Maturity Date.
ANNUITANT'S BENEFICIARY: The person who is entitled to the death benefit upon
the death of the Annuitant.
ANNUITY OPTION: The arrangement under which annuity payments are made.
ANNUITY PERIOD: The period starting on the Maturity Date.
ANNUITY UNIT: A measuring unit used to calculate the portion of annuity payments
attributable to each Investment Division of the Variable Account on and after
the Maturity Date.
BENEFICIARY: The person entitled to the death benefit upon the Owner's death or
the Annuitant's death as the case may be.
CASH VALUE: The Cash Value for the Variable Account and Fixed Account One is the
Aggregate Value less any applicable Surrender or Withdrawal charges, contract
fees or premium taxes. The Cash Value for Fixed Account Two and Fixed Account
Three is described in Appendix A.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: The deferred variable annuity contract described in this Prospectus.
CONTRACT ANNIVERSARY: Each anniversary of the Effective Date.
CONTRACT OWNER (OR OWNER): The person(s) initially designated in the application
or otherwise, unless later changed, as having all ownership rights under the
Contract. The Annuitant is the Owner unless otherwise designated in writing.
CONTRACT YEAR: Each 12-month period beginning on the Effective Date or Contract
Anniversary.
DELTA: Delta Life and Annuity Company.
EFFECTIVE DATE: The date the Contract is issued and on which coverage begins
under the Contract. It is also the date from which Contract Anniversaries and
Contract Years are measured.
5
<PAGE> 10
FIXED ACCOUNTS: The aggregate portion of Delta's general account to which Fixed
Account Value may be allocated, consisting of Fixed Account One, Fixed Account
Two and Fixed Account Three.
FIXED ACCOUNT VALUE: The portion of the Contract under which interest is
credited at certain minimum rates. Fixed Account assets are maintained in
Delta's general account and not allocated to the Variable Account.
FIXED ACCOUNT ONE: The portion of Delta's general account to which Fixed Account
Value may be allocated that is credited with income at the greater of 3.5% per
annum, compounded annually, or an annual rate established each year by Delta.
FIXED ACCOUNT TWO: The portion of Delta's general account to which Fixed Account
Value may be allocated that is credited with income at the greater of 3.0% per
annum on 90% of each allocation amount, compounded annually, or, if held to the
end of a seven-year term, a rate derived from increases (if any) in the S&P
500(R) Index over a seven-year term.
FIXED ACCOUNT THREE: The portion of Delta's general account to which Fixed
Account Value may be allocated that is credited with income at the greater of
3.0% per annum on 90% of each allocation amount, compounded annually, or, if
held to the end of a seven-year term, a rate derived from increases (if any) in
the Delta International Composite Index over a seven-year term.
FREE WITHDRAWAL AMOUNT: The amount which can be withdrawn free of any surrender
charges from the Variable Account and Fixed Account One. It is the greater of
(a) 10% of Premium Payments credited to the Contract for more than one year or
(b) accumulated earnings not previously withdrawn.
FUND: Dreyfus Variable Investment Fund, an open-end management investment
company (mutual fund) in which the Variable Account currently invests.
INVESTMENT DIVISION: The portion of the Variable Account which invests in shares
of a specific Portfolio.
MATURITY DATE: The date on which a payment option for the payment of Cash Value
for the benefit of the Annuitant is effective.
NON-QUALIFIED CONTRACT: A Contract which does not receive favorable federal
income tax treatment under Code Sections 401, 403, 408 or 457.
OWNER'S BENEFICIARY: The person who is entitled to the death benefit upon the
death of the Owner prior to the Maturity Date.
PAYEE: A recipient of payments under the Contract. The term includes the
Annuitant, the Owner, the Beneficiary who becomes entitled to benefits upon the
death of the Owner or Annuitant, and the Owner's estate.
6
<PAGE> 11
PAYMENT YEAR(S): With respect to any Premium Payment, the year(s) commencing on
the date of such Premium Payment.
PORTFOLIO: Any series of Dreyfus Variable Investment Fund underlying an
Investment Division of the Variable Account. In this Prospectus, the term
Portfolio will also be used to refer to the relevant Investment Division which
invests in shares of a Portfolio.
PREMIUM PAYMENT(S): Initial premium payment and subsequent premium payment(s)
paid to Delta as consideration for the benefits provided by the Contract.
QUALIFIED CONTRACT: A Contract used in connection with a retirement plan which
receives favorable federal income tax treatment under Code Sections 401, 403,
408 or 457.
SURRENDER (OR WITHDRAWAL): When a lump sum amount representing all or part of
the Cash Value is paid to the Owner. In this Prospectus, the term "Surrender"
means a full Surrender and the term "Withdrawal" means a partial Withdrawal of
the Cash Value.
SURRENDER CHARGE: An amount charged upon a Withdrawal or Surrender.
SURRENDER DATE: The date Delta processes the Owner's election to surrender the
Contract.
VALUATION DATE: Every day on which Accumulation Units are valued, which is each
business day on which the New York Stock Exchange ("NYSE") is open for trading,
except any day on which trading on the NYSE is restricted, or on which an
emergency exists, as determined by the Securities and Exchange Commission, so
that valuation or disposal of securities is not practicable.
VALUATION PERIOD: The period of time beginning at the close of the NYSE on a
Valuation Date and ending at the close of the NYSE on the next succeeding
Valuation Date. A Valuation Period may be more than one day in length.
VARIABLE ACCOUNT: Delta Life and Annuity Company Separate Account VA1, a
separate account of Delta under Tennessee law, in which the assets of the
Investment Divisions, funded through shares of the Fund, are maintained.
VARIABLE ACCOUNT VALUE: The portion of the Contract which is allocated to the
Variable Account.
VARIABLE ANNUITY SERVICE CENTER: The address to which Premium Payments should be
sent, notices given and any customer service requests made. The mailing address
for Premium Payments is Delta Lockbox, P.O. Box , Philadelphia, Pennsylvania
19182-5083. The mailing address for other correspondence is Delta Variable
Annuity Service Center, 300 Berwyn Park, P.O. Box 3031, Berwyn, Pennsylvania
19312.
7
<PAGE> 12
HIGHLIGHTS
The Contract provides for periodic payments to be made by Delta on a fixed or
variable or combination of a fixed and variable basis for the life of the
Annuitant or for some other period commencing after the Maturity Date, as
selected by the Owner. Prior to the Maturity Date, the Owner can transfer
amounts between and among the Fixed Accounts and the Investment Divisions. Some
prohibitions and restrictions apply. After the Maturity Date, some transfers
are permitted among the Investment Divisions if the Owner selects a variable
annuity payment option. Before the Maturity Date, the Owner can also elect to
withdraw all or a portion of the Cash Value in exchange for a cash payment from
Delta.
Premium Payments (reduced by any applicable premium tax) attributable to the
variable portion of the Contract will be allocated to a segregated asset account
of Delta which has been designated Delta Life and Annuity Company Separate
Account VA1. The Variable Account invests in shares of one or more of the
Portfolios available to fund the Contract as selected by the Owner. Owners bear
the investment risk for all amounts allocated to the Variable Account. The
Contract's provisions may vary in some states.
The Contract may be canceled within the right-to-examine period by mailing or
delivering it to the Delta Variable Annuity Service Center. Return of the
Contract by mail is effective on being postmarked and properly addressed,
postage prepaid. Delta will promptly refund any Premium Payment allocated to the
Fixed Accounts and any Premium Payment allocated to the Variable Account plus
any increase or minus any decrease in the Variable Account Value attributable to
such Premium Payment. In those states which require that the Premium Payment be
returned, the initial Premium Payment to an Investment Division will be
allocated to the Money Market Portfolio until the expiration of the
right-to-examine period.
A Surrender Charge of up to seven percent (7%) of each Premium Payment may be
deducted in the event of a Surrender or Withdrawal. A Surrender Charge schedule
applies to each Premium Payment and extends up to the 7th anniversary of each
Premium Payment date. The Surrender Charge will vary in amount depending upon
the Payment Year in which the Surrender or Withdrawal is made. After the first
Contract Anniversary and not more frequently than twice each Contract Year, an
Owner may make, without incurring a Surrender Charge, total annual Withdrawals
of an amount not to exceed the greater of: (a) ten percent (10%) of the total
Premium Payments credited to the Contract for more than one year, or (b)
accumulated earnings not previously withdrawn. Accumulated earnings not
previously withdrawn is the Aggregate Value less Premium Payments plus
Withdrawals attributed to Premium Payments. For the Surrender Charge applicable
to allocations surrendered or withdrawn from Fixed Account Two or Fixed Account
Three, see Appendix A. The Surrender Charge is waived in some states for
Withdrawals made as a result of terminal illness or confinement of the Annuitant
to a nursing home so long as certain requirements are met. In no event will the
sum of the Surrender Charges exceed 8.5% of the total Premium Payments. (See
"Charges and Deductions - Surrender Charge.")
Delta deducts a daily charge (the "Mortality and Expense Risk Charge") which is
equal, on an annual basis, to 1.25% of the average daily net assets of the
Variable Account. This Charge compensates Delta for assuming the mortality and
expense risks under the Contract. (See "Charges and Deductions - Mortality and
Expense Risk Charge.")
8
<PAGE> 13
Delta also deducts a daily charge (the "Administrative Expense Charge") which is
equal, on an annual basis, to .15% of the average daily net assets of the
Variable Account. (See "Charges and Deductions - Administrative Expense
Charge.")
There is deducted on each Contract Anniversary prior to the Maturity Date an
annual contract fee (the "Annual Contract Fee") of $33. The fee is waived on
Aggregate Values of $100,000 or more and when there is no value in Fixed Account
One and the Variable Account. (See "Charges and Deductions - Annual Contract
Fee.")
Delta deducts on each Contract Anniversary after the Maturity Date an annuity
fee (the "Annuity Fee") of $33. The fee is deducted in equal amounts from each
Variable Annuity payment. The fee is waived if the Cash Value applied to the
Variable Annuity settlement option is $100,000 or more.
(See "Charges and Deductions - Annuity Fee.")
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against Aggregate Value. (See "Charges and Deductions - Premium
Taxes.")
An Owner may transfer all or part of the Aggregate Value from one Investment
Division to another or to one or more of the Fixed Accounts. Twelve (12)
transfers per Contract Year are permitted without a transfer fee (the "Transfer
Fee") being charged. Thereafter, Delta reserves the right to charge a Transfer
Fee of $20 per transfer. (See "Charges and Deductions - Transfer Fee.")
There is a ten percent (10%) federal income tax penalty applied to the income
portion of any premature distribution from Non-Qualified Contracts. However, the
penalty is not imposed on amounts distributed: (a) after the Payee reaches age
59 1/2; (b) after the death of the Owner (or, if the Owner is not a natural
person, after the death of the Annuitant); (c) if the Payee is totally disabled
(for this purpose, disability is as defined in Section 72(m)(7) of the Code);
(d) in a series of substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy) of the Payee or for
the joint lives (or joint life expectancies) of the Payee and his or her
beneficiary; (e) under an immediate annuity; or (f) which are allocable to
Premium Payments made prior to August 14, 1982. For federal income tax purposes,
distributions are deemed to be on a last-in, first-out basis. Different tax
withdrawal penalties and restrictions apply to Qualified Contracts issued
pursuant to plans qualified under Code Section 401, 403(b), 408 or 457 and under
the Texas Optional Retirement Program. (See "Tax Status - Tax Treatment of
Withdrawals Qualified Contracts.") For a further discussion of the taxation of
the Contract, see "Tax Status."
9
<PAGE> 14
FEES AND EXPENSES
Contract Owner Transaction Fees
The Surrender Charge, as a percentage of the Premium Payment, is
<TABLE>
<CAPTION>
Completed
Payment Years Charge
------------- ------
<S> <C>
0 7%
1 7%
2 6%
3 6%
4 5%
5 5%
6 2%
7+ 0
</TABLE>
<TABLE>
<S> <C>
Transfer Fee.............................................. Delta reserves the right to charge $20 per
transfer in excess of 12 per Contract Year.
Annual Contract Fee....................................... $33 per Contract Year prior to Maturity Date
(waived on Aggregate Values of $100,000 or
more and when there is no value in Fixed
Account One and the Variable Account).
Annuity Fee............................................... $33 per Contract Year after Maturity Date
(waived if the Cash Value applied to the
Variable Annuity settlement option is $100,000
or more).
Cash Value Annual Expenses
(as percentage of average account value)
Mortality and Expense Risk Charge........................ 1.25%
Administrative Expense Charge............................ 0.15%
Total Variable Account Annual Expenses.................... 1.40%
</TABLE>
10
<PAGE> 15
Fund Annual Expenses After Reimbursement (as a percentage of average net
assets)*
<TABLE>
<CAPTION>
Management Other Total Annual
Fees Expenses Expenses
---- -------- --------
<S> <C> <C> <C>
Money Market 0.47% 0.15% 0.62%
Capital Appreciation 0.73% 0.12% 0.85%
Growth and Income 0.72% 0.20% 0.92%
Managed Assets 0.75% 0.19% 0.94%
Small Cap 0.75% 0.08% 0.83%
Small Company Stock** 0.75% 0.25% 1.00%
Disciplined Stock** 0.75% 0.25% 1.00%
International Value** 1.00% 0.50% 1.50%
International Equity 0.30% 1.29% 1.59%
Quality Bond 0.61% 0.20% 0.81%
</TABLE>
* From time to time, the Portfolios' investment advisers, in their sole
discretion, may waive all or part of their fees and/or voluntarily
assume certain Portfolio expenses. For a more complete description of
the Portfolios' fees and expenses, see the Fund's prospectus. During
the fiscal year ended December 31, 1995, certain fees were waived
and/or expenses assumed. Without such waivers or reimbursements, the
Management Fees, Other Expenses and Total Annual Expenses would have
been as follows: Money Market - 0.50%, 0.15%, 0.65%; Capital
Appreciation - 0.75%, 0.12%, 0.87%; Growth and Income - 0.75%, 0.20%,
0.95%; International Equity - 0.75%, 1.29%, 2.04%; and Quality Bond -
0.65%, 0.20%, 0.85%. There is no guarantee that any fee waivers or
expense reimbursements will continue in the future.
** The Small Company Stock, Disciplined Stock and International Value
Portfolios did not commence operations during 1995. These numbers are
annualized estimates of the expenses each Portfolio expected to incur
during fiscal year 1996.
The purpose of the Table above is to assist the Owner in understanding the
various costs and expenses that the Owner will incur, directly or indirectly.
For additional information, see the discussion in the Fund's prospectus. Premium
taxes, if applicable, are not reflected in the Table.
11
<PAGE> 16
Examples:
The Owner would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets, and assuming all Premium Payments are allocated to the
Variable Account and no Withdrawals are made.
The following three examples show expenses based on fee waivers and
reimbursements for 1995. There is no guarantee that any fee waivers or expense
reimbursements will continue in the future. The examples reflect the $33 Annual
Contract Fee as an annual charge of 0.075% assets based on an approximate
average Aggregate Value of $44,000. The tabular information assumes that the
entire Aggregate Value is allocated to the Variable Account. The examples will
assume no Transfer Fee, systematic withdrawal fee or premium tax has been
assessed.
1. If the Contract is surrendered at the end of the applicable time
period:
<TABLE>
<CAPTION>
One Year Three Years
-------- -----------
<S> <C> <C>
Money Market $ 90.95 $124.69
Capital Appreciation $ 93.25 $131.63
Growth and Income $ 93.95 $133.74
Managed Assets $ 94.15 $134.34
Small Cap $ 93.05 $131.03
Small Company Stock $ 94.75 $136.14
Disciplined Stock $ 94.75 $136.14
International Value $ 99.75 $151.07
International Equity $100.65 $153.74
Quality Bond $ 92.85 $130.43
</TABLE>
2. If the Contract is annuitized** at the end of the applicable time
period:
<TABLE>
<CAPTION>
One Year Three Years
-------- -----------
<S> <C> <C>
Money Market $20.95 $64.69
Capital Appreciation $23.25 $71.63
Growth and Income $23.95 $73.74
</TABLE>
12
<PAGE> 17
<TABLE>
<S> <C> <C>
Managed Assets $24.15 $74.34
Small Cap $23.05 $71.03
Small Company Stock $24.75 $76.14
Disciplined Stock $24.75 $76.14
International Value $29.75 $91.07
International Equity $30.65 $93.74
Quality Bond $22.85 $70.43
</TABLE>
3. If the Contract is not surrendered or annuitized at the end of the
applicable time period:
<TABLE>
<CAPTION>
One Year Three Years
-------- -----------
<S> <C> <C>
Money Market $20.95 $64.69
Capital Appreciation $23.25 $71.63
Growth and Income $23.95 $73.74
Managed Assets $24.15 $74.34
Small Cap $23.05 $71.03
Small Company Stock $24.75 $76.14
Disciplined Stock $24.75 $76.14
International Value $29.75 $91.07
International Equity $30.65 $93.74
Quality Bond $22.85 $70.43
</TABLE>
* In preparing the above examples, Delta has relied on data provided by
the Fund and has not verified the data.
** A Surrender Charge may apply to annuitizations under a form that does
not provide for payments (i) for the payee's life or (ii) for a period
certain extending at least ten (10) years past the last Premium Payment
date, provided there is no guaranteed commutation of payment.
13
<PAGE> 18
FINANCIAL INFORMATION
The audited statutory-basis financial statements of Delta are contained in the
Statement of Additional Information. As of the date of this Prospectus, the
Variable Account had not yet commenced operation. The starting Accumulation Unit
value for each Investment Division will be $10.
14
<PAGE> 19
DELTA AND THE VARIABLE ACCOUNT
Delta Life and Annuity Company
Delta is a stock life insurance company incorporated under the laws of Arkansas
in 1984 and redomesticated under the laws of Tennessee in 1990. Its Home Office
address is 530 Oak Court Drive, Suite 200, Memphis, Tennessee 38117, Telephone
(901) 683-1222. Delta is the principal operating subsidiary of, and is
wholly-owned by, Delta Life Corporation, a holding company.
The Variable Account
The Variable Account was established by Delta as a separate account on October
23, 1995, pursuant to a resolution of its Board of Directors. Under Tennessee
insurance law, the income, gains or losses of the Variable Account are credited
to or charged against the assets of the Variable Account without regard to the
other income, gains, or losses of Delta. The assets maintained in the Variable
Account equal to the reserves and other contract liabilities with respect to the
Variable Account will not be charged with any liabilities arising out of any
other business conducted by Delta. All obligations arising under the Contract,
including the promise to make annuity payments, are, however, general corporate
obligations of Delta.
The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940, as amended
(the "1940 Act"), and meets the definition of a separate account under the
federal securities laws. Registration with the Securities and Exchange
Commission does not involve supervision of the management or investment
practices or policies of the Variable Account or of Delta by the Securities and
Exchange Commission.
The assets of the Variable Account are divided into Investment Divisions. The
minimum Investment Division balance required is $1,000. Each Investment Division
invests exclusively in shares of a specific Portfolio. All amounts allocated to
the Variable Account will be used to purchase Portfolio shares as designated by
the Owner at their net asset value. Any and all distributions made by a
Portfolio with respect to the shares held by the Variable Account will be
reinvested in additional shares at their net asset value.
THE FUND
The Variable Account invests exclusively in Dreyfus Variable Investment Fund.
The Fund is registered with the Securities and Exchange Commission as an
open-end management investment company under the 1940 Act. The Fund currently
has ten series (i.e., Portfolios) that are available for the Contract (although
certain Portfolios may not be available for Contracts issued in all states).
Each series has separate investment objectives and policies. As a result, each
series operates as a separate investment Portfolio, and the investment
performance of one series has no effect on the investment performance of any
other series.
15
<PAGE> 20
The Dreyfus Corporation provides investment advisory and administrative services
to the Fund. Fayez Sarofim & Co. provides sub-investment advisory services for
the Capital Appreciation Portfolio.
The Portfolios
Money Market Portfolio
The Money Market Portfolio's investment objective is to achieve as high a level
of current income as is consistent with the preservation of capital and the
maintenance of liquidity. It seeks to achieve its objective by investing in
short-term money market instruments. This Portfolio is neither insured nor
guaranteed by the United States Government, and there can be no assurance that
it will be able to maintain a stable net asset value of $1.00 per share.
Capital Appreciation Portfolio
The Capital Appreciation Portfolio's primary investment objective is to provide
long-term capital growth consistent with the preservation of capital; current
income is a secondary goal. It seeks to achieve its goals by investing in common
stocks of domestic and foreign issuers.
Growth and Income Portfolio
The Growth and Income Portfolio's investment objective is to provide long-term
capital growth, current income and growth of income, consistent with reasonable
investment risk. This Portfolio invests primarily in equity and debt securities
and money market instruments of domestic and foreign issuers. The proportion of
the Portfolio's assets invested in each type of security will vary from time to
time in accordance with The Dreyfus Corporation's assessment of economic
conditions and investment opportunities.
Managed Assets Portfolio
The Managed Assets Portfolio's investment objective is to maximize total return,
consisting of capital appreciation and current income. It seeks to achieve its
objective by investing in a wide range of equity and debt securities and money
market instruments of domestic and foreign markets.
Small Cap Portfolio
The Small Cap Portfolio's investment objective is to maximize capital
appreciation. It seeks to achieve its objective by investing principally in
common stocks. Under normal market conditions, it will invest at least 65% of
its total assets in companies with market capitalizations of less than $1.5
billion at the time of purchase which The Dreyfus Corporation believes to be
characterized by new or innovative products, services or processes which should
enhance prospects for growth in future earnings.
16
<PAGE> 21
Small Company Portfolio
The Small Company Stock Portfolio's goal is to provide investment results that
are greater than the total return performance of publicly-traded common stocks
in the aggregate, as represented by the Russell 2500(TM) Index. This Portfolio
invests primarily in the equity securities of small- to medium-sized domestic
issuers, while attempting to maintain volatility and diversification similar to
that of the Russell 2500(TM) Index.
Disciplined Stock Portfolio
The Disciplined Stock Portfolio's goal is to provide investment results that are
greater than the total return performance of publicly-traded common stocks in
the aggregate, as represented by the Standard & Poor's 500(R) Composite Stock
Price Index. The Portfolio will invest in common stocks of both domestic and
foreign issuers. This Portfolio will use quantitative statistical techniques to
construct a portfolio in an attempt to achieve its investment objective, without
assuming undue risk relative to the broad stock market.
International Value Portfolio
The International Value Portfolio's goal is long-term capital growth. This
Portfolio invests primarily in a portfolio of publicly-traded equity securities
of foreign issuers which would be characterized as "value" companies according
to criteria established by the Portfolio's investment adviser.
International Equity Portfolio
The International Equity Portfolio's investment objective is to maximize capital
appreciation. This Portfolio invests primarily in the equity securities of
foreign issuers located throughout the world.
Quality Bond Portfolio
The Quality Bond Portfolio's investment objective is to provide the maximum
amount of current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. It seeks to achieve its objective by
investing principally in debt obligations of corporations, the U.S. Government
and its agencies and instrumentalities, and major banking institutions. The
Quality Bond Portfolio may invest in the debt obligations of some foreign
issuers.
THERE IS NO ASSURANCE THAT ANY OF THESE PORTFOLIOS WILL ACHIEVE
THEIR STATED OBJECTIVES.
AN INVESTMENT IN THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, NOR IS THE CONTRACT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTING IN THE CONTRACT INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Since all of the Portfolios are available to registered separate accounts
offering variable annuity and variable life products of other insurance
companies, there is a possibility that a material conflict may arise between the
interests of the Variable Account and one or more other separate accounts
investing
17
<PAGE> 22
in the Fund. In the event of a material conflict, the affected insurance
companies will take any necessary steps to resolve the matter, including
stopping their separate accounts from investing in the Fund. See the Fund's
prospectus for greater details.
ADDITIONAL INFORMATION CONCERNING THE INVESTMENT OBJECTIVES AND POLICIES OF ALL
OF THE PORTFOLIOS, THE INVESTMENT ADVISORY SERVICES, ADMINISTRATIVE SERVICES AND
CHARGES CAN BE FOUND IN THE CURRENT PROSPECTUS FOR THE FUND WHICH ACCOMPANIES
THIS PROSPECTUS. THE FUND'S PROSPECTUS SHOULD BE READ CAREFULLY BEFORE ANY
DECISION IS MADE CONCERNING THE ALLOCATION OF PREMIUM PAYMENTS TO, OR TRANSFERS
AMONG, THE INVESTMENT DIVISIONS.
Owners bear the complete investment risk for Aggregate Value allocated to an
Investment Division. Each such Investment Division involves inherent investment
risk, and such risk varies significantly among the Investment Divisions. Owners
should read the Fund's prospectus carefully and understand the Portfolios'
relative degrees of risk before making or changing investment choices.
Additional Funds may, from time to time, be made available as investments to
underlie the Contract. However, the right to make such selections will be
limited by the terms and conditions imposed on such transactions by Delta. (See
"Premium Payments and Aggregate Value - Allocation of Premium Payments.")
Addition, Deletion or Substitution of Investments
Delta does not control the Fund and cannot guarantee that any of the Investment
Divisions of the Variable Account or any of the Portfolios will always be
available for allocation of Premium Payments or transfers. Delta retains the
right to make changes in the Variable Account and in its investments.
Delta reserves the right to eliminate the shares of any Portfolio held by an
Investment Division and to substitute shares of another Portfolio or of another
investment company for the shares of any Portfolio, if the shares of the
Portfolio are no longer available for investment or if, in Delta's judgment,
investment in the Portfolio would be inappropriate in view of the purposes of
the Variable Account. To the extent required by the 1940 Act, a substitution of
shares attributable to the Owner's interest in an Investment Division will not
be made without prior notice to the Owner and the prior approval of the
Securities and Exchange Commission. Nothing contained herein shall prevent the
Variable Account from purchasing other securities for other series or classes of
variable annuity contracts, or from effecting an exchange between series or
classes of variable contracts on the basis of requests made by Owners.
Voting Rights
To the extent required by applicable law, all Portfolio shares held in the
Variable Account will be voted by Delta at regular and special shareholder
meetings of the Fund in accordance with instructions received from persons
having voting interest in the corresponding Investment Division. If, however,
the 1940 Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, or if Delta determines that it is allowed
to vote all Portfolio shares in its own right, Delta may elect to do so.
18
<PAGE> 23
The person with the voting interest is the Owner. The number of votes which are
available to an Owner will be calculated separately for each Investment
Division. Before the Maturity Date, that number will be determined by applying
his or her percentage interest, if any, in a particular Investment Division to
the total number of votes attributable to that Investment Division. The Owner
holds a voting interest in each Investment Division to which Aggregate Value is
allocated. After the Maturity Date, the number of votes decreases as annuity
payments are made and as the reserves for the Contract decrease.
The number of votes of a Portfolio will be determined as of the date coincident
with the date established by that Portfolio for determining shareholders
eligible to vote at the meeting of the Fund. Voting instructions will be
solicited by written communication prior to such meeting in accordance with
procedures established by the Fund.
Shares as to which no timely instructions are received and shares held by Delta
as to which Owners have no beneficial interest will be voted in proportion to
the voting instructions which are received with respect to all Contracts
participating in the Investment Division. Voting instructions to abstain on any
item to be voted upon will be applied on a pro rata basis to reduce the votes
eligible to be cast.
Each person or entity having a voting interest in an Investment Division will
receive proxy material, reports and other material relating to the appropriate
Portfolio.
It should be noted that the Fund is not required, and does not intend, to hold
annual or other regular meetings of shareholders.
Administrator
While Delta has primary responsibility for all administration of the Contract,
Delaware Valley Financial Services, Inc. ("Delaware Valley"), whose principal
business address is 300 Berwyn Avenue, Berwyn, Pennsylvania 19312, will provide
on Delta's behalf administrative services relating to the Contract. These
administrative services include, but are not limited to, the following: receive
and review applications, deliver Contracts, allocate Premium Payments among
Portfolios, determine Aggregate Values, calculate and make payments under
payment options and death benefits, process withdrawals and surrenders,
calculate charges and fees, record Contract transfers, maintain books and
records relating to the foregoing, prepare reports, provide telephone support
and tax information, but not tax advice, to Owners. Delaware Valley provides
similar administrative services for a number of other insurance companies.
Inquiries should be directed to Delaware Valley, which is the Variable Annuity
Service Center, at 1-800-___-_____.
PREMIUM PAYMENTS AND AGGREGATE VALUE
Premium Payments
Premium Payments are payable in the frequency and in the amount selected by the
Owner. The initial Premium Payment is due on the Effective Date and must be at
least $10,000. The minimum
19
<PAGE> 24
subsequent Premium Payment is $2,000 to the Investment Divisions and to Fixed
Account One and $5,000 to Fixed Account Two and Fixed Account Three. Delta may,
at its sole discretion, waive the minimum payment requirements.
A Premium Payment resulting in Aggregate Value in excess of $2 million or an
allocation to the Fixed Accounts resulting in Fixed Account Value in excess of
$1 million requires preapproval by Delta.
Allocation of Premium Payments
Premium Payments are allocated to the Fixed Accounts and/or to one or more
Investment Divisions within the Variable Account as selected by the Owner. For
each Investment Division, the Premium Payments are converted into Accumulation
Units. The number of Accumulation Units credited to the Contract is determined
by dividing the Premium Payment allocated to the Investment Division by the
value of the Accumulation Unit for the Investment Division.
If state law requires that Premium Payments be returned upon cancellation of the
Contract, Delta will allocate the initial Premium Payment for the Investment
Division(s) selected by the Owner to the Money Market Portfolio until the
expiration of the right-to-examine period.
Transfers do not necessarily affect the allocation instructions for payments.
Subsequent payments will be allocated as directed by the Owner; if no direction
is given, the allocation will be that which has been most recently directed for
payments. The Owner may change the allocation of future payments without fee,
penalty or other charge upon written notice to the Variable Annuity Service
Center. A change will be effective for payments received on or after receipt of
the written notice of change.
For initial Premium Payments, if the application for a Contract is in good order
and is accepted, Delta will apply the Premium Payment to the Variable Account
and credit the Contract with Accumulation Units within two business days of
receipt. If the application for a Contract is not in good order, Delta will
attempt to get it in good order or Delta will return the application and the
Premium Payment within five business days, unless the purchaser has authorized
Delta to retain the application and Premium Payment.
For each subsequent Premium Payment, Delta will apply such payment to the
Variable Account and credit the Contract with Accumulation Units at the
Accumulation Unit Value for the Valuation Period during which each such payment
is received in good order.
The Owner may elect to allocate Premium Payments to the Fixed Accounts. Initial
Premium Payments and subsequent Premium Payments, or portions thereof, and
transferred amounts allocated to a Fixed Account, less any amounts subsequently
withdrawn, will be credited with interest using the applicable guaranteed
minimum rates of interest. Excess interest may be credited. (See "Appendix A -
- -The Fixed Accounts.")
20
<PAGE> 25
Procedures for Telephone Transfers
Owners may effect telephone transfers by contacting a Variable Annuity Service
Center representative directly. Delta will undertake reasonable procedures to
confirm that instructions communicated by telephone are genuine. Before a
service representative accepts any request, the caller will be asked to verify
his or her identity. All calls will be recorded. All telephone transfers will be
confirmed by Delta in writing. Moreover, all telephone transfer transactions
will be assigned a unique confirmation number which will become part of the
Contract's history. Delta and the Variable Annuity Service Center are not liable
for any loss, cost or expense for action on telephone instructions which are
believed to be genuine in accordance with these procedures.
Aggregate Value
The Aggregate Value is the sum of Fixed Account Value and the Variable Account
Value. The value of each Investment Division is determined by multiplying the
number of Accumulation Units in the Investment Division by the value of an
Accumulation Unit for the Investment Division.
Accumulation Units
Premium Payments allocated to the Variable Account are converted into
Accumulation Units. This is done by dividing each Premium Payment by the value
of an Accumulation Unit for the Valuation Period during which the Premium
Payment is allocated to the Variable Account. The Accumulation Unit value for
each Investment Division will be set initially at $10. It may increase or
decrease from Valuation Period to Valuation Period. The Accumulation Unit Value
for any later Valuation Period is determined by multiplying the Accumulation
Unit Value for that Investment Division for the preceding Valuation Period by
the Net Investment Factor for the current Valuation Period. The Net Investment
Factor is calculated as follows:
The Net Investment Factor for any Investment Division for any Valuation Period
is determined by dividing (a) by (b) and then subtracting (c) from the result,
where:
(a) is the net result of:
(1) the net asset value (as described in the
prospectus for the Fund) of a Portfolio
share held in the Investment Division
determined as of the end of the Valuation
Period, plus
(2) the per share amount of any dividend or
other distribution declared by the Portfolio
on the shares held in the Investment
Division if the "ex-dividend" date occurs
during the Valuation Period, plus or minus
(3) a per share credit or charge with respect to
any taxes paid or reserved for by Delta
during the Valuation Period which are
determined by Delta to be attributable to
the operation of the Investment Division;
21
<PAGE> 26
(b) is the net asset value of a Portfolio share held in the
Investment Division determined as of the end of the preceding
Valuation Period; and
(c) is the equivalent for the Valuation Period of the annual
Mortality and Expense Risk and Administrative Expense Charges
for the Variable Account.
CHARGES AND DEDUCTIONS
Various charges and deductions are made under the Contract. These charges and
deductions are:
Surrender Charge
Upon a Withdrawal or Surrender, a Surrender Charge may be calculated and
deducted from the Aggregate Value. This charge reimburses Delta for expenses
incurred in connection with the promotion, sale and distribution of the
Contracts.
The Surrender Charge is a percentage of those Premium Payments received within
seven (7) years of the date of Withdrawal or Surrender. Premiums Payments are
allocated to the amount surrendered or withdrawn on a first-in, first-out basis.
The amount of the Surrender Charge is calculated by: (a) allocating Premium
Payments to the amount surrendered; (b) multiplying each allocated Premium
Payment that has been held under the Contract for the period shown below by the
charge shown below:
<TABLE>
<CAPTION>
Completed
Payment Years Charge
------------- ------
<S> <C>
0 7%
1 7%
2 6%
3 6%
4 5%
5 5%
6 2%
7+ 0
</TABLE>
and (c) adding the products of each multiplication in (b) above. Upon Surrender,
the Cash Value will be at least equal to (i) 91.5% of the Premium Payments; (ii)
plus or minus increases or decreases in the Variable Account, (iii) plus any
interest credited to Fixed Account One, (iv) plus any interest credited to the
Fixed Account Two Cash Value and the Fixed Account Three Cash Value, (v) less
any Withdrawals, (vi) less applicable premium tax and applicable fees.
22
<PAGE> 27
Any applicable Annual Contract Fee will be deducted before application of the
Surrender Charge. The Surrender Charge is not imposed on any benefit paid upon
the death of the Annuitant or upon amounts applied to a payment option if the
payment option has (a) life contingencies or (b) a period certain extending at
least ten years past the last Premium Payment date, provided there is no
guaranteed commutation of payment. Payment of the death benefit upon the death
of an Owner who is not the Annuitant is subject to a charge. The Surrender
Charge is waived in some states for Withdrawals made as a result of terminal
illness or confinement of the Annuitant to a nursing home so long as certain
requirements are met.
After the first Contract Anniversary, the Owner may make a Withdrawal free of
any Surrender Charge twice per Contract Year. The maximum Free Withdrawal Amount
in any Contract Year is the greater of: (a) 10% of total Premium Payments
credited to the Contract for more than one year, or (b) accumulated earnings not
previously withdrawn. For this purpose, accumulated earnings not previously
withdrawn is the Aggregate Value less Premium Payments plus Withdrawals charged
to Premium Payments. Withdrawals of the maximum Free Withdrawal Amount are not
charged to Premium Payments. Withdrawals in excess of the maximum Free
Withdrawal Amount are charged to Premium Payments on a first in, first out
basis.
For a Withdrawal, unless the Owner designates otherwise, the Surrender Charge
will be deducted proportionately from the Investment Division(s) and/or Fixed
Account One from which the Withdrawal is made. If the value(s) of such
account(s) is insufficient, the amount payable on the Withdrawal will be net of
any remaining Surrender Charges, unless the Owner and Delta agree otherwise. For
Surrenders and partial Withdrawals made from Fixed Account Two or Fixed Account
Three, see Appendix A.
Mortality and Expense Risk Charge
On each Valuation Date, Delta deducts a Mortality and Expense Risk Charge which
is equal, on an annual basis, to 1.25% of the average daily net assets of the
Variable Account. The mortality risks assumed by Delta arise from its
contractual obligation to make annuity payments after the Maturity Date for the
life of the Annuitant in accordance with annuity rates guaranteed in the
Contract, regardless of how long the Annuitant lives and how long all Annuitants
as a group live. Delta also assumes a mortality risk in connection with its
payment of the minimum Death Benefit under the Contract. The expense risk
assumed by Delta is that all actual expenses involved in administering the
Contract, including Contract maintenance costs and the costs of other services
may exceed the amount recovered from the Administrative Expense Charge and the
Annual Contract Fee or Annuity Fee. The Mortality and Expense Risk Charge is
guaranteed by Delta and cannot be increased.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by Delta. Conversely, if the amount deducted
proves more than sufficient, the excess will be added to Delta's surplus.
23
<PAGE> 28
Administrative Expense Charge
Delta deducts daily an Administrative Expense Charge which is equal, on an
annual basis, to .15% of the average daily net assets of the Variable Account.
This charge, the Annual Contract Fee and the Annuity Fee discussed below are for
expenses incurred in administering the Contract. The charge is guaranteed by
Delta and cannot be increased.
Annual Contract Fee
Prior to the Maturity Date, Delta imposes an Annual Contract Fee of $33 to be
deducted from the Variable Account and Fixed Account One on the last Valuation
Date of each Contract Year or on the date of Surrender, if applicable. This
charge is inapplicable to Aggregate Values of $100,000 or more or when there is
no value in both Fixed Account One and the Variable Account. The Annual Contract
Fee is deducted by canceling Accumulation Units from each applicable Investment
Division in the ratio that the value of each Investment Division bears to the
sum of the Variable Account and Fixed Account One values. The Annual Contract
Fee is deducted from Fixed Account One in the ratio that Fixed Account One value
bears to the sum of the Variable Account and Fixed Account One values. When the
Contract is annuitized, the Annual Contract Fee will be prorated. When the
Contract is surrendered for its full value on other than a Contract Anniversary,
the Annual Contract Fee will be charged in full.
Annuity Fee
After the Maturity Date, there is an Annuity Fee of $33 imposed each Contract
Year. This charge will be deducted in equal amounts from each Variable Annuity
payment. The fee is waived if the Cash Value applied to the Variable Annuity
settlement option is $100,000 or more.
Premium Taxes
Delta may, where such taxes are imposed by state law, deduct premium taxes
relative to the Contract at the earlier of (i) the date a surrender,
cancellation or annuitization occurs, or (ii) the date such premium tax is due.
Applicable premium tax rates depend upon such factors as the Owner's current
state of residency, and the insurance laws and the status of Delta in states
where premium taxes are incurred. Current premium tax rates range from 0% to
3.5%. Applicable premium tax rates are subject to change by legislation,
administrative interpretations or judicial acts.
Income Taxes
Under present laws, Delta will incur state and local taxes (in addition to the
premium taxes described above) in several states. At present, these taxes are
not significant. If they increase, however, Delta may make charges for such
taxes.
Delta does not expect to incur any federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Contract. (See "Tax Status.") Based upon
24
<PAGE> 29
these expectations, no charge is being made currently to the Variable Account
for corporate federal income taxes which may be attributable thereto.
Delta will review the question of a charge to the Variable Account for corporate
federal income taxes periodically. Such a charge may be made in future years for
any federal income taxes incurred by Delta. This might become necessary if the
tax treatment of Delta is ultimately determined to be other than what Delta
currently believes it to be, if there are changes made in the federal income tax
treatment of annuities at the corporate level, or if there is a change in
Delta's tax status. In the event that Delta should incur federal income taxes
attributable to investment income or capital gains retained as part of the
reserves under the Contracts, the Cash Value would be correspondingly adjusted
by any provision or charge for such taxes.
While Delta is not currently maintaining a provision for federal income taxes,
Delta has reserved the right to establish a provision for income taxes if it
determines, in its sole discretion, that it will incur a tax as a result of the
operation of the Variable Account. Delta will, in a manner it deems appropriate,
deduct for any income taxes incurred by it as a result of the operation of the
Variable Account whether or not there is a provision for taxes and whether or
not it is sufficient.
Fund Expenses
There are other deductions from, and expenses paid out of, the assets of the
Portfolios which are described in the accompanying Fund prospectus.
Transfer Fee
An Owner may transfer all or part of the Aggregate Value in an Investment
Division to another Investment Division or the Fixed Accounts without the
imposition of any Transfer Fee if there have been no more than twelve transfers
made in the Contract Year. For additional transfers, Delta reserves the right to
deduct a Transfer Fee of $20 per transfer. Transfers made before the Maturity
Date will have the Transfer Fee deducted from the amount which is transferred if
the entire amount in the Investment Division is being transferred, otherwise
from the Investment Division from which the transfer is made. Any Transfer Fee
will be deducted in the ratio of the Aggregate Value transferred from each
Investment Division or Fixed Account to the total Aggregate Value transferred.
Prescheduled automatic dollar cost averaging and automatic asset rebalancing
transfers are not counted toward the applicable limit.
OTHER CONTRACT FEATURES
Ownership
The Owner has all rights and may receive all benefits under the Contract,
including the right to make Withdrawals from or surrender the Contract or change
the Owner's Beneficiary or the Annuitant's Beneficiary. The Owner may be changed
at any time. A request for change must be: (1) made in writing, and (2) received
and recorded by Delta at its Variable Annuity Service Center. The change
25
<PAGE> 30
will become effective as of the date the written request is signed. A new
designation of Owner will not apply to any payment made or action taken by Delta
prior to the time it was recorded.
For Non-Qualified Contracts, in accordance with Code Section 72(u), a deferred
annuity contract held by a corporation or other entity that is not a natural
person is not treated as an annuity contract for tax purposes. Accordingly, if
the Owner is not a natural person, income credited to the Contract is treated as
ordinary income received by the Owner during the taxable year. But in accordance
with Code Section 72(u), an annuity contract held by a trust or other entity as
agent for a natural person is considered held by a natural person.
Assignment
The Owner may assign the Contract at any time during his or her lifetime
subject to the rights of any assignee of record. Delta will not be bound by any
assignment until written notice is received and recorded by Delta at its
Variable Annuity Service Center. Delta will not be liable as to any payment or
other settlement made by Delta before such assignment has been recorded at
Delta's Variable Annuity Service Center. Delta is not responsible for the
validity or sufficiency of any assignment. If a Beneficiary designation is
revocable, any interest of the Beneficiary shall be subject to the rights of
the assignee. To the extent a Beneficiary's designation is irrevocable, no
assignment may be made without such Beneficiary's consent. Any part of the Cash
Value to which the assignee is entitled shall be payable to the assignee in one
sum.
If the Contract is issued pursuant to a Qualified Plan, it may not be assigned,
pledged or otherwise transferred except as may be allowed under applicable law.
Beneficiary
Beneficiaries are named when the Contract is applied for and, unless changed,
are entitled to receive any death benefits to be paid. The Annuitant's
Beneficiary is the person who is entitled to the death benefit upon the death of
the Annuitant. The Owner's Beneficiary is the person who is entitled to the
death benefit upon the death of the Owner prior to the Maturity Date.
Change of Beneficiary
The Owner may change a Beneficiary by filing a written request with Delta at its
Variable Annuity Service Center, unless an irrevocable Beneficiary designation
was previously filed. After the change is recorded, it will take effect as of
the date the request was signed. If the request reaches the Variable Annuity
Service Center after the Annuitant or Owner, as applicable, dies but before any
payment is made, the change will be valid. Delta will not be liable for any
payment made or action taken before it records the change.
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Annuitant
The Annuitant must be a natural person. If Delta chooses to make a joint and
survivor annuity payment option available in addition to the options provided in
the Contract, Joint Annuitants are allowed at the time of annuitization only.
The Annuitant has no rights or privileges prior to the Maturity Date. When an
Annuity Option is elected, the amount payable as of the Maturity Date is based
on the age and gender classification (in accordance with state law) of the
Annuitant, as well as the payment option selected and the Cash Value.
Transfers Among Accounts
The Owner may transfer all or part of the Aggregate Value in an Investment
Division to another Investment Division or to a Fixed Account without the
imposition of any fee or charge if there have been no more than twelve transfers
made in the Contract Year. For additional transfers, Delta reserves the right to
deduct a Transfer Fee of $20 per transfer. (See "Charges and Deductions Transfer
Fee".)
All transfers are subject to the following:
a. The deduction of any Transfer Fee that may be imposed. The
Transfer Fee will be deducted from the amount which is
transferred if the entire amount in the Investment Division or
the Fixed Account is being transferred, otherwise from the
Investment Division or the Fixed Account from which the
transfer is made.
b. The minimum amount which may be transferred is $1,000;
however, the minimum amount which may be transferred to Fixed
Account Two or Three is $5,000.
c. The total transfers and Withdrawals each Contract Year from
Fixed Account One, Fixed Account Two and Fixed Account Three
are limited to 10% of the Fixed Account One Aggregate Value
and Fixed Account Two and Fixed Account Three Cash Value,
respectively. Exceptions apply to Dollar Cost Averaging and
Surrender.
d. No partial transfer will be made if the Owner's remaining
Aggregate Value will be less than $1,000 in an Investment
Division or in Fixed Account One or the remaining Cash Value
will be less than $5,000 in Fixed Accounts Two or Three. If
the value is below these minimums, Delta will transfer the
remaining value.
e. Transfers will be effected at the end of the Valuation Period
during which Delta receives a written transfer request (or by
telephone, if authorized) containing all required information.
Transfers are not permitted during the right-to-examine
period.
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f. Any transfer request must clearly specify the amount which is
to be transferred and the Investment Division(s) and/or Fixed
Account(s) which are to be affected.
g. Delta reserves the right to defer transfers from the Fixed
Accounts for up to six months after date of receipt of the
transfer request.
h. Transfers involving the Investment Divisions are subject to
such restrictions as may be imposed by the Portfolios.
i. Delta reserves the right at any time and without prior notice
to any party to terminate, suspend or modify the transfer
privileges described above.
Surrenders and Withdrawals
Before the Maturity Date of the Contract, Delta will, upon written request by
the Owner, allow the Surrender or Withdrawal of all or a portion of the Cash
Value of the Contract. Withdrawals from the Variable Account will result in the
cancellation of Accumulation Units from each applicable Investment Division in
the ratio that the value of each Investment Division bears to the total Variable
Account Value, unless the Owner specifies in writing in advance which units are
to be canceled. Delta will pay the amount of any Surrender or Withdrawal within
seven (7) days of receipt of a valid request, unless the "Delay of Payments"
provision is in effect. (See "Delay of Payments and Transfers.") Certain tax
penalties and restrictions may apply to Surrenders and Withdrawals from the
Contract. (See "Tax Status.") Owners should consult their tax adviser.
The minimum amount which may be withdrawn is $1,000. The minimum Contract
balance required after Withdrawal is $5,000, while maintaining all other minimum
balance requirements: $1,000 Aggregate Value in each Investment Division and in
Fixed Account One and $5,000 Cash Value in Fixed Account Two and Fixed Account
Three.
NOTE: Only one of the following can be in effect at any given time:
Systematic Withdrawal, Dollar Cost Averaging, or Automatic Asset Rebalancing.
Systematic Withdrawal
After the right-to-examine period and prior to the Maturity Date, an Owner may
elect to have Withdrawals, not exceeding the Free Withdrawal Amount, made
automatically from one or more Investment Divisions on a monthly, quarterly or
annual basis without incurring a Surrender Charge. To begin Systematic
Withdrawals, the Aggregate Value must be at least $25,000 for monthly
Withdrawals and $10,000 for quarterly or annual Withdrawals. The minimum
withdrawal amount under this option is $500. Withdrawals will be in the
percentage allocations specified by the Owner. If no specifications are made,
Withdrawals will be pro rata from all Investment Divisions with value.
Systematic Withdrawals may be made from the Variable Account or Fixed Account
One. Systematic Withdrawals may not be made from Fixed Account Two or Fixed
Account Three. The annual
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Systematic Withdrawal amount cannot exceed the Free Withdrawal Amount as of the
election date of the Systematic Withdrawal and any anniversary of such election.
Withdrawals in excess of the Systematic Withdrawal amount are subject to the
Surrender Charge. Under this option, no free Withdrawals may be made.
Accordingly, an Owner who has made a free Withdrawal in a Contract Year may not
elect the option until the next year.
There is no current charge for Systematic Withdrawal, but Delta reserves the
right to charge an annual fee of an amount not to exceed $45 for administrative
expenses associated with this program.
Dollar Cost Averaging
Dollar Cost Averaging is a program available after the right-to-examine period
and prior to the Maturity Date which enables an Owner to systematically allocate
specified amounts from the Money Market Investment Division to other Investment
Divisions and from Fixed Account One to the Investment Divisions at regular
intervals so that the cost of the securities is averaged over time. Transfers
from the Money Market Investment Division may be made once per month. Transfers
from Fixed Account One may be made once per month and may not exceed 1/36th of
the Fixed Account Value of Fixed Account One at the time of election. The
minimum Money Market Investment Division and Fixed Account One value required to
elect this option is $10,000. The minimum transfer amount is $250. Dollar Cost
Averaging does not assure a profit or protect against a loss in declining
markets. Dollar Cost Averaging may not occur from the Money Market Investment
Division and Fixed Account One concurrently.
Dollar Cost Averaging will terminate when any of the following occurs: (a) the
number of designated transfers has been completed; (b) the value of the Money
Market Investment Division or Fixed Account One is insufficient to complete the
next transfer; (c) the Owner requests termination in writing and such writing is
received by the 25th of the month in order to cancel the transfer scheduled to
take effect the next month; (d) the Contract is surrendered; or (e) the Maturity
Date is reached.
There is no current charge for Dollar Cost Averaging, but Delta reserves the
right to charge an annual fee of an amount not to exceed $25 for administrative
expenses associated with this program. Transfers pursuant to the Dollar Cost
Averaging option are not deemed transfers in calculating any applicable Transfer
Fee.
Automatic Asset Rebalancing
Selection of this option allows an Owner to maintain the percentage of the
Owner's Variable Account Value allocated to each Investment Division at a
pre-set level. For example, an Owner might specify that 50% of the Variable
Account Value of a Contract be allocated to the Quality Bond Portfolio and 50%
of the Variable Account Value be allocated to the Growth and Income Portfolio.
Over time, the variations in each such Investment Division's investment results
will shift this balance. If you elect this rebalancing option, on the 25th day
of the month, Delta will automatically transfer your Variable Account Value back
to the percentages you specify. The asset allocation percentages can be changed
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with 30 days written notice. You may choose to have reallocations made
quarterly, semi-annually or annually.
This option is available after the right-to-examine period and prior to the
Maturity Date. The minimum Variable Account Value required to elect this option
is $10,000, however, there is no minimum amount which must be allocated among
the Investment Divisions.
There is no current charge for Automatic Asset Rebalancing, but Delta reserves
the right to charge an annual fee of an amount not to exceed $25 for
administrative expenses associated with this program. Transfers pursuant to the
Automatic Asset Rebalancing option are not deemed transfers in calculating any
applicable Transfer Fee.
Internal Segmented Annuity
For a term of three (3), five (5), seven (7) or ten (10) years, an Owner may
elect to invest part of the Premium Payments into an Investment Division or into
Fixed Accounts Two or Three, and the balance deposited into Fixed Account One.
The portion to be invested in Fixed Account One is determined by Delta in a
manner to ensure that the deposit is at least equal to the original Premium
Payment at the conclusion of the period of time selected.
Rider
For no additional Premium Payment, the Contract contains a benefit rider which
provides for the Surrender or Withdrawal of Aggregate Value without the
imposition of a Surrender Charge if the Annuitant enters a qualified institution
or becomes terminally ill. If certain requirements are met, the Owner is
automatically entitled to this benefit if it has been approved by the state in
which the Contract is issued. The Annuitant must have been age 70 or less upon
the Effective Date of the Contract and the Contract must have been in force at
least one year. Surrenders and Withdrawals may be taxable transactions and,
prior to age 59 1/2, may be subject to a 10% penalty.
Delay of Payments and Transfers
Delta reserves the right to suspend or postpone payments or transfers for any
period when:
a. the New York Stock Exchange is closed (other than customary
weekend and holiday closings);
b. trading on the New York Stock Exchange is restricted;
c. the Securities and Exchange Commission declares an emergency
exists as a result of which disposal of securities held in the
Variable Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Variable
Account's net assets;
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d. a governmental body having jurisdiction over the Variable
Account by order permits such delay; or
e. any Premium Payment paid to Delta by check or draft has not
yet cleared.
The applicable rules and regulations of the Securities and Exchange Commission
will govern as to whether the conditions described above exist. When permitted
by law, Delta may defer payment of any amount due from the Fixed Accounts,
whether a transfer, Withdrawal or Surrender, for up to 6 months from the date of
the request.
Death of the Owner prior to the Maturity Date
In the event of death of the Owner prior to the Maturity Date, a death benefit
is payable to the Owner's Beneficiary. The value of the death benefit will be
determined as of the Valuation Period next following the date both due proof of
death (a certified copy of the Death Certificate) and a payment election are
received by Delta. The value of the death benefit is equal to the Cash Value.
The Owner's Beneficiary may elect the Cash Value to be paid as follows:
a. payment of the entire death benefit within five years of the
date of the death of the Owner;
b. payment over the lifetime of the Owner's Beneficiary or over a
period not extending beyond the life expectancy of the Owner's
Beneficiary, with distribution beginning within one year of
the date of death of the Owner; or
c. if the Owner's Beneficiary is the Owner's spouse, he/she can
continue the Contract in his/her own name as the Owner.
If the Owner is not a natural person, the death of the Annuitant shall be
treated as the death of the Owner for purposes of applying these rules. If death
occurs prior to the Maturity Date and no payment election meeting the above
requirements is selected, a single sum settlement of the death benefit will be
made by Delta.
Death of the Owner on or after the Maturity Date
Upon the death of the Owner on or after the Maturity Date, all rights of the
Owner's Beneficiary are terminated.
Death of the Annuitant prior to the Maturity Date
If the Annuitant dies prior to the Maturity Date and the Annuitant is different
from the Owner, the death benefit shall be distributed to the Annuitant's
Beneficiary pursuant to a payment election selected by the Owner. Upon the death
of an Annuitant less than 81 years of age, the death benefit is equal to the
greatest of:
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a. the Aggregate Value as of the Valuation Period next following
the date on which due proof of death and a payment election
are received by Delta;
b. the Premium Payments less Withdrawals and any Surrender
Charges; or
c. the step-up benefit plus Premium Payments less Withdrawals and
any Surrender Charges since the last step-up anniversary.
The step-up benefit on the Effective Date of the Contract is the Initial
Premium. At each step-up anniversary, the step-up benefit is redetermined to be
the Premium Payments made less Withdrawals and any Surrender Charges accumulated
annually at 5% per year simple interest. The step-up anniversaries are the
effective date and every fifth Contract Anniversary thereafter until the
Annuitant's 76th birthday, and the Annuitant's 76th birthday. The step-up
benefit shall not exceed 200% of the Premium Payments, less Withdrawals and
Surrender Charges.
Upon the death of an Annuitant age 81 or above, the death benefit is equal to
the greater of:
a. the Aggregate Value as of the Valuation Period next following
the date on which due proof of death and a payment election
are received by Delta; or
b. the Premium Payments less Withdrawals and any Surrender
Charges.
If the Annuitant is the Owner, payment of the death benefit shall be made under
the provisions relating to death of the Owner. If the Annuitant is not the
Owner, distribution of the death benefit to the Annuitant's Beneficiary shall be
made under a settlement option selected by the Owner. If the Annuitant dies
prior to the Maturity Date and no payment election is selected, a single sum
settlement of the death benefit will be made by Delta.
Death of the Annuitant on or after the Maturity Date
If the Annuitant dies on or after the Maturity Date, the death benefit, if any,
will be paid to the Annuitant's Beneficiary as specified in the Annuity Option
selected. Delta will require proof of the Annuitant's death.
Change in Operation of Variable Account
Delta reserves the right to take certain actions in connection with its
operations and the operations of the Variable Account. These actions will be
taken in accordance with applicable laws (including obtaining any required
approval of the Securities and Exchange Commission and any other required
regulatory approvals). If required by law, Delta will seek approval by the
Owners.
Specifically, Delta reserves the right to:
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- - Make additional Investment Divisions available. The Investment
Divisions will invest in investment portfolios the Company finds
suitable for this Contract.
- - Eliminate Investment Divisions from the Variable Account, combine two
or more Investment Divisions, or substitute a new portfolio for the
portfolio in which an Investment Division invests. A substitution may
become necessary if , in the Company's judgment, a portfolio no longer
suits the purposes of this Contract. This may happen due to a change in
the laws or regulations, or a change in a portfolio's investment
objectives or restrictions. This may also happen if the portfolio is no
longer available for investment, or for some other reason.
- - Combine the Variable Account with other separate accounts.
- - Deregister the Variable Account under 1940 Act when registration of the
Variable Account is no longer required.
- - Operate the Variable Account as a management company under the 1940
Act.
- - Restrict or eliminate any of the voting rights of Owners or other
persons who have voting rights as to the Variable Account.
- - Make any changes required by the 1940 Act or its related requirements.
Delta also reserves the right to change the name of the Variable Account.
Modification
The Contract may be modified by Delta without consent (except in Kansas,
Pennsylvania and Washington) if such modification: (i) is necessary to allow the
Contract or the Variable Account to comply with, any law or regulation issued by
a governmental agency to which Delta or the Variable Account is subject; or (ii)
is necessary to attempt to assure continued qualification of the Contract under
the Code or other federal or state laws relating to annuity contracts. In the
event of any such modification, Delta may make appropriate endorsement to the
Contract to reflect such modification.
Discontinuance
Delta reserves the right to limit or discontinue the offer and issuance of new
Contracts. Such limitation or discontinuance shall have no effect on rights or
benefits with respect to any Contracts issued prior to the effective date of
such limitation or discontinuance.
ANNUITY PROVISIONS
Maturity Date
The Owner selects a Maturity Date at the time of application. The Maturity Date
may not be later than the Annuitant's 109th birthday and may be as early as
desired subject to any applicable Surrender Charges.
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Change in Maturity Date or Annuity Options
The Owner may, upon written notice to Delta, change the Maturity Date at any
time prior thereto. The Maturity Date cannot be accelerated without Delta's
written consent. In addition, the Owner may, upon at least thirty (30) days
prior written notice to Delta, select and/or change an Annuity Option at any
time prior to the Maturity Date. On and after the Maturity Date, the election of
an Annuity Option is irrevocable.
Annuity Options
Instead of having the proceeds paid in one sum, the Owner may select one of the
Annuity Options (described below) or divide the Cash Value into two or more
parts and select an Annuity Option for each part. These may be on a fixed or
variable basis, or a combination thereof. At least 20% of Cash Value must be
applied to each option selected. The Annuity Option(s) shall be selected prior
to the Maturity Date, otherwise the Cash Value will be paid out as a life
annuity with a guarantee of ten years of payments. In such event, annuity
payments under Option 4 will be made on a variable basis, to the extent any of
the Cash Value has been allocated to the Variable Account.
If the Cash Value is less than $2,000 or the initial payment to the Payee is
less than $25, Delta reserves the right to pay the proceeds in one sum.
Variable Payments
The actual dollar amount of variable annuity payments is dependent upon (i) the
Cash Value at the time of annuitization, (ii) the annuity table specified in the
Contract, (iii) the Annuity Option selected, and (iv) the investment performance
of the Investment Division(s) selected.
The dollar amount of the first variable annuity payment is determined by
applying the Cash Value to the applicable table using the age and gender (in
accordance with state law) of the Annuitant. The number of Annuity Units is then
determined by dividing this dollar amount by the then-current Annuity Unit
value. Thereafter, the number of Annuity Units remains unchanged during the
period of annuity payments. This determination is made separately for each
Investment Division of the Variable Account. The number of Annuity Units is
determined for each Investment Division as of the date annuity payments are to
begin. The dollar amount determined for each Investment Division and the Fixed
Account will then be aggregated for purpose of making payments.
The dollar amount of the second and later variable annuity payments is equal to
the number of Annuity Units determined for each Investment Division multiplied
by the Annuity Unit value for that Investment Division as of the Valuation
Period 10 days prior to the due date of the payment.
The annuity tables contained in the Contract are based on three and a half
percent (3.5%) and five percent (5%) assumed return rates. The Owner may select
either rate in selecting a Payment Option. If the actual return rate exceeds the
rate selected, payments will increase. Conversely, if the actual rate is less
than the selected rate, annuity payments will decrease. Thus, if an Owner
selects a 3.5%
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assumed return rate, the initial payment will be lower, but will rise more
quickly and fall less quickly than if a 5% assumed return rate were selected. If
no selection is made, the assumed return rate is 3.5%.
The Annuitant receives the value of a fixed number of Annuity Units each payment
period (e.g., each month). The value of a fixed number of Annuity Units will
reflect the investment performance of the Investment Division selected and the
amount of each annuity payment will vary accordingly.
The Annuity Unit value for an Investment Division is determined by multiplying
the Annuity Unit value for that Investment Division for the preceding Valuation
Period by the Net Investment Factor for the current Valuation Period (calculated
as described on page of this Prospectus) and multiplying the result by a daily
factor to neutralize the assumed return rate which is built into the annuity
rate tables. It may increase or decrease from Valuation Period to Valuation
Period.
After the Maturity Date, the Owner may, by written request to the Variable
Annuity Service Center, exchange Annuity Units of one Investment Division for
Annuity Units of equivalent value in another Investment Division up to twelve
times in each Contract Year.
Fixed Payments
The dollar amount of the fixed annuity payments is determined by applying the
available value (after deduction of any premium taxes not previously deducted)
to the table using the age and gender (in accordance with state law) of the
Annuitant based upon a guaranteed interest rate of 3%. Under a fixed option,
once the selection has been made and payments have begun, the amount of the
payments will not vary.
Commutation of Fixed Annuity Payments
Delta will guarantee to commute the remaining payments under any Fixed Annuity
settlement option with period certain payments; provided, however, that
Surrender Charges were not waived upon annuitization. The amount will be the
present value of the remaining period certain payments based on an interest rate
established by Delta at the Maturity Date. After commutation, the Owner and the
Annuitant will have no future interest in the Contract.
Available Annuity Options
Delta permits the Annuity Options to be paid on a monthly, quarterly,
semi-annual or annual basis. The fixed Annuity Options currently available are
Options 1 through 6. The variable Annuity Options currently available are
Options 3 through 6.
Option 1 - Payments of Designated Amount. Delta will make
periodic installment payments in such amounts (i.e., in dollars and/or
Annuity Units) selected by Annuitant and agreed to by Delta until the
Cash Value is fully paid. The installment dollar amounts will be equal
and the unpaid portion will have interest credited at a rate of not
less than 3% per annum.
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Option 2 - Annuity Certain. Delta will make periodic payments for a
number of years selected of not less than 5 or more than 30 years. The
installment dollar amounts will be equal.
Option 3 - Life Annuity. Delta will make periodic payments during the
remaining life of the Annuitant, ceasing with the last payment due
prior to the death of the Annuitant. If a Fixed Annuity is chosen, the
monthly dollar amounts will be equal. If a Variable Annuity is chosen,
the number of Annuity Units of each installment will be equal, but the
dollar amounts of each installment will vary based on the Annuity Unit
values of the Investment Division chosen.
Option 4 - Life Annuity with Period Certain. Delta will make periodic
payments during the life of the Annuitant, but at least for the
guaranteed period of 10 or 20 years, as selected. If a Fixed Annuity is
chosen, the monthly dollar amounts will be equal. If a Variable Annuity
is chosen, the number of Annuity Units of each installment will be
equal, but the dollar amounts of each installment will vary based on
the Annuity Unit values of the Investment Division chosen.
Option 5 - Life Annuity with Cash or Unit Refund. Delta will make
periodic payments during the remaining lifetime of the Annuitant. The
Annuitant's Beneficiary may receive an additional payment. If a Fixed
Annuity is chosen, the additional payment, if any, will be the Cash
Value applied to this option less the total of all prior payments. If a
Variable Annuity is chosen, the additional payment, if any, will be the
current value of the number of Annuity Units credited at Maturity Date
less the number of Annuity Unites that have been paid. For this
purpose, the number of Annuity Units credited equals the Cash Value
applied to this option divided by the Annuity Unit Value at the date
used to calculate the first annuity payment.
Option 6 - By Agreement. Delta will make periodic installments in any
other method mutually agreed upon (e.g., joint and survivor annuity).
Evidence of Survival
Delta reserves the right to require evidence of the survival of any Payee at the
time any payment to such Payee is due under the following Payment Options: Life
Annuity, Life Annuity with Period Certain, Life Annuity with Cash or Unit
Refund, or any other method selected which depends upon the Payee being alive on
a certain date.
Endorsement of Annuity Payments
Delta will make each annuity payment by check. Each check must be personally
endorsed by the Payee or Delta may require that proof of the Annuitant's
survival be furnished.
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DISTRIBUTION OF THE CONTRACT
Delta Life Securities, Inc. ("DLS"), Memphis, Tennessee, acts as the principal
underwriter and the distributor of the Contract as well as of variable life
insurance policies and other variable annuity contracts which are or may be
issued by Delta. DLS, a registered broker-dealer under the Securities Exchange
Act of 1934, is a wholly-owned subsidiary of Delta Life and Annuity Company. Its
principal offices are located at 530 Oak Court, Suite 200, Memphis, Tennessee
38117. The Contract is offered on a continuous basis. DLS and Delta may enter
into agreements to sell the Contract through various broker-dealers whose agents
are licensed to sell the Contract.
Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions, up to an amount equal to 6% of Premium
Payments, for promotional or distribution expenses associated with the marketing
of the Contracts. To the extent that the Surrender Charge is insufficient to
cover the actual cost of distribution, Delta may use any of its corporate
assets, including amounts derived from the Mortality and Expense Risk Charge, to
make up any difference.
PERFORMANCE DATA
From time to time, Delta may advertise yields and total returns for the
Investment Divisions of the Variable Account. In addition, Delta may advertise
the effective yield of the Money Market Investment Division. These figures will
be based on historical information for various periods of time measured from the
date the Investment Division commenced operations. They are not intended to
indicate future performance.
Money Market Investment Division
The yield of the Money Market Investment Division refers to the annualized
income generated by an investment in that Investment Division over a specified
seven-day period. The yield is calculated by assuming that the income generated
for that seven-day period is generated each seven-day period over a 52-week
period and is shown as a percentage of the investment. The effective yield is
calculated similarly but, when annualized, the income earned by an investment in
that Investment Division is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Other Investment Divisions
The yield of the Quality Bond Investment Division refers to the annualized
income generated by an investment in that Investment Division over a specified
thirty-day period. The yield is calculated by assuming that the income
generated by the investment during that thirty-day period is generated each
thirty-day period over a 12-month period and is shown as a percentage of the
investment.
The total return of the Capital Appreciation, Growth and Income, Managed Assets,
Small Cap, Small Company Stock, Disciplined Stock, International Value,
International Equity and Quality Bond Investment Divisions refers to return
quotations for various periods of time including, but not limited
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to, 1, 5 and 10 year periods or, if different, a period measured from the date
the Investment Division commenced operations. The total return quotations will
represent the average annual compounded rates of return that would equate an
initial investment of $1,000 to the redemption value of that investment (before
deduction of any applicable Surrender Charge) as of the last day of each of the
periods for which total return quotations are provided.
The yield calculations do not reflect the effect of any Surrender Charge that
may be applicable to a particular Contract. To the extent that the Surrender
Charge is applicable to a particular Contract, the yield of that Contract will
be reduced.
For additional information regarding the yields and total returns calculated
using the standard formats briefly described above, please refer to the
Statement of Additional Information.
Performance Ranking
Delta may from time to time also disclose average annual total return in
non-standard formats and cumulative total return for the Investment Divisions.
The non-standard average annual total return and cumulative total return will
assume that no Surrender Charge is applicable. Delta may from time to time also
disclose yield, standard total returns, and non-standard total returns for the
Portfolios of the Funds, but only if the performance data for the Portfolios is
accompanied by comparable data for the corresponding Investment Division in
equal prominence.
All non-standard performance data will only be disclosed if the standard
performance data for the same period, as well as for the required periods, is
also disclosed. For additional information regarding the calculation of other
performance data, please refer to the Statement of Additional Information.
TAX STATUS
NOTE: The following description is based upon Delta's understanding of current
federal income tax law applicable to annuities in general and is not intended as
tax advice. Delta cannot predict the probability that any changes in such laws
will be made. Owners are cautioned to seek competent tax advice regarding the
possibility of such changes. Delta does not guarantee the tax status of the
Contract. Owners bear the complete risk that the Contract may not be treated as
an "annuity contract" under federal income tax laws. Moreover, no attempt has
been made to consider any issues under the federal gift and estate taxes or any
applicable state or other taxes.
The Contract may be purchased on a non-tax qualified basis ("Non-Qualified
Contract") or purchased for use in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). Qualified Contracts are designed
for use in connection with plans entitled to special income tax treatment under
Sections 401, 403(b), 408 and 457 of the Code and under the Texas Optional
Retirement Program. The ultimate effect of federal income taxes on the amounts
held under a Contract, on annuity payments, and on the economic benefit to the
Owner, the Annuitant, or the Beneficiary may depend on the type of retirement
plan, and on the tax status of the individual
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concerned. In addition, certain requirements must be satisfied in purchasing a
Qualified Contract and receiving distributions from a Qualified Contract in
order to continue receiving favorable tax treatment. Therefore, purchasers of
Qualified Contracts should seek competent legal and tax advice regarding the
suitability of the Contracts for their situation, the applicable requirements,
and the tax treatment of the rights and benefits of the Contracts. The following
discussion assumes a Qualified Contract is purchased with proceeds from and/or
contributions under retirement plans that qualify for the intended special
federal income tax treatment. In addition, the following discussion is based
upon the assumption that the Contracts qualify as annuity contracts for federal
income tax purposes.
General
Section 72 of the Code governs taxation of annuities in general. An Owner is not
taxed on increases in the value of a Contract until distribution occurs, either
in the form of a lump sum payment or as annuity payments under the Annuity
Option elected. The owner of a Non-Qualified Contract must be a natural person
or an agent for a natural person in order for the Contract to receive this
favorable income tax treatment. For a lump sum payment received as a total
surrender (total redemption), the recipient is taxed on the portion of the
payment that exceeds the cost basis of the Contract. For Non-Qualified
Contracts, this cost basis is generally the Premium Payments, while for
Qualified Contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.
For annuity payments made under a Non-Qualified Contract, the portion of each
annuity payment that represents nontaxable return of basis is generally equal to
the total investment in the Contract as of the Maturity Date, divided by the
expected total value of annuity payments made during the term of the Contract.
For annuity payments made under a Qualified Plan, the portion of each annuity
payment that represents nontaxable return of basis is generally zero, therefore,
each annuity payment is usually completely taxable at ordinary income tax rates.
Delta is taxed as a life insurance company under Subchapter L of the Code. For
federal income tax purposes, the Variable Account is not a separate entity from
Delta, and its operations form a part of Delta. Accordingly, the Variable
Account will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Delta does not expect to incur any federal income tax
liability with respect to investment income and net capital gains arising from
the activities of the Variable Account retained as part of the reserves under
the Contract. Based on this expectation, it is anticipated that no charges will
be made against the Variable Account for federal income taxes. If, in future
years, any federal income taxes or other economic burden are incurred by Delta
with respect to the Variable Account or the Contracts, Delta may make a charge
for any such amounts that are attributable to the Variable Account.
Diversification
Section 817(h) of the Code imposes 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
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adequately diversified in accordance with regulations prescribed by the United
States Treasury Department ("Treasury Department"). Disqualification of the
Contract as an annuity contract would result in imposition of federal income tax
to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 1, 1989, the Treasury Department adopted regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
Delta intends that the Fund underlying the Contract will be managed in such a
manner as to comply with these diversification requirements.
The Treasury Department has indicated that guidelines may be forthcoming under
which a variable annuity contract will not be treated as an annuity contract for
tax purposes if the owner of the contract has excessive control over the
investments underlying the contract (i.e., by being able to transfer values
among Investment Divisions with only limited restrictions). The issuance of such
guidelines may require Delta to impose limitations on an Owner's right to
control the investment. It is not known whether any such guidelines would have a
retroactive effect.
Distribution Requirements
Section 72(s) of the Code requires that in order to be treated as an annuity
contract for federal income tax purposes, any Non-Qualified Contract must
provide that (a) if any Owner dies on or after the Maturity 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 when the Owner died, and (b) if any Owner dies
prior to the Maturity Date, the entire interest in the Contract will be
distributed within five years after such death. If the Owner
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of the Contract is not an individual, the Annuitant will be treated as the Owner
for purposes of the required distribution rules under Section 72(s) of the Code.
The required distribution rules will be considered satisfied as to any amount
which is payable to or for the benefit of any individual designated as a
Beneficiary by the Owner and which is distributed over the life of such
individual or over a period not extending beyond the life expectancy of such
individual where the distributions begin not later than one year after the
Owner's death. If the surviving spouse of the Owner is designated as Beneficiary
by the Owner, the Contract may be continued with the surviving spouse as the new
Owner.
The Contract contains 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, Delta intends to review such provisions
and modify the Contract, if necessary, to comply with the Section 72(s)
requirements when clarified by regulation or otherwise. Future similar rules may
also apply to a Qualified Contract.
Multiple Contracts
The Code provides that multiple Non-Qualified Contracts which are issued during
a calendar year to the same contract owner by one company or its affiliates are
treated as one annuity contract for purposes of determining the tax consequences
of any distribution. Such treatment may result in adverse tax consequences,
including more rapid taxation of the distributed amounts from such combination
of contracts. Owners should consult a tax adviser prior to purchasing more than
one Non-Qualified Contract in any single calendar year.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign their
Contracts.
Withholding
Withholding of federal income taxes on the taxable portion of all distributions
may be required unless the recipient elects not to have any such amounts
withheld and properly notifies Delta of that election. Different rules may
apply to United States citizens or expatriates living abroad. Withholding is
mandatory for certain distributions from Qualified Contracts. In addition, some
states have enacted legislation requiring withholding.
Section 1035 Exchanges
Code Section 1035 generally provides that no gain or loss shall be recognized on
the exchange of one annuity contract for another. If the surrendered contract
was issued prior to August 14, 1982, the tax rules that formerly provided that
the surrender was taxable only to the extent the amount received exceeds the
owner's investment in the contract will continue to apply to amounts allocable
to
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investment in the contract before August 14, 1982. Special rules and
procedures apply to Code Section 1035 transactions. Prospective purchasers
wishing to take advantage of Code Section 1035 should consult their tax
advisers.
Tax Treatment of Withdrawals -- Non-Qualified Contracts
Section 72 of the Code governs the treatment of distributions from annuity
contracts. It provides that if the Cash Value exceeds the aggregate Premium
Payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includable in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the Payee reaches age 59 1/2; (b) by a Payee designated by
the Owner and received after the death of the Owner (or, if the Owner is a
non-natural person, the Annuitant); (c) if the Payee is totally disabled (for
this purpose disability is as defined in Section 72(m)(7) of the Code); (d) in a
series of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Payee or for the joint lives
(or joint life expectancies) of the Payee and his/her beneficiary; (e) under an
immediate annuity; or (f) which are allocable to Premium Payments made prior to
August 14, 1982.
The above information does not apply, except where noted, to Qualified
Contracts. However, separate tax withdrawal penalties and restrictions may apply
to such Qualified Contracts. (See "Tax Treatment of Withdrawals - Qualified
Contracts.")
Qualified Plans
The Contract offered by this Prospectus is designed to be suitable for use under
various types of Qualified Plans. Because of the minimum Premium Payment
requirements, the Contract may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contract issued pursuant to the plan. Although Delta
provides administration for the Contract, it does not provide administrative
support for Qualified Plans. Following are general descriptions of the types of
Qualified Plans with which the Contract may be used. Such descriptions are not
exhaustive and are for general informational purposes only. The tax rules
regarding Qualified Plans are very complex and will have differing applications,
depending on individual facts and circumstances. Each purchaser should obtain
competent tax advice prior to purchasing a Contract issued in connection with a
Qualified Plan.
Special favorable tax treatment may be available for certain types of
contributions and distributions (including special rules for certain lump sum
distributions). Adverse tax consequences may result from contributions in excess
of specified limits, distributions prior to age 59 1/2 (subject to certain
exceptions), distributions that do not conform to specified minimum distribution
rules, aggregate distributions in excess of a specified annual amount, and in
certain other circumstances. Therefore, Delta makes no attempt to provide more
than general information about use of the Contract with the
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various types of Qualified Plans. Purchasers and participants under Qualified
Plans as well as Annuitants and Beneficiaries are cautioned that the rights of
any person to any benefits under Qualified Plans may be subject to the terms
and conditions of the plan themselves, regardless of the terms and conditions
of the Contract issued in connection therewith.
Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans
Section 401(a) and 403(a) of the Code permit corporate employers to establish
various types of retirement plans for employees and self-employed individuals to
establish Qualified Plans for themselves and their employees. Such retirement
plans may permit the purchase of the Contract to provide benefits under the
plans.
Cash or Deferred Compensation Arrangements
Section 401(k) of the Code provides, in general, that a profit-sharing,
stock-bonus or pension plan will not fail to qualify under Section 401(a) merely
because it includes a qualified cash or deferred compensation arrangement. Under
such an arrangement, employees may individually elect to defer a portion of
current cash compensation by having their employers contribute it to a qualified
retirement trust.
Section 403(b) Plans
Under Section 403(b) of the Code, payments made by public school systems and
certain tax exempt organizations to purchase annuity policies for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, such payments may be subject to FICA (Social
Security) taxes. Additionally, in accordance with the requirements of the Code,
Section 403(b) annuities generally may not permit distribution of (i) elective
contributions made in years beginning after December 31, 1988, (ii) earnings on
those contributions, and (iii) earnings on amounts attributed to elective
contributions held as of the end of the last year beginning before January 1,
1989. Distributions of such amounts will be allowed only upon the death of the
employee, on or after attainment of age 59 1/2, separation from service,
disability, or financial hardship, except that income attributable to elective
contributions may not be distributed in the case of hardship.
Texas Optional Retirement Program
The Optional Retirement Program ("ORP") is available to certain employees of
Texas institutions of higher learning. ORP allows as the funding media for the
program fixed and variable annuity contracts purchased from any insurance or
annuity company qualified to do business in Texas, thus bringing the program
under the special tax treatment of Section 403(b) of the Code. Redemption of the
securities, however, is restricted. The benefits of an annuity purchased under
ORP, including the right to surrender the Contract, are available only if the
employee reaches the age of 70 1/2 or terminates participation in the program by
death, retirement or termination of employment in all Texas institutions of
higher learning.
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Individual Retirement Annuities
Sections 219 and 408 of the Code permit individuals or their employers to
contribute to an individual retirement program known as an Individual Retirement
Annuity ("IRA"). IRAs are subject to limitation on the amount which may be
contributed and deducted and the time when distributions may commence. In
addition, distributions from certain other types of qualified plans may be
placed into an IRA on a tax-deferred basis.
Deferred Compensation Plans
Section 457 of the Code, while not actually providing for a Qualified Plan as
that term is normally used, provides for certain deferred compensation plans
with respect to service for state governments, local governments, political
sub-divisions, agencies, instrumentalities and certain affiliates of these
entities, and tax exempt organizations which enjoy special treatment. The
Contract can be used with such plans. Under the plans, a participant may specify
the form of investment in which his or her participation will be made. If a plan
was in existence prior to August 20, 1996, all investments are owned by and
subject to the claims of the general creditors of the sponsoring employer until
December 31, 1998, or such earlier date as may be effected by plan amendment.
Amounts deferred under a plan created as of or after August 20, 1996, however,
must be held in trust, custodial account or annuity contract for the exclusive
benefit of plan participants and their beneficiaries.
Tax Treatment of Withdrawals -- Qualified Contracts
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any distribution from qualified retirement plans, including Contracts issued and
qualified under Code Sections 401, 403(b), 408 and 457. To the extent amounts
are not includable in gross income because they have been properly rolled over
to an IRA or to another eligible Qualified Plan, no tax penalty will be imposed.
The tax penalty will not apply to the following distributions: (a) if
distribution is made on or after the date on which the Payee reaches age 59 1/2;
(b) distributions following the death of the Owner or Annuitant (as applicable)
or disability of the Payee (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Payee or the joint lives (or
joint life expectancies) of the Payee and a Designated Beneficiary; (d)
distributions to a Payee who has separated from service after attaining age 55;
(e) distributions made to the extent such distributions do not exceed the amount
allowable as a deduction under Code Section 213 to the Payee for amounts paid
during the taxable year for medical care; and (f) distributions made to an
alternate payee pursuant to a qualified domestic relations order. The exceptions
stated in items (d), (e) and (f) above do not apply in the case of an IRA.
THE ABOVE DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES PERTAINING
TO THE DIFFERENT TYPES OF QUALIFIED PLANS THAT MAY BE FUNDED BY THE
CONTRACT IS ONLY A BRIEF SUMMARY AND IS NOT INTENDED AS TAX ADVICE. The
rules governing the provisions of Qualified Plans are extremely complex and
often difficult to comprehend. Anything less than full compliance with the
applicable rules, all of which are subject
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to change, may have significant adverse tax consequences. A prospective
purchaser considering the purchase of a Contract in connection with a Qualified
Plan should first consult a qualified and competent tax adviser with regard to
the suitability of the Contract as an investment vehicle for the Qualified Plan.
FINANCIAL STATEMENTS
Audited, statutory-basis financial statements of Delta as of and for periods
ended December 31, 1996, and December 31, 1995, are contained in the Statement
of Additional Information. No financial statements are included for the Variable
Account, which had not yet commenced operations as of the date of this
Prospectus.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account, the Distributor or
Delta is a party except for routine litigation which Delta does not believe is
relevant to the Contract offered by this Prospectus.
AVAILABLE INFORMATION
Delta has filed a registration statement (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933 relating to
the Contract offered by this Prospectus. This Prospectus has been filed as a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement and exhibits thereto. Reference is
hereby made to such Registration Statement and exhibits for further information
relating to Delta and the Contract. Statements contained in this Prospectus, as
to the content of the Contract and other legal instruments, are summaries. For a
complete statement of the terms thereof, reference is made to the instruments
filed as exhibits to the Registration Statement. The Registration Statement and
the exhibits thereto may be inspected and copied at the office of the Securities
and Exchange Commission, located at 450 Fifth Street, N.W., Washington, D.C.
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Appendix A - - The Fixed Accounts
The Fixed Accounts are made up of the general assets of Delta other than those
allocated to any separate account. The Fixed Accounts are part of Delta's
general account. Because of applicable exemptive and exclusionary provisions,
interests in the Fixed Accounts have not been registered under the Securities
Act of 1933 (the "1933 Act"), and neither the Fixed Accounts nor Delta's general
account has been registered under the Investment Company Act of 1940 (the "1940
Act"). Therefore, neither the Fixed Accounts nor any interest therein is
generally subject to regulation under the provisions of the 1933 Act or the 1940
Act. Accordingly, Delta has been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosure in this Prospectus relating
to the Fixed Accounts. These disclosures regarding the Fixed Accounts may,
however, be subject to certain applicable provisions of the Federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
The initial Premium Payment and any subsequent Premium Payment(s) will be
allocated to one or more of the Fixed Accounts to the extent elected by the
Owner at the time such payment is made. In addition, all or part of the
Aggregate Value of Fixed Account One and the Cash Value of Fixed Accounts Two
and Three may be transferred to one or more of the Fixed Accounts as described
under "Transfers Among Accounts."
Delta reserves the right to defer the payment or transfer of amounts withdrawn
from the Fixed Accounts for a period not to exceed six (6) months from the date
a proper request for Surrender, Withdrawal or transfer is received by Delta.
There are three Fixed Accounts. Fixed Account One, Fixed Account Two, and Fixed
Account Three differ from one another in the method of crediting income thereto.
- - Fixed Account One - Annual interest rate guarantee established by Delta
Delta guarantees that Premium Payments and transfers allocated to Fixed Account
One will earn a minimum fixed interest rate of 3.5% per year. Delta may credit
interest in excess of 3.5%. Periodically, but not less than annually, Delta will
declare interest rates that apply separately to amounts allocated in separate
time periods. The minimum value for Fixed Account One is $1,000.
- - Fixed Account Two - Indexed rate linked to the S&P 500(R) Index
Premium Payments and transfers to Fixed Account Two are invested in the Money
Market Investment Division until the next available purchase date. Purchase
dates generally occur weekly and are determined by Delta based on the volume of
Premium Payments and transfers into Fixed Account Two. Each allocation under a
Contract to Fixed Account Two has a Fixed Account Two Value. The Fixed Account
Two Value of an allocation is the greater of its Indexed Value or its Cash
Value. The Indexed Value is the allocation plus indexed increases less
Withdrawals. The Cash Value is the amount available for Withdrawal or Surrender
during the seven-year term. The Fixed Account Two Value is available at the end
of the seven-year term, upon the death of the Annuitant, or under
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the provisions of the Rider for the Annuitant's terminal illness or confinement
to a qualified institution.
Initially, the Indexed Value is equal to the allocation. Interest is credited to
the Indexed Value at an effective annual yield as follows. The effective annual
yield is the Index Rate less a guaranteed yield spread charge. The yield spread
charge is set at the beginning of each seven-year term and does not vary during
the term. The Index Rate is derived by comparing the initial S&P 500(R) Index
value (as of the time of the allocation to Fixed Account Two) and the highest
S&P 500(R) Index value on any allocation anniversary during the seven-year term.
The Index Rate is determined such that if the S&P 500(R) Index value were
accumulated for the seven-year term at this Index Rate to the allocation
anniversary at the end of the term the resulting value would equal the highest
S&P 500(R) Index value on any allocation anniversary, including the first day,
of the term period. The Index Rate is equal to:
[(Highest S&P 500(R) Index Value)/Starting S&P 500(R) Index Value)]1/7 - 1
where:
* Highest S&P 500(R) Index value is the highest S&P 500(R) Index value on
any allocation anniversary during the seven-year term.
* Starting S&P 500(R) Index value is the S&P 500(R) on the first day of
the seven-year term.
On each allocation anniversary during the seven-year term, the Indexed Value is
credited with interest at the effective annual yield calculated above. Such
interest is called an indexed increase. If the new effective annual yield is
higher than on the prior allocation anniversary, interest is credited as if the
new effective annual yield was in effect from the allocation date, unless
Withdrawals have been made. Withdrawals directly reduce the Indexed Value and
the amounts withdrawn do not receive further interest credits. Moreover, any
interest previously credited on Withdrawals does not receive any further
interest credits.
During the seven-year term, the Cash Value for each allocation is 90% of the
allocation plus the greater of guaranteed interest at 3% or indexed increases,
less any Withdrawals.
Allocations of Premium Payments and Aggregate Value to Fixed Account Two each
have seven-year terms that do not renew. Transfers and Withdrawals of at least
$1,000 may be made at any time during any seven-year term so long as the
transfer or Withdrawal does not reduce the Fixed Account Two Cash Value below
$5,000 (100% of Fixed Account Two Cash Value may be withdrawn or transferred at
any time) and no more than 10% of the Fixed Account Two Cash Value has been
withdrawn and/or transferred during the Contract Year. The minimum Fixed Account
Value for Fixed Account Two is $5,000. The minimum subsequent Premium Payment or
transfer of Aggregate Value to Fixed Account Two is $5,000.
Allocations to Fixed Account Two may be surrendered or withdrawn; however,
during each allocation's seven-year term the surrender value is ninety percent
(90%) of the allocation less
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Withdrawals plus the greater of three percent (3%) compounded annually or any
indexed increases credited to date. Moreover, any amounts withdrawn do not
receive any future indexed increases and interest attributable to the amount of
the Withdrawal does not receive any future indexed increases.
The S&P 500(R) Index is the Standard & Poor's 500(R) Composite Stock Price Index
and represents more than 70% of the total domestic U.S. stock market value.
- - Fixed Account Three - Indexed rate linked to the Delta International
Composite Index
Premium Payments and transfers to Fixed Account Three are invested in the Money
Market Investment Division until the next available purchase date. Purchase
dates generally occur monthly and are determined by Delta based on the volume of
Premium Payments and transfers into Fixed Account Three. Each allocation under a
Contract to Fixed Account Three has a Fixed Account Three Value. The Fixed
Account Three Value of an allocation is the greater of its Indexed Value or its
Fixed Account Three Cash Value. The Indexed Value is the allocation plus indexed
increases less Withdrawals. The Fixed Account Three Cash Value is the amount
available for Withdrawal or Surrender during the seven-year term. The Fixed
Account Three Value is available at the end of the seven-year term, upon death
of the Annuitant, or under the provisions of the Rider for the Annuitant's
terminal illness or confinement in a qualified institution.
Initially, the Indexed Value is equal to the allocation. Interest is credited to
the Indexed Value at an effective annual yield as follows. The effective annual
yield is the Index Rate less a guaranteed yield spread charge. The yield spread
charge is set at the beginning of each seven-year term and does not vary during
the term. The Index Rate is derived by comparing the initial Delta International
Composite Index value (as of the time of the allocation to Fixed Account Three)
and the highest Delta International Composite Index value on any allocation
anniversary during the seven-year term. The Index Rate is determined such that
if the Delta International Composite Index value were accumulated for the
seven-year term at this Index Rate to the allocation anniversary at the end of
the term the resulting value would equal the highest Delta International
Composite Index value on any allocation anniversary, including the first day, of
the term period. The Index rate is equal to:
(Highest Delta International Composite Index Value)/Starting Delta
International Composite Index Value)]1/7 - 1
where:
* Highest Delta International Composite Index value is the highest Delta
International Composite Index value on any allocation anniversary
during the seven-year term.
* Starting Delta International Composite Index value is the Delta
International Composite Index Value on the first day of the seven-year
term (the Starting Delta International
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Composite Index Value is always 100 for the initial allocation
and each subsequent allocation, if any).
On each allocation anniversary during the seven-year term, the Indexed Value is
credited with interest at the effective annual yield calculated above. Such
interest is called an indexed increase. If the new effective annual yield is
higher than on the prior allocation anniversary, interest is credited as if the
new effective annual yield was in effect from the allocation date, unless
Withdrawals have been made. Withdrawals directly reduce the Indexed Value and
the amounts withdrawn do not receive further interest credits. Moreover, any
interest previously credited on Withdrawals does not receive any further
interest credits.
During the seven-year term, the Cash Value for each allocation is 90% of the
allocation plus the greater of guaranteed interest at 3% or indexed increases,
less any Withdrawals.
Allocations of Premium Payments and Aggregate Value to Fixed Account Three each
have seven-year terms that do not renew. Transfers and Withdrawals of at least
$1,000 may be made at any time during any seven-year term so long as the
transfer or Withdrawal does not reduce the Fixed Account Three Cash Value below
$5,000 (100% of Fixed Account Three Cash Value may be withdrawn or transferred
at any time) and no more than 10% of the Fixed Account Three Cash Value has been
withdrawn and/or transferred during the Contract Year. The minimum Fixed Account
Value for Fixed Account Three is $5,000. The minimum Premium Payment or transfer
of Aggregate Value to Fixed Account Three is $5,000.
Allocations to Fixed Account Three may be surrendered or withdrawn, however,
during each allocation's seven-year term the surrender value is ninety percent
(90%) of the allocation plus the greater of guaranteed interest at three percent
(3%) or indexed increases less Withdrawals. Moreover, any amounts withdrawn do
not receive any future indexed increases and interest attributable to the amount
of the Withdrawal does not receive any future indexed increases.
The Delta International Composite Index is derived from the stock market indices
of five different countries: France (represented by the CAC 40(R) Index),
Germany (the DAX(R) Index), Japan (the Nikkei 225(R) Index), Switzerland (the
SMI(R) Index), and the United Kingdom (the FT-SE 100(R) Index). Each of these
indices are represented equally at 20% in the Delta International Composite
Index. All of the indices are widely recognized and quoted daily in most major
financial publications. The following summarizes each of the indices:
FRANCE--CAC 40(R) (PUBLISHED BY SOCIETE DES BOURSES FRANCAISES)
The CAC 40(R) is comprised of 40 companies listed on the Paris Bourse. L'Oreal,
Michelin, and Renault are some of the companies listed.
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GERMANY--DAX(R) (PUBLISHED BY FRANKFURTER WERPAPIERBORSE)
The DAX(R) is an index of 30 selected German blue chip stocks that trade on the
Frankfurt Stock Exchange. Some of the companies on the index include Deutsche
Bank, Volkswagen, Bayer and Daimler-Benz.
JAPAN--NIKKEI 225(R) (PUBLISHED BY NIHON KEIZAI SHIMBUN, INC.)
The Nikkei 225(R) Index is comprised of 225 top-rated Japanese companies listed
on the Tokyo Stock Exchange. Some of the more familiar companies on the index
are: Bridgestone, Canon, Sony, Honda Motor, Toyota Motor, Nissan Motor, Pioneer
Electronics, and Sharp.
SWITZERLAND--SMI(R) (SWISS MARKET INDEX; PUBLISHED BY SWISS STOCK EXCHANGE
ASSOCIATION)
The SMI(R) is an index of the largest and most liquid stocks traded on the
Geneva, Zurich, and Basle stock exchanges. Some of the more familiar companies
on the index are Nestle, Roche and CibaGeigy.
UNITED KINGDOM--FT-SE 100(R) (THE FINANCIAL TIMES-STOCK EXCHANGE 100 SHARE;
PUBLISHED BY FT-SE INTERNATIONAL)
The FT-SE 100(R) is an index of the 100 most highly capitalized companies traded
on the London Stock exchange. British Aerospace, British Petroleum, BAT
Industries, Glaxo Wellcome, Cadbury Schweppes and Rolls-Royce are some of the
companies that comprise the index.
"CAC 40(R)" is a registered trademark of the Societe des Bourses
Francaises-Paris Bourse, which designates the index that the SBF-Paris Bourse
calculates and publishes. Authorization to use the index and the "CAC 40(R)"
trademark in connection with this product has been granted by license.
The SBF-Paris Bourse, owner of the trademark and of the index, does not sponsor,
endorse or participate in the marketing of this product. The SBF-Paris Bourse
makes no warranty or representation to any person, express or implied, as to the
figure at which the said index stands at any particular time, nor as to the
results or performance of the index-linked product. Neither shall the SBF-Paris
Bourse be under any obligation to advise any person of any error in the
published level of the index.
"DAX(R)" is a registered trademark of Deutsche Borse AG.
NIKKEI 225(R)- All rights to the Nikkei 225(R) Index are owned by Nihon Keizai
Shimbun, Inc. The Company disclaims all responsibility for the calculation or
other maintenance of or any adjustments to the Nikkei 225(R) Index. In addition,
Nihon Keizai Shimbun, Inc. has no relationship to the Company; it does not
sponsor, endorse, authorize, sell or promote the insurance product, and has no
obligation or liability in connection with the administration or marketing of
the insurance product or with the calculation of the policy values. The Nihon
Keizai
50
<PAGE> 55
Shimbun, Inc. reserves the right to modify the content of and to cease publicity
of the Nikkei 225(R) Index.
"SMI(R)" is a registered trademark of the SWISS EXCHANGE. These securities are
not in any way sponsored, endorsed, sold or promoted by the SWISS EXCHANGE and
the SWISS EXCHANGE makes no warranty or representation whatsoever, express or
implied, either as to the result to be obtained from the use of the SMI index
(the "Index") and/or the figure at which the said index stands at any particular
time on any particular day or otherwise. The Index is compiled and calculated
solely by the SWISS EXCHANGE. However, the SWISS EXCHANGE shall not be liable
(whether in negligence or otherwise) to any person for any error in the Index
and the SWISS EXCHANGE shall not be under any obligation to advise any person of
any error therein.
"FT-SE(R)" and "Footsie(R)" are registered trademarks of the London Stock
Exchange Limited and The Financial Times Limited and are used by FT-SE
International Limited under license.
This Insurance Product is not in any way sponsored, endorsed, sold or promoted
by FT-SE International Limited ("FT-SE") or by The London Stock Exchange Limited
(the "Exchange") or by The Financial Times Limited ("FT") and neither FT-SE or
Exchange or FT makes any warranty or representation whatsoever, express or
implied, either as to the results to be obtained from the use of the FT-SE
100(R) Index (the "Index") and/or the figure at which the Index stands at any
particular time on any particular day or otherwise. The Index is compiled and
calculated by FT-SE. However, neither FT-SE nor Exchange nor FT shall be liable
(whether in negligence or otherwise) to any person for any error in the Index
and neither FT-SE nor Exchange nor FT shall be under any obligation to advise
any person of any error therein.
The FT-SE 100(R) is calculated by FT-SE International Limited in conjunction
with the Institute of Actuaries. FT-SE International Limited accepts no
liability in connection with the trading of any products based on the Index.
All copyright in the index values and constituent list vests in FTS-SE
International Limited.
51
<PAGE> 56
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
THE CONTRACT - GENERAL PROVISIONS......................................................
The Contract ............................................................
Non-Participating Contract....................................................
Misstatement of Age...........................................................
CALCULATION OF VARIABLE ACCOUNT VALUES.................................................
Variable Accumulation Unit Value..............................................
Net Investment Factor.........................................................
STATE REGULATION OF DELTA..............................................................
SERVICES TO THE VARIABLE ACCOUNT.......................................................
PERIODIC REPORTS.......................................................................
DISTRIBUTION OF THE CONTRACT...........................................................
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS.................................................
HISTORICAL PERFORMANCE DATA............................................................
Money Market Investment Division Yield........................................
Other Investment Division Yields..............................................
Total Returns ............................................................
Other Performance Data........................................................
Performance Ranking or Rating.................................................
LEGAL PROCEEDINGS......................................................................
LEGAL MATTERS..........................................................................
INDEPENDENT ACCOUNTANTS................................................................
FINANCIAL STATEMENTS...................................................................
</TABLE>
52
<PAGE> 57
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY CONTRACT
Issued By
DELTA LIFE AND ANNUITY COMPANY
AND
DELTA LIFE AND ANNUITY COMPANY SEPARATE ACCOUNT VA1
Home Office Location:
530 Oak Court, Suite 200
Memphis, TN 38117
Mailing Address:
Delta Life and Annuity Company
Variable Annuity Service Center
300 Berwyn Park
P.O. Box 3031
Berwyn Park, PA 19312-0031
This Statement of Additional Information ("Statement") expands upon
subjects discussed in the current Prospectus for the Variable Annuity Contract
(the "Contract") offered by Delta Life and Annuity Company through DELTA LIFE
AND ANNUITY COMPANY SEPARATE ACCOUNT VA1. You may obtain a copy of the
Prospectus dated _________, 1997, by calling (800) ___________, or by writing
to Delta's Variable Annuity Service Center, 300 Berwyn Park, P.O. Box 3031,
Berwyn Park, PA 19312-0031. 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 IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT AND DELTA
LIFE AND ANNUITY COMPANY SEPARATE ACCOUNT VA1.
Dated:_______, 1997
<PAGE> 58
TABLE OF CONTENTS
THE CONTRACT - GENERAL PROVISIONS...........................................
The Contract.......................................................
Non-Participating Contract.........................................
Misstatement of Age................................................
CALCULATION OF VARIABLE ACCOUNT VALUES......................................
Variable Accumulation Unit Value...................................
Net Investment Factor..............................................
STATE REGULATION OF DELTA...................................................
SERVICES TO THE VARIABLE ACCOUNT............................................
PERIODIC REPORTS............................................................
DISTRIBUTION OF THE CONTRACT................................................
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS......................................
HISTORICAL PERFORMANCE DATA.................................................
Money Market Investment Division Yield.............................
Other Investment Division Yields...................................
Total Returns......................................................
Other Performance Data.............................................
Performance Ranking................................................
LEGAL PROCEEDINGS...........................................................
LEGAL MATTERS...............................................................
INDEPENDENT ACCOUNTANTS.....................................................
FINANCIAL STATEMENTS........................................................
B - 2
<PAGE> 59
In order to supplement the description in the Prospectus, the following
provides additional information about Delta Life and Annuity Company ("Delta")
and the Contract which may be of interest to an Owner. Terms have the
same meaning as in the Prospectus, unless otherwise indicated.
THE CONTRACT - GENERAL PROVISIONS
THE CONTRACT
A Contract, attached riders, amendments and any application, form the entire
contract. Only the President, Senior Vice Presidents, or Secretary of Delta may
change, modify or waive any provision in a Contract. Any changes, modifications
or waivers must be in writing. Except where prohibited by state law, Delta 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.
NON-PARTICIPATING CONTRACT
The Contract does not participate or share in the profits or surplus earnings
of Delta.
MISSTATEMENT OF AGE
If the age of the Annuitant is misstated, any amounts payable by Delta under
the Contract will be adjusted to be those amounts which the Premium Payments
would have purchased for the correct age, according to Delta's rates in effect
on the Effective Date. Any overpayment by Delta, with interest at the rate of
3% per year compounded annually, will be charged against the payments to be
made next succeeding the adjustment. Any underpayment by Delta will be paid in
a lump sum with interest at the rate of 3% per year compounded annually.
CALCULATION OF VARIABLE ACCOUNT VALUES
On any Valuation Date, the Variable Account Value is equal to the total of the
values allocated to the Contract in each Investment Division. The portion of an
Owner's Aggregate Value held in any Investment Division is equal to the number
of Investment Division units allocated to a Contract multiplied by the
Investment Division accumulation unit value as described below.
VARIABLE ACCUMULATION UNIT VALUE
Upon receipt of a Premium Payment by Delta at its Variable Annuity Service
Center, all or that portion, if any, of the Premium Payment to be allocated to
the Investment Divisions will be credited to the Variable Account in the form
of Variable Accumulation Units. The number of particular Variable Accumulation
Units to be credited is determined by dividing the dollar amount allocated to
B - 3
<PAGE> 60
the particular Investment Division by the Variable Accumulation Unit Value for
the particular Investment Division for the Valuation Period during which the
Premium Payment is received at Delta's Variable Annuity Service Center (for the
initial Premium Payment, for the Valuation Period during which the Premium
Payment is accepted).
The Variable Accumulation Unit Value for each Investment Division will be set
initially at $10. The Variable Accumulation Unit Value for any subsequent
Valuation Period is determined by multiplying the Variable Accumulation Unit
Value for the immediately preceding Valuation Period by the Net Investment
Factor for such subsequent Valuation Period.
The Variable Account Value is equal to the sum of the value of all Variable
Accumulation Units credited to the Contract for such Valuation Period.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of an Investment Division from one Valuation Period to the next.
The Net Investment Factor may be greater or less than or equal to 1.0;
therefore, the value of a Variable Accumulation Unit may increase, decrease, or
remain the same.
The Net Investment Factor for any Investment Division for any Valuation Period
is determined by dividing (a) by (b) and then subtracting (c) from the result
where:
(a) is the net result of:
(1) the net asset value of a Portfolio share held in the
Investment Division determined as of the end of the
Valuation Period; plus
(2) the per share amount of any dividend or other
distribution declared by the Portfolio on the shares
held in the Investment Division if the "ex-dividend"
date occurs during the Valuation Period; plus or minus
(3) a per share credit or charge with respect to any taxes
paid or reserved for by Delta during the Valuation
Period which are determined by Delta to be
attributable to the operation of the Investment
Division.
(b) is the net asset value of a Portfolio share held in the
Investment Division determined as of the end of the preceding
Valuation Period; and
(c) is the asset charge factor determined by Delta for the Valuation
Period to reflect the charges for assuming mortality and expense
risks and for the administrative expenses.
B - 4
<PAGE> 61
STATE REGULATION OF DELTA
Delta, a Tennessee corporation, is subject to regulation by the Tennessee
Department of Commerce and Insurance. An Annual Statement is filed with the
Tennessee Department of Commerce and Insurance each year covering the
operations and reporting on the financial condition of Delta as of December 31
of the preceding year. Periodically, the Tennessee Department of Commerce and
Insurance or insurance regulatory authorities of other states may examine the
assets and liabilities of Delta, including the Variable Account, and a full
examination of Delta's financial condition and operations is conducted no less
often than every five (5) years by the Tennessee Department of Commerce and
Insurance. In addition, Delta is subject to the insurance laws and regulations
of other states within which it is licensed to operate. Generally, the
Insurance Department of any other state defers to the laws of the state of
domicile in determining permissible investments.
A Contract is governed by the laws of the state in which it is delivered. The
value and benefits of each policy are at least equal to those required by such
state.
SERVICES TO THE VARIABLE ACCOUNT
Delaware Valley Financial Services, Inc. performs certain administrative
functions relating to the Contract, the Fixed Accounts, and the Variable
Account. These functions include, among other things, maintaining the books and
records of the Variable Account, the Fixed Accounts, and the Investment
Divisions, and maintaining records of the name, address, taxpayer
identification number, contract number, Annuity Account number and type, the
status of each Annuity Account and other pertinent information necessary to the
administration and operation of the Contract.
PERIODIC REPORTS
At least once during each Contract Year, Delta will furnish each Owner with a
report showing the Aggregate Value at the end of the preceding Contract Year,
all transactions during the Contract Year, the current Aggregate Value, the
number of Accumulation Units in each Investment Division, the applicable
Accumulation Unit Value as of the date of the report, the Fixed Account Value
and the interest rate credited to the Fixed Account. In addition, each person
having voting rights in the Variable Account and a Portfolio will receive such
reports or prospectuses as may be required by the Investment Company Act of
1940 and the Securities Act of 1933. Delta will also send each Owner such
statements reflecting transactions in the Owner's Annuity Account as may be
required by applicable laws, rules and regulations. Upon request to the
Variable Annuity Service Center, Delta will provide an Owner with information
regarding fixed and variable accumulation values.
B - 5
<PAGE> 62
DISTRIBUTION OF THE CONTRACT
The Contract will be offered on a continuous basis. The principal underwriter
for the Contract, Delta Life Securities, Inc. ("DLS"), Memphis, Tennessee, a
wholly-owned subsidiary of Delta, has not yet received any commissions with
respect to sales of the Contract as of the date of this Statement.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the Variable Account is held by Delta. The assets are kept
physically segregated and held separate and apart from Delta's general
corporate assets. Records are maintained of all purchases and redemptions of
Portfolio shares held by each of the Investment Divisions.
HISTORICAL PERFORMANCE DATA
MONEY MARKET INVESTMENT DIVISION YIELD
From time to time, the Money Market Investment Division may advertise its
"yield" and "effective yield." Both yield figures will be based on historical
earnings and are not intended to indicate future performance. The "yield" of
the Money Market Investment Division refers to the income generated by
Aggregate Value in the Money Market Investment Division over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the Aggregate Value in the Money Market Investment
Division. The "effective yield" is calculated similarly but, when annualized,
the income earned by Aggregate Value in the Money Market Investment Division is
assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment. The
computation of the yield includes a deduction for the Mortality and Expense
Risk Charge, the Administrative Expense Charge, and the Annual Contract Fee.
The effective yield is calculated by compounding the unannualized base period
return according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)(365/7)] - 1
The yield on amounts held in the 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 Money Market Investment Division's actual yield is affected by
changes in interest rates on money market securities, average portfolio
maturity of the Money Market Portfolio, the types and quality of portfolio
securities held by the Money Market Portfolio and its operating expenses. The
yield figures do not reflect withdrawal charges or premium taxes.
B - 6
<PAGE> 63
OTHER INVESTMENT DIVISION YIELDS
Delta may from time to time advertise or disclose the current annualized yield
of one or more of the Investment Divisions of the Variable Account (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 specific 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 over a 12-month period. The yield is computed by:
(i) dividing the net investment income per accumulation unit earned during the
period by the maximum offering 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
Portfolio attributable to shares owned by the Investment
Division.
b = Expenses accrued for the period.
c = The average daily number of accumulation units outstanding
during the period.
d = The maximum offering price per accumulation unit on the
last day of the period.
Because of the charges and deductions imposed by the Variable Account, the
yield for an Investment Division of the Variable Account will be lower than the
yield for its corresponding Portfolio. The yield calculations do not reflect
the effect of any premium taxes or deferred sales charges that may be
applicable to a particular Contract. Surrender Charges range from 7% to 2% of
the amount withdrawn or surrendered on each Premium Payment paid based on the
Payment Year in which the Withdrawal or Surrender occurs.
The yield on amounts held in the Investment Divisions of the Variable Account
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. An Investment Division's actual yield is affected by the types and
quality of the Portfolio's investments and its operating expenses.
TOTAL RETURNS
Delta may from time to time also advertise or disclose annual average total
returns for one or more of the Investment Divisions of the Variable Account for
various periods of time. When an Investment Division has been in operation for
1, 5 and 10 years, respectively, the total return for these periods will be
provided. Total returns for other periods of time may from time to time also be
disclosed.
B - 7
<PAGE> 64
Total returns represent the average annual compounded rates of return that
would equate the initial amount invested to the redemption value of that
investment as of the last day of each of the periods.
Total returns will be calculated using Investment Division Unit Values which
Delta calculates on each Valuation Period based on the performance of the
Investment Division's underlying Portfolio, and the deductions for the
mortality and expense risk charge, the administrative expense charge, and the
Annual Contract Fee. The Annual Contract Fee is reflected by dividing the total
amount of such charges collected during the year that are attributable to the
Variable Account by the total average net assets of all the Investment
Divisions. The resulting percentage is deducted from the return in calculating
the ending redeemable value. These figures will not reflect any premium taxes.
Total return calculations will reflect the effect of deferred sales charges
that may be applicable to a particular period. The total return will then be
calculated according to the following formula:
P(1 + T)n = ERV
Where: P = A hypothetical initial Premium Payment of $1,000.
T = Average annual total return.
n = Number of years in period.
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).
OTHER PERFORMANCE DATA
Delta may from time to time also disclose average annual total returns in a
non-standard format in conjunction with the standard format described above.
The non-standard format will be identical to the standard one except that the
deferred sales charge percentage will be assumed to be 0%.
Delta may from time to time disclose cumulative total returns in conjunction
with the standard format described above. The cumulative returns will be
calculated using the following formula assuming that the 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.
B - 8
<PAGE> 65
ERV = The ending redeemable value of the hypothetical investment
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).
P = A hypothetical initial payment of $10,000.
All non-standard performance data will only be advertised if the standard
performance data is also disclosed.
Delta may also from time to time use advertising which includes hypothetical
illustrations to compare the difference between the growth of a taxable
investment and a tax-deferred investment in a variable annuity.
PERFORMANCE RANKING OR RATING
Performance data for the Investment Divisions may be compared, in
advertisements, sales literature and reports to shareholders, to: (i) the
investment returns on various mutual funds, stocks, bonds, certificates of
deposit, tax free bonds, or common stock and bond indexes; and (ii) other
groups of variable annuity separate accounts or other investment products
tracked by Lipper Analytical Services ("Lipper"), a widely used independent
research firm which ranks mutual funds and other investment companies by
overall performance, investment objectives, and assets, or tracked by other
services, companies, publications, or persons who rank such investment
companies on overall performance or other criteria.
The performance of each or all of the Investment Divisions of the Variable
Account may be compared in its advertising and sales literature to the
performance of other variable annuity issuers in general or to the performance
of particular types of variable annuities investing in mutual funds, or series
of mutual funds with investment objectives similar to each of the Investment
Divisions of the Variable Account. Morningstar Variable Annuity/Life
Performance Report of Morningstar, Inc. ("Morningstar") and the Variable
Annuity Research and Data Service ("VARDS(R)") are independent services which
monitor and rank or rate the performance of variable annuity issuers in each of
the major categories of investment objectives on an industry-wide basis.
Lipper's rankings include variable life issuers as well as variable annuity
issuers. VARDS(R) rankings compare only variable annuity issuers. Morningstar
ratings include mutual funds used by both variable life and variable annuity
issuers. The performance analyses prepared by Lipper and VARDS(R) rank such
issuers on the basis of total return, assuming reinvestment of distributions,
but do not take sales charges, redemption fees or certain expense deductions at
the separate account level into consideration. In addition, VARDS(R) prepares
risk adjusted rankings, which consider the effects of market risk on total
return performance. This type of ranking may address the question as to which
funds provide the highest total return with the least amount of risk.
Morningstar assigns
B - 9
<PAGE> 66
ratings of zero to five stars to the mutual funds taking into account primarily
historical performance and risk factors.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account, the Distributor
or Delta is a party except for routine litigation which Delta does not believe
is relevant to the Contract offered by this Prospectus.
LEGAL MATTERS
Legal matters involving the applicability of the federal securities laws have
been reviewed by Jorden Burt Berenson & Johnson LLP, Suite 400 East, 1025
Thomas Jefferson Street, N.W., Washington, D. C. 20007.
INDEPENDENT ACCOUNTANTS
The financial statements of Delta included in this Statement of Additional
Information have been audited by Coopers & Lybrand LLP, Indianapolis, Indiana,
independent certified public accountants, and have been included in reliance on
the reports of Coopers & Lybrand LLP given upon their authority as experts in
accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of Delta included in this Statement of Additional
Information should be considered only as bearing on the ability of Delta to
meet the obligations under the Contract. They should not be considered as
bearing on the investment performance of the assets held in the Variable
Account. No financial statements of the Variable Account are included because
as of the date of this Statement of Additional Information the Variable Account
had not yet commenced operations.
B - 10
<PAGE> 67
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Part A. None
Part B. To be filed by amendment.
Part C. None
(b) Exhibits.
(1) Resolution of the Board of Directors of Delta Life
and Annuity Company ("Delta Life") authorizing
establishment of the Separate Account.1/
(2) Not Applicable.
(3) Distribution Agreement.2/
(4) Form of Variable Annuity Contract.1/
(5) Form of Application.2/
(6) (a) Articles of Incorporation of Delta Life.1/
(b) By-Laws of Delta Life.1/
(7) Not Applicable.
(8) Form of Participation Agreement for the Funds.2/
(9) (a) Opinion and Consent of Counsel.2/
(b) Consent of Counsel.2/
(10) Consent of Independent Auditors.2/
(11) No Financial Statements are omitted from Item 23.
(12) Not Applicable.
(13) Performance Computation.2/
(14) Not Applicable.
- --------------------------------------
1/ Filed herewith.
2/ To be filed by amendment.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Principal business address is 530 Oak Court, Suite 200, Memphis, Tennessee
38117, except as noted below.
<PAGE> 68
<TABLE>
<CAPTION>
Name Positions and Offices with Depositor
- ---- ------------------------------------
<S> <C>
Gerald Tsai, Jr. Chairman, Chief Executive Officer and Director 1/
Allen O. Jones, Jr. President, Chief Operating Officer and Chief Financial Officer
James L. Bergin Senior Vice President and Chief Actuary
Bettye S. Adams Senior Vice President, Secretary and General Counsel
David W. Rikard Senior Vice President-Accounting and Treasurer
James D. Wingett Senior Vice President-Investments
Cody H. Phillips Senior Vice President-Distribution and Marketing
Michael P. Hydanus Senior Vice President-Operations
John J. Chandler Vice President-Compliance
Lura L. Bond Vice President and Controller
Marilyn D. Johnson Vice President and Assistant Secretary
Michael Lewis Assistant Vice President, Employee Relations and Employment Director
Debra A. Prestage Assistant Vice President and Internal Auditor
Debbie B. Lazarov Assistant Vice President and Public Relations Director
Danielle K. Schonbaum Assistant Vice President-Investments
Milton B. Buring Assistant Vice President-Management Information Systems
Robert T. Threlkeld Assistant Vice President-Mortgage Services
Denise L. Blankinship Assistant Vice President-Software Services
William D. Callaghan, Jr. Director 2/
Todd G. Cole Director 3/
Robert L. Cox Director 4/
Richard E. Floor Director 5/
Robert F. Fogelman Director 6/
R. Brad Martin Director 7/
William B. Rudner Director 8/
Ronald A. Terry Director 9/
</TABLE>
- --------------------------------------
1/ Tsai Management, Inc., 200 Park Avenue, Suite 4501, New York, New York
10166
2/ Western Reserve Life, P.O. Box 5068, Clearwater, Florida 34618
3/ SH&E, Grove Forest Plaza, 2937 S.W. 27th Avenue, Suite 306, Miami, Florida
33133
4/ Waring Cox, 50 N. Front Street, 13th Floor, Memphis, Tennessee 38103
5/ Goodwin, Procter & Hoar, Exchange Place, 25th Floor, Boston, Massachusetts
02109
6/ 6455 Poplar Avenue, Memphis, Tennessee 38119
7/ Profitt's, Inc., 5810 Shelby Oaks Drive, Memphis, Tennessee 38134
8/ White Station Tower, 5050 Poplar Avenue, Suite 2429, Memphis, Tennessee
38157
9/ International Place #2, 6410 Poplar Avenue, Suite 375, Memphis, Tennnessee
38119
C - 2
<PAGE> 69
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT.
The Depositor, Delta Life and Annuity Company, is wholly owned by
Delta Life Corporation. The Registrant is a segregated asset account of Delta
Life and Annuity Company. The following chart indicates the persons controlled
by or under common control with Delta Life and Annuity Company:
<TABLE>
<CAPTION>
Jurisdiction Percentage of Voting
Name of Incorporation Securities Owned and Owner
- ---- ---------------- --------------------------
<S> <C> <C>
Delta Mortgage Services, Inc. Tennessee 100% Delta Life Corporation
Delta Investment Advisors, Inc. Tennessee 100% Delta Life Corporation
Delta Life Agency, Inc. Tennessee 100% Delta Life Corporation
Delta Travel Services, Inc. Tennessee 100% Delta Life Corporation
Delta Life Securities, Inc. Arkansas 100% Delta Life and Annuity Company
</TABLE>
ITEM 27. NUMBER OF CONTRACT OWNERS
None.
ITEM 28. INDEMNIFICATION.
Reference is made to the Articles of Incorporation filed herewith.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Delta Life Securities, Inc., which serves as the principal
underwriter for the variable annuity contracts funded by Separate Account VA1,
does not serve as the principal underwriter, depositor, sponsor or investment
adviser for any other investment company.
(b) Directors and Officers.
Principal business address is 530 Oak Court, Suite 200, Memphis, Tennessee
38117.
C - 3
<PAGE> 70
<TABLE>
<CAPTION>
Name Positions and Offices with Principal Underwriter
- ---- ------------------------------------------------
<S> <C>
Allen O. Jones, Jr. President
John Chandler Senior Vice President, Chief Operating Officer and Chief Compliance Officer
Peter L. Hall Senior Vice President
David W. Rikard Vice President and Treasurer
Bettye S. Adams Secretary
Gerald Tsai, Jr. Director
</TABLE>
(c) N/A
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books, accounts and other documents required by Section 31(a)
under the Investment Company Act and the rules promulgated thereunder will be
maintained in the physical possession of Delta Life and Annuity Company, 530
Oak Court, Suite 200, Memphis, Tennessee 38117.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B.
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is necessary to
ensure that the audited financial statements in the registration statement are
never more than 16 months old for so long as payments under the variable
annuity contracts may be accepted;
(b) The Registrant hereby undertakes to include either (1) as part
of any application to purchase a contract offered by the prospectus, a space
that an applicant can check to request a Statement of Additional Information,
or (2) a postcard or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a Statement of
Additional Information; and
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be made
available under this Form promptly upon written or oral request.
C - 4
<PAGE> 71
(d) Delta Life and Annuity Company represents that the fees and
charges deducted under the contract described in this registration statement, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Delta Life and Annuity
Company.
C - 5
<PAGE> 72
EXHIBITS
(1) Resolution of the Board of Directors of Delta Life and Annuity Company
authorizing establishment of the Separate Account.
(4) Form of Variable Annuity Contract.
(6)(a) Articles of Incorporation of Delta Life and Annuity Company.
(6)(b) By-Laws of Delta Life and Annuity Company.
C - 6
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Delta Life and Annuity Company
Separate Account VA1, has duly caused this registration statement to be signed
on its behalf by the undersigned thereunto duly authorized in the City of New
York, State of New York, on the 10th day of January, 1997.
Delta Life and Annuity Company Separate Account VA1
By: Delta Life and Annuity Company
By: /s/ Gerald Tsai, Jr.
-----------------------------------------------
Gerald Tsai, Jr.
Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacity and on the dates
indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Gerald Tsai, Jr. Principal Executive Officer Jan. 10, 1997
- -----------------------------------
Gerald Tsai, Jr.
/s/ Allen O. Jones, Jr. Principal Financial Officer Jan. 9, 1997
- -----------------------------------
Allen O. Jones, Jr.
/s/ David Rikard Principal Accounting Officer Jan. 9, 1997
- -----------------------------------
David Rikard
/s/ Gerald Tsai, Jr. Director Jan. 10, 1997
- -----------------------------------
Gerald Tsai, Jr.
/s/ William D. Callaghan, Jr.
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
William D. Callaghan, Jr.
/s/ Todd G. Cole
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
Todd G. Cole
/s/ Robert L. Cox
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
Robert L. Cox
/s/ Richard E. Floor
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
Richard E. Floor
</TABLE>
<PAGE> 74
N-4 Signature Page (continued)
Page 2 - Continuation of SIGNATURES as required by the Securities Act of 1933
for the registration statement for the Registrant, Delta Life and Annuity
Company Separate Account VA1:
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Robert F. Fogelman
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
Robert F. Fogelman
/s/ R. Brad Martin
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
R. Brad Martin
/s/ William B. Rudner
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
William B. Rudner
/s/ Ronald A. Terry
by Allen O. Jones, Jr. POA Director Jan. 9, 1997
- -----------------------------------
Ronald A. Terry
</TABLE>
<PAGE> 1
EXHIBIT 1
SECRETARY'S CERTIFICATE
I, Bettye S. Adams, do hereby certify that I am the duly elected and
acting Secretary of Delta Life and Annuity Company (the "Corporation"), a
corporation duly organized and existing under the laws of the State of Tennessee
and that the following are resolutions duly adopted by the board of directors
via written consent effective as of October 23, 1995, and that said resolutions
remain in full force and effect and unmodified:
WHEREAS, it has been determined that it is in the best
interests of this Corporation to establish for the accounts of the
Corporation a separate account in accordance with the laws of the state
of Tennessee to provide the investment medium for contracts to be
issued by this Corporation as may be designated as participating
therein.
NOW, THEREFORE, BE IT RESOLVED, that the officers of this
Corporation be, and they hereby are, authorized to establish for the
accounts of this Corporation the Delta Life and Annuity Company
Separate Account VA1 ("Separate Account") in accordance with the
insurance laws of the state of Tennessee, to provide the investment
medium for contracts to be issued by this Corporation ("Contracts") as
may be designated as participating therein. The Separate Account shall
receive, hold, invest and reinvest only the monies arising from: (1)
premiums, contributions or payments made pursuant to Contracts
participating therein; (2) such assets of this Corporation as may be
deemed necessary for the orderly operation of such Separate Account;
and (3) the dividends, interest and gains produced by the foregoing;
and
RESOLVED FURTHER, that the Separate Account may be divided
into various sub-accounts as determined necessary by the officers of
this Corporation to fund the Contracts. In that event, purchase
payments (net of any applicable deductions) remitted to this
Corporation under the Contracts and allocated to the Separate Account
shall be allocated to the appropriate sub-account in accordance with
the terms of the Contracts. Each sub-account, in turn, shall invest in
the shares of the series type registered management investment company
(or one or more registered management investment companies, or
designated investment series thereof as may be established in the
future), as specified for investment by it, at net asset value per
share next to be determined following receipt of an order for purchase
by such sub-account. To the extent that such registered management
investment company, or companies, establishes additional investment
series, the officers of this Corporation are empowered and authorized
to establish such additional sub-accounts as there are additional
investment series, with each such sub-account to invest solely in the
shares of a specified additional investment series; and
<PAGE> 2
RESOLVED FURTHER, that the Separate Account shall be
administered and accounted for as part of the general business of this
Corporation, but the income, gains and losses of the Separate Account
shall be credited to or charged solely against the assets held in the
Separate Account, without regard to any other income arising out of
other business that this Corporation may conduct. The assets of such
Separate Account shall not be chargeable with the liabilities arising
out of any other business that this Corporation may conduct; and
RESOLVED FURTHER, in the event of the division of the Separate
Account into sub-accounts that each sub-account shall be administered
and accounted for as part of the general business of this Corporation,
but the income (including capital gains or losses, if any) of each
sub-account shall be credited to or charged against the assets held in
that sub-account in accordance with the terms of the Contracts funded
therein, without regard to other income of the remaining sub-accounts
or arising out of any other business that this Corporation may conduct.
The assets of each sub-account shall not be chargeable with liabilities
arising out of the business conducted by another sub-account, nor shall
a sub-account be chargeable with liabilities arising out of any other
business that this Corporation may conduct; and
RESOLVED FURTHER, that no recommendation shall be made to an
applicant to purchase a variable annuity policy and no variable annuity
shall be issued in the absence of reasonable grounds to believe that
the purchase of such policy is not unsuitable for such applicant,
taking into account the applicant's insurance and investment
objectives, financial situation and needs, and any other information
known to the Corporation or to the agent making the recommendation; and
RESOLVED FURTHER, that the officers of this Corporation be,
and they hereby are, authorized:
(i) to take whatever actions are necessary to see to it that
the Contracts are registered under the provisions of the Securities Act
of 1933 to the extent that they shall determine that such registration
is necessary; and
(ii) to take whatever actions are necessary to assure that
such Separate Account is properly registered as a unit investment trust
with the Securities and Exchange Commission under the provisions of the
Investment Company Act of 1940 to the extent that they shall determine
that such registration is necessary; and
2
<PAGE> 3
(iii) to prepare, execute and file such amendments to any
registration statements filed under the aforementioned Acts (including
such pre-effective and post-effective amendments), supplements and
exhibits thereto as they may deem necessary or desirable; and
(iv) to prepare, execute and file such periodic filings as may
be required by regulatory authorities in connection with the Separate
Account; and
(v) to apply for exemption from those provisions of the
aforementioned Acts and the rules promulgated thereunder as they may
deem necessary or desirable and to take any and all other actions which
they may deem necessary, desirable or appropriate in connection with
such Acts; and
(vi) to take whatever actions are necessary to assure that the
Contracts are filed with the appropriate state insurance regulatory
authorities and to prepare and execute all necessary documents to
obtain approval of the insurance regulatory authorities; and
(vii) to prepare or have prepared and executed all necessary
documents to obtain approval of, or clearance with, or other
appropriate actions required by, any other regulatory authority that
may be necessary in connection with the foregoing matters; and
(viii) to enter into agreements with appropriate entities for
the provision of administrative and other required services on behalf
of the Separate Account and for the safekeeping of assets of such
Separate Account; and
(ix) to make application in any and all states and
jurisdictions as may be necessary for the Corporation to be authorized
to engage in the business of issuing variable annuity and/or variable
life insurance contracts; and
RESOLVED FURTHER, that the form of any resolutions required by
any state authority to be filed in connection with any of the actions,
documents or instruments referred to in any of the preceding
resolutions be, and the same hereby are, adopted as fully set forth
herein if (i) in the opinion of the officers of this Corporation the
adoption of the resolutions is advisable; and (ii) the Corporate
Secretary or Assistant Secretary of this Corporation evidences such
adoption by inserting into these minutes copies of such resolutions;
and
3
<PAGE> 4
RESOLVED FURTHER, that the officers of this Corporation, and
each of them, are hereby authorized to prepare and to execute the
necessary documents and to take such further actions as may be deemed
necessary or appropriate, in their discretion, to implement the purpose
of the foregoing resolutions.
IN WITNESS WHEREOF, I have set my hand this day of ,
---- ---------
19 .
---
-----------------------------------
Bettye S. Adams
Secretary
(S E A L)
4
<PAGE> 1
================================================================================
EXHIBIT 4
Nonqualified
DELTA LIFE AND ANNUITY COMPANY
530 Oak Court, Suite 200, Memphis Tennessee 38117
Delta Variable Annuity Service Center
300 Berwyn Park, P. O. Box 3031, Berwyn, PA 19312
1-800-XXX-XXXX
"A Stock Company"
On the Maturity Date, DELTA LIFE AND ANNUITY COMPANY (the "Company")
shall pay the Cash Value under any of the settlement options, subject to the
provisions of this contract, to the Annuitant if then living.
If the Owner or Annuitant dies prior to the Maturity Date, the Company
shall, subject to the provisions of this contract, pay the Death Benefit in
accordance with the beneficiary designation in effect at the date of death upon
receipt of due proof of death of the Owner or Annuitant.
10-DAY RIGHT TO EXAMINE CONTRACT
Within 10 days after this contract is first received, unless a longer
period is required by applicable law, it may be canceled for any reason by
delivering or mailing it to the Delta Variable Annuity Service Center at the
address shown above. Upon receipt of such request, the Company will refund any
Premium Payment allocated to the Fixed Account; the Company will refund any
Premium Payment allocated to the Variable Account plus any increase or minus any
decrease in the Variable Account value attributable to such Premium Payments.
This contract is issued in consideration of the application and payment
of the Initial Premium while the Annuitant is alive. Signed on the Effective
Date at the Home Office of the Company in Memphis, Tennessee.
President Secretary
--------------------------------------------
REGISTRAR
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
Non-Participating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE, MAY INCREASE OR DECREASE AND
ARE NOT GUARANTEED AS TO AMOUNT.
================================================================================
<PAGE> 2
INDEX
Flexible Premium Variable Deferred Annuity
<TABLE>
<CAPTION>
Page
----
<S> <C>
Contract Data.....................................................................3
Definitions.......................................................................8
General Provisions...............................................................13
Payment of Premiums..............................................................16
Allocation to Fixed Accounts/Fixed Account One...................................17
Fixed Account Two................................................................18
Fixed Account Three..............................................................22
Variable Account.................................................................25
Variable Account Contract Values During the Accumulation Period..................27
Transfers Within and Between Accounts............................................29
Withdrawals and Surrender........................................................32
Distributions Upon Death of Owner or Annuitant...................................34
Charges and Deductions...........................................................37
Settlement Options...............................................................38
</TABLE>
THIS CONTRACT IS A LEGAL CONTRACT BETWEEN THE CONTRACT OWNER AND THE COMPANY.
READ YOUR CONTRACT CAREFULLY.
2
<PAGE> 3
CONTRACT DATA
<TABLE>
<S> <C> <C> <C>
Contract Number LA100000 Effective Date 9-1-95
Initial Premium $10,000 Annuitant John Michael Doe
Owner John Michael Doe Age of Annuitant 35
Maturity Date 9-1-2069
</TABLE>
VARIABLE ACCOUNT
Allocation of Premium Payments to Variable Account Investment Divisions and to
the Fixed Accounts is shown in the application.
The Variable Account is: Delta Life and Annuity Company Separate Account VA 1.
The following is a list of Portfolios in which the currently available
Investment Divisions invest:
Dreyfus Variable Investment Fund
Capital Appreciation Portfolio Small Cap Portfolio
Money Market Portfolio Quality Bond Portfolio
Growth and Income Portfolio Managed Assets Portfolio
Small Company Stock Portfolio International Equity Portfolio
Disciplined Stock Portfolio
International Value Portfolio
CURRENT ADDRESS FOR DELTA VARIABLE ANNUITY SERVICE CENTER
The mailing address for premiums is:
Delta Lockbox
P. O. Box ####
Philadelphia, PA 19182-5083.
The mailing address for all other correspondence is:
Delta Variable Annuity Service Center
300 Berwyn Park
P. O. Box 3031
Berwyn, PA 19312-0031
3
<PAGE> 4
CONTRACT DATA (CONTINUED)
FIXED ACCOUNTS
The following is a list of the currently available Fixed Account options:
<TABLE>
<S> <C>
Fixed Account 1: Fixed Account 2:
Guaranteed Minimum Annual Interest Rate Guaranteed Minimum Annual Interest Rate: 3%
First Contract Year for Initial Premium: ________% Fixed Account 2 Guaranteed Yield Spread Charge for Initial
Subsequent Contract Years and Premiums: 3.50% Premium Term Period: _______%
Fixed Account 3:
Guaranteed Minimum Annual Interest Rate: 3%
Fixed Account 3 Guaranteed Yield Spread Charge for Initial
Premium Term Period: _____%
MINIMUM BALANCES MINIMUM PREMIUM PAYMENTS
Minimum Contract Aggregate Value: $5,000 Minimum Initial Premium Payment: $10,000
Minimum Fixed Account 1 Aggregate Value: $1,000 Minimum Subsequent Premium Payment to Variable Account
And Fixed Account 1: $2,000
Minimum Fixed Account 2 Cash Value: $5,000 Minimum Subsequent Premium Payment to Fixed Account
2 or Fixed Account 3: $5,000
Minimum Fixed Account 3 Cash Value: $5,000
Minimum Investment Division Variable Account
Aggregate Value: $1,000
MINIMUM TRANSFERS AND WITHDRAWALS
Minimum Transfer Amount: $1,000
Minimum Transfer Amount to Fixed Account 2 or
Fixed Account 3: $5,000
Minimum Withdrawal: $1,000
</TABLE>
4
<PAGE> 5
CONTRACT DATA (CONTINUED)
WITHDRAWALS AND WITHDRAWAL CHARGES
The Withdrawal Charge table, as shown below, applies to Fixed Account
One and the Variable Account. The Withdrawal Charge is a percentage of each
Premium Payment withdrawn. Years are counted from the Valuation Date the Premium
Payment is received.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEARS: 0 1 2 3 4 5 6 7+
PERCENTAGE: 7.0% 7.0% 6.0% 6.0% 5.0% 5.0% 2.0% 0.0%
</TABLE>
After the first Contract Anniversary, the Owner may make a withdrawal
free of any Withdrawal Charge twice per Contract Year. The maximum free
withdrawal amount in any Contract Year is the greater of (1) 10% of total
Premium Payments credited for more than one year or (2) accumulated earnings not
previously withdrawn. For this purpose, accumulated earnings not previously
withdrawn is the Aggregate Value less Premium Payments plus withdrawals charged
to Premium Payments. Withdrawals of the maximum free withdrawal amount are not
charged to Premium Payments. Withdrawals in excess of the maximum free
withdrawal amount are charged to Premium Payments on a first-in, first-out
basis.
Withdrawals may not reduce the Aggregate Value allocated to any
Investment Division or Fixed Account One below the minimum. The sum of transfers
and withdrawals from Fixed Account One is limited to ten percent (10%) of the
Aggregate Value of Fixed Account One each Contract Year.
Systematic withdrawals may be made from the Variable Account if the
Aggregate Value in the Variable Account meets the following minimums:
$25,000 if monthly withdrawals are made
$10,000 if quarterly or annual withdrawals are made
The minimum withdrawal amount under this option is $500. The maximum
annual systematic withdrawals which may be made are limited to the maximum free
withdrawal amount available as of the election date of the systematic
withdrawal. Such amount is redetermined on each anniversary of such election. If
systematic withdrawals are being made, no additional withdrawals may be made
free of the Withdrawal Charge.
The Withdrawal Charge does not apply to payments upon the death of the
Annuitant. The Withdrawal Charge does not apply at the Maturity Date if payment
is made under a settlement option providing for payments (1) for the payee's
life or (2) for a period certain, where the last payment is at least ten (10)
years from the date the last Premium Payment was made (provided there is no
guaranteed commutation).
The Withdrawal Charge table, as defined above, does not apply to Fixed
Account Two or Fixed Account Three. Withdrawals may be made from Fixed Account
Two or Fixed Account Three subject to the required minimum balances. Withdrawals
are limited to the Fixed Account Two or Fixed Account Three Cash Value. The sum
of transfers and withdrawals from Fixed Account Two and Fixed Account Three, is
limited to ten percent (10%) of the respective Cash Value each Contract Year.
Any amounts withdrawn lose any future indexed increases on the withdrawal amount
and future indexed increases on interest attributable to the amount of the
withdrawal up to the time of the withdrawal.
5
<PAGE> 6
CONTRACT DATA (CONTINUED)
SURRENDER OF CONTRACT
At any time prior to the Maturity Date, the Owner may surrender this
contract for its Cash Value. The surrender request shall be in writing on a form
provided by the Company and signed by the Owner. This contract shall accompany
the request form and be surrendered. If an assignment of this contract has been
recorded by the Company, any surrender request must be approved in writing by
the assignee.
The Surrender Charge, as shown below, applies to Fixed Account One and
the Variable Account. The Surrender Charge is a percentage of each Premium
Payment withdrawn. Years are counted from the Valuation Date the Premium Payment
is received.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEARS: 0 1 2 3 4 5 6 7+
PERCENTAGE: 7.0% 7.0% 6.0% 6.0% 5.0% 5.0% 2.0% 0.0%
</TABLE>
The Surrender Charge does not apply to payments upon the death of the
Annuitant. The Surrender Charge does not apply at the Maturity Date if payment
is made under a settlement option providing for payments (1) for the payee's
life or (2) for a period certain, where the last payment is at least ten years
from the date the last Premium Payment was made (provided there is no guaranteed
commutation).
The Surrender Charge table, as defined above, does not apply to Fixed
Account Two or Fixed Account Three. During the seven-year Term Period for each
allocation, surrenders are limited to the Fixed Account Two or Fixed Account
Three Cash Value.
Upon surrender, the Cash Value of the contract shall be at least equal
to (1) 91.5% of the aggregate Premium Payments; (2) plus or minus increases or
decreases in the Variable Account; (3) plus any interest credited to the Fixed
Account; (4) less any withdrawals; (5) less applicable premium tax and
applicable fees.
CHARGES AND DEDUCTIONS
<TABLE>
<S> <C>
Annual Contract Fee prior to the Maturity Date: $33 per year (inapplicable where the Aggregate Value is
$100,000 or more or on any Contract Anniversary when there
is no Aggregate Value in either Fixed Account One or the
Variable Account.)
Annual Annuity Fee after the Maturity Date: $33 per year deducted in equal amounts from each Variable
Annuity payment (inapplicable if Cash Value applied to Variable
Annuity settlement options is $100,000 or more)
</TABLE>
Variable Account annual expenses (percentage of assets in each Investment
Division):
Mortality and Expense Risk Charge: 1.25%
Administrative Charge: .15%
Total Variable Account Annual Expenses: 1.40%
6
<PAGE> 7
CONTRACT DATA (CONTINUED)
TRANSFERS
<TABLE>
<S> <C>
Number of Free Transfers 12 in one Contract Year (before the Maturity Date)
12 in one Contract Year (after the Maturity Date)
Excess Transfer Charge $20 for each transfer over the number of free transfers shown above
</TABLE>
GUARANTEED MINIMUM DEATH BENEFIT - ANNUITANT
The Guaranteed Minimum Death Benefit on the Effective Date is equal to
the Initial Premium. Upon the death of the Annuitant on or after subsequent
Valuation Dates before the Maturity Date and before the Annuitant's 81st
birthday, the Guaranteed Minimum Death Benefit is equal to the greatest of:
1. the sum of the Premium Payments made less withdrawals and any
Withdrawal Charges;
2. the Aggregate Value as of the Valuation Period next following
the date on which due proof of death and a payment election
are received by the Company; and
3. the step-up benefit plus Premium Payments made less
withdrawals and any Withdrawal Charges since the last step-up
anniversary.
The step-up benefit on the Effective Date is the Initial Premium. At
each step-up anniversary, the step-up benefit is redetermined to be the Premium
Payments less withdrawals and any Withdrawal Charges accumulated annually at 5%
per year simple interest. The step-up anniversaries are the Effective Date,
every fifth Contract Anniversary thereafter until the Annuitant's 76th birthday,
and the Annuitant's 76th birthday. The step-up benefit shall not exceed 200% of
1 above.
The Guaranteed Minimum Death Benefit on and after the Annuitant's 81st
birthday will be the greater of 1 or 2 above.
7
<PAGE> 8
DEFINITIONS
ACCUMULATION UNIT means a measuring unit used to calculate the
value of the Owner's interest in each Investment
Division of the Variable Account prior to the
Maturity Date.
AGGREGATE VALUE means the value of this contract at
any point in time. It is equal to the sum of the
Variable Account Value and the Fixed Account Value.
Such term shall also mean that portion of the
Aggregate Value in an Investment Division or Fixed
Account.
ANNUITANT means the person whose life is used to
determine the amount of annuity payments on and after
the Maturity Date and to whom periodic payments are
made after the Maturity Date. The Annuitant is named
in the Contract Data.
ANNUITANT'S BENEFICIARY means the person who is entitled to the Death
Benefit upon the death of the Annuitant.
ANNUITY UNIT means a measuring unit used to calculate the
portion of annuity payments attributable to each
Investment Division of the Variable Account on and
after the Maturity Date.
CASH VALUE means, for the Variable Account or Fixed
Account One, the Aggregate Value less any applicable
Surrender or Withdrawal Charges and contract fees and
less any applicable taxes incurred and not yet
deducted. The Cash Value for Fixed Account Two and
Fixed Account Three is set forth in the Fixed Account
Two Section and Fixed Account Three Section,
respectively.
CODE means the Internal Revenue Code of 1986, as amended.
COMPANY means Delta Life and Annuity Company.
CONTRACT ANNIVERSARY means each anniversary of the Effective Date.
CONTRACT YEAR means the 12 month period commencing with the
Effective Date or a Contract Anniversary.
DELTA INTERNATIONAL
COMPOSITE INDEX The Delta International Composite Index is
determined pursuant to Appendix A. Sample
calculations are in Appendix B. The components of the
Delta International Composite Index are as follows:
<TABLE>
<CAPTION>
Index Country Quotation Exchange Publisher
- ----- ------- ------------------ ---------
<S> <C> <C> <C>
CAC-40(R) France Paris Stock Societe dex
Exchange Bourses
Francaises
DAX(R) Germany Frankfurt Stock Frankfurter
Exchange Wertpapierborse
Nikkei 225(R) Japan Tokyo Stock Nihon Keizai
Exchange Shimbun
SMI(R) Switzerland Zurich Stock Swiss Stock Exchange
Exchange Association
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
FT-SE 100(R) United Kingdom London Stock FT-SE International
Exchange
</TABLE>
If the respective international Index is not
published on the appropriate date, the respective
Index published on the next succeeding business day
will be used. If the respective international Index
is not published for five (5) consecutive business
days, a substitute international Index may be used.
If an international Index is no longer published or
the calculation of the Index is changed
substantially, a substitute international Index will
be used. The substitute international Index must be
acceptable to the appropriate regulatory authority.
The Owner will be notified of any substitute Index.
DELTA VARIABLE ANNUITY
SERVICE CENTER means the address to which notices are given
and any customer service requests are made. The
address shall be as listed on the Contract Data or as
changed by the Company and notified to the Owner in
writing.
USE OF CAC 40(R) INDEX "CAC 40(R)" is a registered trademark of the
Societe des Bourses Francaises-Paris Bourse, which
designates the index that the SBF-Paris Bourse
calculates and publishes. Authorization to use the
index and the "CAC 40(R)" trademark in connection
with this product has been granted by license.
The SBF-Paris Bourse, owner of the trademark
and of the index, does not sponsor, endorse or
participate in the marketing of this insurance
product. The SBF-Paris Bourse makes no warranty or
representation to any person, express or implied, as
to the figure at which the said index stands at any
particular time, nor as to the results or performance
of the index-linked annuity. Neither shall the
SBF-Paris Bourse be under any obligation to advise
any person of any error in the published level of the
index.
USE OF FT-SE(R)100 INDEX This insurance product is not in any way
sponsored, endorsed, sold or promoted by FT-SE
International Limited ("FT-SE") or by the London
Stock Exchange Limited (the "Exchange") or by The
Financial Times Limited ("FT") and neither FT-SE nor
Exchange nor FT makes any warranty or representation
whatsoever, expressed or implied, either as to the
results to be obtained from the use of the
FT-SE(R)100 Index and/or the figure at which the
FT-SE(R)100 Index stands at any particular time on
any particular day or otherwise. The FT-SE(R)100
Index is compiled and calculated by FT-SE. However,
neither FT-SE nor Exchange nor FT shall be liable
(whether in negligence or otherwise) to any person
for any error in the FT-SE(R)100 Index and neither
FT-SE nor Exchange nor FT shall be under any
obligation to advise any person of any error therein.
"FT-SE(R)" and "Footsie(R)" are registered
trademarks of the London Stock Exchange Limited and
The Financial Times Limited and are used by FT-SE
International Limited under license.
USE OF SMI(R) INDEX This insurance product is not in any way
sponsored, endorsed, sold or promoted by the Swiss
Exchange and the Swiss Exchange makes no warranty or
representation whatsoever, expressed or implied,
either as to the results to be obtained from the use
of the SMI(R) Index and/or the figure at which the
SMI(R) Index stands at any particular time
on any particular day or otherwise. The SMI(R) Index
is compiled and calculated solely by the Swiss
Exchange. However, the Swiss Exchange shall not be
liable (whether in negligence or otherwise) to any
person for any error in the SMI(R) Index and the
Swiss Exchange shall be under no obligation to advise
any person of any error therein.
9
<PAGE> 10
SMI(R) is a registered trademark of the
Swiss Exchange.
USE OF NIKKEI 225(R)INDEX All rights to the Nikkei 225(R)Index are
owned by Nihon Keizai Shimbun. The Company disclaims
all responsibility for the calculation or other
maintenance of or any adjustments to the Nikkei
225(R)Index. In addition, Nihon Keizai Shimbun has no
relationship to the Company; it does not sponsor,
endorse, authorize, sell or promote the insurance
product, and has no obligation or liability in
connection with the administration or marketing of
the annuity or with the calculation of the contract
values.
USE OF DAX(R) INDEX DAX(R) is a registered trademark of Deutsche
Borse AG.
DEATH BENEFIT means the amount payable upon the death of
the Owner or the Annuitant, whichever applies. The
amount of the Death Benefit is described in the
Distributions Upon Death of Owner or Annuitant.
EFFECTIVE DATE means the Effective Date shown in the Contract
Data and is the date coverage begins under
this contract. It is also the date from which
Contract Anniversaries and Contract Years are
measured.
FIXED ACCOUNT VALUE means the portion of the Aggregate Value
which is credited with a Guaranteed Minimum Interest
Rate specified in the Contract Data. Fixed Account
assets are maintained in the Company's general
account and not allocated to the separate account.
FIXED ACCOUNT ONE means the portion of the contract which is
credited with a Guaranteed Minimum Interest Rate of
3.5% or the annual rate established each year by the
Company.
FIXED ACCOUNT TWO means the portion of the contract which is
credited with a Guaranteed Minimum Interest Rate of
3.0% or a rate derived from increases (if any) in the
S & P 500(R) Index over a Term Period.
FIXED ACCOUNT THREE means the portion of the contract which is
credited with a Guaranteed Minimum Interest Rate of
3.0%, or a rate derived from increases (if any) in
the Delta International Composite Index over a Term
Period.
FIXED ANNUITY means payments which begin on the Maturity
Date and which do not vary as to investment
experience of any separate account of the Company.
FUND/SERIES means an open ended management investment
company whose shares are available to fund the
benefits under this contract. Such investment company
must be registered under the Investment Company Act
of 1940, as amended.
INVESTMENT DIVISION means a subdivision of the Variable Account
investing solely in shares of one of the Portfolios.
The investment performance of each Investment
Division is linked directly to the performance of the
underlying Portfolio.
JOINT OWNERS means two persons who are considered the
Owner and may exercise all the rights of the Owner
under this contract jointly. Each Joint Owner has an
equal ownership interest in the Contract unless the
Company is advised otherwise in writing.
MATURITY DATE means the Maturity Date designated in the
application for this contract. It may be as early as
desired, subject to applicable Withdrawal or
Surrender Charges. Until the Maturity Date, it is
subject to change by the Owner upon at least 30 days
advance written notice to the Company. The Maturity
Date cannot be accelerated without written consent of
the Company. It is the date
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<PAGE> 11
on which a settlement option for the payment of Cash
Value for the benefit of the Annuitant is effective.
At the Maturity Date, the election is binding and
irrevocable. The Maturity Date shall in no event be
later than the Annuitant's 109th birthday.
OWNER means the person who possesses all rights
under the contract, including the right to make
withdrawals from or surrender the contract and
designate or change the Owner's Beneficiary and
Annuitant's Beneficiary. The Annuitant is the Owner
unless otherwise designated in the application or by
change of ownership thereafter.
OWNER'S BENEFICIARY means the person who is entitled to the Death
Benefit upon the death of the Owner prior to the
Maturity Date.
PORTFOLIO means any series of Dreyfus Variable
Investment Fund underlying an Investment Division of
the Variable Account.
PREMIUM PAYMENTS means the sum of the Initial Premium and all
subsequent premiums.
RIGHT TO EXAMINE PERIOD means the period described in the Right to
Examine provision during which the contract may be
canceled and treated as void from the Effective Date.
TERM PERIOD means seven years from the date any Premium
Payment or transfer is allocated to Fixed Account Two
or Fixed Account Three. A separate Term Period
applies to each Premium Payment allocated to Fixed
Account Two or Fixed Account Three or to any transfer
to Fixed Account Two or Fixed Account Three.
VALUATION DATE means each date on which the Variable
Account is valued, which is each business day on
which the New York Stock Exchange is open for
trading, except any day on which trading on the New
York Stock Exchange is restricted, or on which an
emergency exists, as determined by the Securities and
Exchange Commission, so that valuation or disposal of
securities is not practicable.
VALUATION PERIOD means the period of time beginning at the
close of the New York Stock Exchange on a Valuation
Date and ending at the close of the New York Stock
Exchange on the next succeeding Valuation Date. A
Valuation Period may be more than one day in length.
VARIABLE ACCOUNT means Delta Life and Annuity Company
Separate Account VAI, a separate account of the
Company under Tennessee law. The Variable Account
consists of Investment Divisions. Each Investment
Division of the Variable Account may invest its
assets in a separate class of a designated investment
company or companies.
VARIABLE ACCOUNT VALUE means the portion of the Aggregate Value
allocated to the Variable Account.
VARIABLE ANNUITY means monthly payments which vary in amount
with the investment experience of the Investment
Division into which the amount allocated to the
Variable Account is allocated.
WITHDRAWAL CHARGE
OR SURRENDER CHARGE means the amount specified in the Contract Data.
11
<PAGE> 12
GENERAL PROVISIONS
ENTIRE CONTRACT This contract has been issued in
consideration of the application and payment of the
Initial Premium while the Annuitant is alive. This
contract, the riders and/or endorsements, if any, and
the application, a copy of which is attached,
constitute the entire agreement between the parties.
All statements made by the Owner, Annuitant or on
behalf of either shall be considered representations
and not warranties.
AGE Unless otherwise specified, the word age
means age nearest birthday. Payment under this
contract will be subject to proof of age acceptable
to the Company.
MISSTATEMENT OF AGE If the age of the Annuitant or any payee
under the contract has been misstated, the benefits
available under this contract will be those that the
premiums paid would have purchased for the correct
age. Any overpayment by the Company, with interest at
the rate of 3% compounded annually, will be charged
against the payments to be made next succeeding the
adjustment. Any underpayment by the Company will be
paid in a lump sum with interest at the rate of 3%
compounded annually.
EVIDENCE OF SURVIVAL When any payments under the contract depend
on a recipient being alive on a given date, proof
that the recipient is living may be required by the
Company. Such proof may be required prior to making
the payments.
INCONTESTABILITY This contract will not be contested.
STATEMENTS Prior to the Maturity Date or death of the
Annuitant or Owner, the Company shall provide the
Owner with a written statement of the Aggregate Value
at least once each Contract Year.
COMPATIBILITY The Company intends that the terms and
conditions of this contract shall be in compliance
with the applicable provisions of the Code. All
interpretations of the terms and conditions of this
contract shall be in compliance with these sections
of the Code. In addition, all rights granted to the
Owner or the Annuitant herein shall be ineffective to
the extent such rights would be incompatible with
such sections.
AMENDMENT/MODIFICATION The contract may be modified by Delta
without consent (except in Kansas, Pennsylvania and
Washington) if such modification: (i) is necessary to
allow the contract or the separate account to comply
with any law or regulation is sued by a governmental
agency to which the Company or the separate account
is subject; or (ii) is necessary to assure continued
compliance with applicable requirements of the Code
or other federal or state laws relating to the
contract.
Any other amendment may be made only with
the consent of the Owner and the Company. Only the
President, a Senior Vice President or the Secretary
of the Company has the power to change, modify or
waive the provisions of this contract, and then only
in writing. The agent or any other person shall not
have the power or authority to waive, change or alter
the terms of this contract, except as provided above.
TRANSFER OF OWNERSHIP Transfer of ownership may be made on a form
signed by the Owner, provided by and filed with the
Company. The effective date on the transfer
shall be the date the request was signed by the
Owner, subject to any payment made or action taken by
the Company before the contract was endorsed.
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<PAGE> 13
ASSIGNMENT The Owner may assign this contract, subject
to the rights of any assignee of record. No
assignment shall be binding upon the Company until it
is recorded by the Company at its Delta Variable
Annuity Service Center. In no case shall the Company
have any obligation as to the effect, validity or
sufficiency of the assignment. If a beneficiary
designation is revocable, any interest of the
beneficiary shall be subject to the rights of an
assignee. To the extent a beneficiary designation is
irrevocable, no assignment may be made without such
beneficiary's consent. Any part of the contract
values to which the assignee is entitled shall be
payable to the assignee in one sum.
INTEREST ON DEATH PROCEEDS The Company will pay interest at 3% per year
on the proceeds if the Cash Value is not paid in one
sum or applied under a settlement option within
thirty (30) days of the date the Company receives (1)
due proof of death of the Annuitant or Owner before
the Maturity Date and (2) payment election from the
beneficiary in good order. This does not apply if the
contract is continued with the spouse beneficiary as
Owner. If applicable law requires payment of a
greater amount, the Company will pay that amount.
SPENDTHRIFT AND
CREDITOR EXEMPTION After the selection of a settlement option
has been made by the Owner, no payee shall have the
right to encumber, alienate, or anticipate any of the
payments, or change the manner of settlement in any
way, unless such right has been granted by the Owner
in writing and filed with the Company.
To the extent permitted by law, no payments
under this contract shall be subject to the debts,
contracts or engagements of the Owner, Annuitant or
any beneficiary of this contract or to any judicial
process to levy upon or attach the same for the
payment thereof.
FORMS The Company may rely upon, and shall be held
harmless for, acting in accordance with any form
provided to the Company which has been executed and
filed by either the: (1) Owner; (2) Annuitant; and/or
(3) beneficiary(ies).
DEFERRAL Transfers, partial withdrawals, payment of
proceeds on the Maturity Date or a request for full
surrender from the Variable Account will usually be
processed within seven (7) days. However, processing
of any of these transactions that involve the
Variable Account may be postponed for any of the
following reasons:
1. when the New York Stock Exchange is
closed, other than customary
weekend and holiday closings;
2. when trading on the New York Stock
Exchange is restricted by the
Securities and Exchange Commission;
3. when the Securities and Exchange
Commission declares that an
emergency exists as a result of
which disposal of securities in the
Variable Account is not reasonably
practicable to determine the
Accumulation Value in the
Investment Division;
4. when a governmental body having
jurisdiction over the Variable
Account by order permits such
delay;
5. if any Premium Payment paid to
Delta by check or draft has not
yet cleared.
Rules and regulations of the Securities and
Exchange Commission, if any, are applicable and will
govern as to whether conditions described above
exist.
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<PAGE> 14
At the option of the Company, any transfer
or withdrawal or surrender payment or payment upon
the Maturity Date from the Fixed Account may be
deferred for a period not longer than six (6) months
from the date the Owner makes such request.
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<PAGE> 15
PAYMENT OF PREMIUMS
PREMIUMS/LIMITATION The Initial Premium payable to the Company
on the Effective Date is shown on the Contract Data.
This contract will not be in force until the Initial
Premium is paid. The Annuitant must be alive upon the
Company's receipt of the Initial Premium for the
contract to become effective. Subsequent Premium
Payments may be made at any time prior to the
Maturity Date, subject to the premium limitations
described below.
The Minimum Initial Premium Payment and
Minimum Subsequent Premium Payment are as set forth
in the Contract Data. A Premium Payment resulting in
Aggregate Value in excess of $2,000,000 or an
allocation to the Fixed Accounts resulting in Fixed
Account Aggregate Value in excess of $1,000,000
requires preapproval by the Company.
PAYMENTS/DATE OF RECEIPT Premium Payments are payable to the Company
at the mailing address for premiums shown on the
Contract Data. Premium Payments after the Initial
Premium shall be credited to this contract on the
Valuation Date received by the Company.
PREMIUM TAX In the event that a premium tax is imposed
against the contract, such tax will be deducted from
the Aggregate Value at the earlier of:
1. the date such premium tax is due;
or
2. the date the Aggregate Value is
used to determine the value of
annuity payments, or any proceeds
payable upon death, or upon
surrender.
PREMIUM ALLOCATION Premium Payments received at the Delta
Variable Annuity Service Center will be allocated to
the Variable and Fixed Accounts according to the
premium allocation specified in the application or
the Owner's most recent instructions received in good
order by the Company, if any. The Owner may change
the allocation of future Premium Payments without fee
or penalty upon written notice to the Delta Variable
Annuity Service Center.
Premium Payments and transfers to Fixed
Account Two and Fixed Account Three shall be invested
in the Money Market Investment Division until the
next available purchase date. The purchase date is
determined by the Company based on the volume of
premium and transfers into the respective Fixed
Account. The purchase date shall be the date that the
Premiums and transfers are allocated to the
respective Fixed Account.
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<PAGE> 16
ALLOCATION TO FIXED ACCOUNTS/FIXED ACCOUNT ONE
GENERAL The benefits under this contract may be
provided wholly or in part through the Fixed Account.
The Fixed Account includes assets of the Company
other than those credited to a separate account of
the Company. Premium Payments allocated to the Fixed
Account may be allocated to Fixed Account One, Fixed
Account Two or Fixed Account Three.
FIXED ACCOUNT ONE The Aggregate Value attributable to Fixed
Account One on or before the Maturity Date shall be
the sum of:
(1) Premium Payments received by the
Company and allocated to Fixed
Account One, plus;
(2) Transfers to Fixed Account One,
plus;
(3) Interest credited to Fixed Account
One, less;
(4) Withdrawals from Fixed Account One,
less;
(5) Transfers from Fixed Account One,
less;
(6) Withdrawal Charges or Surrender
Charges attributable to Fixed
Account One, less;
(7) Any applicable taxes or fees
deducted by the Company.
The Company guarantees that Premium Payments
and transfers allocated to Fixed Account One will
earn a minimum fixed interest rate of 3.5% per year.
The Company may credit interest in excess in 3.5%.
Periodically, but not less than annually, the Company
will declare interest rates that apply separately to
amounts allocated in separate time periods.
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<PAGE> 17
FIXED ACCOUNT TWO
GENERAL The Aggregate Value and Cash Value attributable
to Fixed Account Two shall be determined
separately for each Premium Payment or transfer
allocated to Fixed Account Two. The Aggregate Value
of an allocation shall be equal to the greater of (1)
its Indexed Value; or (2) its Cash Value.
ALLOCATION ANNIVERSARY An Allocation Anniversary is each anniversary
of the date a Premium Payment or transfer
is allocated to Fixed Account Two. Premium Payments
and transfers to Fixed Account Two and Fixed Account
Three shall be invested in the Money Market
Investment Division until the next available purchase
date. The purchase date is determined by the Company
based on the volume of premium and transfers into the
respective Fixed Account. The purchase date shall be
the date that the Premiums and transfers are
allocated to the respective Fixed Account.
ALLOCATION ANNIVERSARY
ADJUSTMENTS On each Allocation Anniversary, the Indexed
Value and the Cash Value will be compared. If the
Indexed Value is greater than the Cash Value, the
Cash Value will be increased, up to the amount of the
Indexed Value, by the excess, if any:
* of the total to date of all Indexed
Increases during the Term Period;
OVER:
* the total of all interest credited
to the Cash Value and all previous
Allocation Anniversary Adjustments
during the Term Period.
INDEXED VALUE The Indexed Value of a Fixed Account Two allocation
shall be the sum of:
1. The Premium Payment received by the
Company and allocated to Fixed
Account Two or the amount
transferred to Fixed Account Two;
plus
2. All Indexed Increases; less
3. Any withdrawals; plus
4. Any Term Period Adjustment; less
5. Any applicable taxes deducted by
the Company.
CASH VALUE The Cash Value of each Fixed Account Two allocation
at any time is guaranteed to equal:
1. The Fixed Account Two allocation
multiplied by 90%; plus
2. Allocation Anniversary Adjustments,
if any; less
3. Any withdrawals; less
4. Any applicable taxes deducted by
the Company; plus
5. Interest credited on the result of
items 1 through 4 at the Guaranteed
Minimum Interest Rate shown in the
Contract Data.
At the end of the Term Period, if the
Indexed Value exceeds the Cash Value, the Cash Value
will be increased to equal the Indexed Value.
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<PAGE> 18
INDEXED INCREASES The Indexed Increase during any Term Period is
determined on each Allocation Anniversary as follows:
1. First, an annual effective Index Rate is determined.
The Index Rate is determined such that if the S & P
500(R) Index Value on the first day of the Term
Period were accumulated for the Term Period at this
annual effective Index Rate to the Allocation
Anniversary at the end of the Term Period the
resulting value would equal the highest S & P 500(R)
Index Value on any Allocation Anniversary, including
the first day of the current Term Period. The annual
effective Index Rate is equal to:
[(Highest S & P 500(R) Index
Value)/(Initial S & P 500(R) Index
Value)]1/7-1
where:
* the Highest S & P 500 (R) Index
Value is the highest S & P 500(R)
Index Value on any Allocation
Anniversary measured from the first
day of the Term Period to the
current Allocation Anniversary; and
* the Initial S & P 500(R) Index
Value is the S & P 500(R) Index
Value on the first Valuation Date
of the Term Period.
2. Second, the Indexed Increase on the current
Allocation Anniversary is determined as follows:
(a) multiply the Indexed Value as of
the first day of the Term Period
less any withdrawals during the
Term Period by:
(1 + Index Rate - Guaranteed
Yield Spread Charge)n-1
where:
* "n" is the number of
completed years in the Term
Period; and
(b) subtract any previous Indexed
Increases in the Term Period;
(c) add, for each withdrawal during the
Term Period, the amount of the
withdrawal multiplied by:
(1 + Index Rate calculated on the
Allocation Anniversary immediately
prior to the withdrawal Guaranteed
Yield Spread Charge)m-1
where:
* "m" is the number of completed
years in the Term Period at the
time of the withdrawal.
The Indexed Increase will never be less than zero.
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<PAGE> 19
If any portion of the Initial Premium is
allocated to Fixed Account Two, then the Guaranteed
Yield Spread Charge is set forth on the Contract Data
page. For any subsequent allocation in Fixed Account
Two, the Guaranteed Yield Spread Charge will be set
by the Company at the beginning of the Term Period.
TERM PERIOD ADJUSTMENT At the end of the Term Period if the Cash
Value exceeds the Indexed Value, the Indexed Value
will be increased to equal the Cash Value.
MINIMUM VALUES Cash Values, benefits payable upon death and
annuity payments under Settlement Options are at
least equal to the minimum values required by law of
the state in which this contract was delivered.
FIXED ACCOUNT TWO INDEX The Fixed Account Two Index is the Standard
and Poor's 500(R)Index (or "S & P 500(R) Index). If
the S & P 500(R)Index is not published on the
appropriate date, the S & P 500(R) Index published on
the next succeeding Valuation Date will be used. If
the S & P 500(R) Index is not published for five (5)
consecutive business days, a substitute S & P
500(R)Index may be used. If the S & P 500(R)Index is
no longer published or the calculation of the S & P
500(R)Index is changed substantially, a substitute
index will be used. The Owner will be notified of any
substitute index.
USE OF S & P 500(R)INDEX "S & P"(R), "S & P 500"(R)and "Standard &
Poor's 500"(R)are trademarks of The McGraw Hill
Companies, Inc. and have been licensed for use by the
Company. This product is not sponsored, endorsed,
sold or promoted by Standard & Poor's(R), and
Standard & Poor's(R) makes no representations
regarding the advisability of purchasing this
product.
FIXED ACCOUNT TWO AT
MATURITY DATE On the Maturity Date, the entire Fixed
Account Two Cash Value shall be transferred to the
Money Market Portfolio of the Variable Account.
Thereafter, the Aggregate Value of the Owner's
interest in Fixed Account Two shall be zero.
END OF TERM PERIOD At the end of a Term Period for an
allocation to Fixed Account Two and before the
Maturity Date, the Aggregate Value of the Fixed
Account Two allocation shall be transferred to the
Money Market Portfolio of the Variable Account unless
otherwise specified by the Owner in writing prior to
the end of the Term Period.
CHANGES TO FIXED
ACCOUNT TWO To the extent permitted by law, subject to any
required notice to the Owner, the Company may, from
time to time, make the following changes in Fixed
Account Two:
- change the Fixed Account Two Index
and/or the Guaranteed Yield Spread
Charge, if the Company determines
such change to be appropriate, for
any future allocation but not
during the respective Term Period
for such allocation.
- discontinue future allocations to
Fixed Account Two.
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<PAGE> 20
FIXED ACCOUNT THREE
GENERAL The Aggregate Value and Cash Value
attributable to Fixed Account Three shall be
determined separately for each Premium Payment or
transfer allocated to Fixed Account Three. The
Aggregate Value of each allocation shall be equal to
the greater of (1) its Indexed Value; or (2) its Cash
Value.
ALLOCATION ANNIVERSARY An Allocation Anniversary is each
anniversary of the date a Premium Payment or transfer
is allocated to Fixed Account Three. Premium Payments
and transfers to Fixed Account Two and Fixed Account
Three shall be invested in the Money Market
Investment Division until the next available purchase
date. The purchase date is determined by the Company
based on the volume of premium and transfers into the
respective Fixed Account. The purchase date shall be
the date that the Premiums and transfers are
allocated to the respective Fixed Account.
ALLOCATION ANNIVERSARY
ADJUSTMENTS On each Allocation Anniversary, the Indexed
Value and the Cash Value will be compared. If the
Indexed Value is greater than the Cash Value, the
Cash Value will be increased, up to the amount of the
Indexed Value, by the excess, if any:
* of the total to date of all Indexed
Increases during the Term Period;
OVER:
* the total of all interest credited
to the Cash Value and all previous
Allocation Anniversary Adjustments
during the Term Period.
INDEXED VALUE The Indexed Value of a Fixed Account Three
allocation shall be the sum of:
1. The Premium Payment received by the
Company and allocated to Fixed
Account Three or the amount
transferred to Fixed Account Three;
plus
2. All Indexed Increases; less
3. Any withdrawals; plus
4. Any Term Period Adjustment; less
5. Any applicable taxes deducted by
the Company.
CASH VALUE The Cash Value of each Fixed Account Three
allocation at any time is guaranteed to equal:
1. The Fixed Account Three allocation
multiplied by 90%; plus
2. Allocation Anniversary Adjustments,
if any; less
3. Any withdrawals; less
4. Any applicable taxes deducted by
the Company; plus
5. Interest credited on the result of
items 1 through 4 at the Guaranteed
Minimum Interest Rate shown in the
Contract Data.
At the end of the Term Period, if the Indexed Value
exceeds the Cash Value, the Cash Value will be
increased to equal the Indexed Value.
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<PAGE> 21
INDEXED INCREASES The Indexed Increase during any Term Period
is determined on each Allocation Anniversary as
follows:
1. First, an annual effective Index Rate is
determined. The Index Rate is determined
such that if the Delta International
Composite Index Value on the first day of
the Term Period were accumulated for the
Term Period at this annual effective Index
Rate to the Allocation Anniversary at the
end of the Term Period the resulting value
would equal the highest Delta International
Composite Index Value on any Allocation
Anniversary, including the first day of the
Term Period. The annual effective Index Rate
is equal to:
[(Highest Composite Index Value)/
(Initial Composite Index Value)] 1/7-1
where:
* the Highest Composite Index Value
is the highest Delta International
Composite Index Value on any
Allocation Anniversary measured
from the first day of the Term
Period to the current contract
anniversary; and
* the Initial Composite Index Value
is the Delta International
Composite Index Value on the first
Valuation Date of the Term Period.
2. The Indexed Increase on the current
Allocation Anniversary is determined as
follows:
(a) multiply the Indexed Value as of
the first day of the Term Period
less any withdrawals during the
Term Period by:
(1 + Index Rate - Guaranteed
Yield Spread Charge)n-1
where:
* "n" is the number of
completed years in the Term
Period;
(b) subtract any previous Indexed
Increases in the Term Period;
(c) add, for each withdrawal during the
Term Period, the amount of the
withdrawal multiplied by:
(1 + Index Rate calculated on
the Allocation Anniversary
immediately prior to the
withdrawal Guaranteed Yield
Spread Charge)m-1
where:
* "m" is the number of
completed years in the Term
Period at the time of the
withdrawal.
The Indexed Increase will never be less than
zero.
If any portion of the Initial Premium is
allocated to Fixed Account Three, then the Guaranteed
Yield Spread Charge is set forth on the Contract Data
page. For any subsequent allocation in
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<PAGE> 22
Fixed Account Three, the Guaranteed Yield
Spread Charge will be set by the Company at the
beginning of the Term Period.
TERM PERIOD ADJUSTMENT At the end of the Term Period if the Cash
Value exceeds the Indexed Value, the Indexed Value
will be increased to equal the Cash Value.
MINIMUM VALUES Cash Values, benefits payable upon death and
annuity payments under Settlement Options are at
least equal to the minimum values required by law of
the state in which this contract was delivered.
INDEX VALUE The Index Value is the value of the Fixed
Account Three Index.
FIXED ACCOUNT THREE AT
MATURITY DATE On the Maturity Date, the entire Fixed
Account Three Cash Value shall be transferred to the
Money Market Portfolio of the Variable Account.
Thereafter, the Aggregate Value of the Owner's
interest in Fixed Account Three shall be zero.
FIXED ACCOUNT THREE INDEX The Fixed Account Three Index is the Delta
International Composite Index.
END OF TERM PERIOD At the end of a Term Period for an
allocation to Fixed Account Three and before the
Maturity Date, the Aggregate Value of the Fixed
Account Three allocation shall be transferred to the
Money Market Portfolio under the Variable Account
unless otherwise specified by the Owner in writing
prior to the end of the Term Period.
CHANGES TO FIXED ACCOUNT
THREE To the extent permitted by law, subject to
any required notice to the Owner, the Company may
from time to time, make the following changes in
Fixed Account Three:
- change the Fixed Account Three
Index and/or the Guaranteed Yield
Spread Charge, if the Company
determines such change to be
appropriate, for any future
allocation but not during the
respective Term Period for such
allocation.
- discontinue future allocations to
Fixed Account Three.
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<PAGE> 23
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT The Variable Account is an account established by
the Company, pursuant to the laws of the state
of Tennessee, to separate the assets funding the
variable benefits for the class of policies to which
this contract belongs from the other assets of the
Company. The Variable Account is registered as a unit
investment trust under the Investment Company Act of
1940, as amended. All income, gains, and losses,
whether or not realized, from assets allocated to the
Variable Account are credited to or charged against
the Variable Account without regard to income, gains,
or losses of the Company's general account. The
assets of the Variable Account are the property of
the Company but separate from the Company's general
account, or other separate accounts. That portion of
the assets of the Variable Account which is equal to
the reserves and other contract liabilities with
respect to the Variable Account will not be
chargeable with liabilities arising out of any other
business the Company may conduct.
INVESTMENT DIVISIONS The Variable Account is divided into
Investment Divisions. Each invests in a portfolio(s)
of a Fund or Series designed to meet the objectives
of the Investment Divisions. The current eligible
investments are shown in the Contract Data. The
Company may, from time to time, add additional
Investment Divisions. If Investment Divisions are
added, the Owner may be permitted to select from
these other Investment Divisions subject to the terms
and conditions the Company may impose on those
allocations. The Company reserves the right to limit
the number of Investment Divisions in which the Owner
may invest. Each Investment Division will be valued
at the end of each Valuation Period.
CHANGES WITHIN THE
VARIABLE ACCOUNT When permitted by law, subject to any
required notice to the Owner and any required
approval of the Securities and Exchange Commission,
state regulatory authorities or contract owners, the
Company may, from time to time, make the following
changes to the Variable Account:
- Make additional Investment
Divisions available. The Investment
Divisions will invest in investment
portfolios the Company finds
suitable for this contract.
- Eliminate Investment Divisions from
the Variable Account, combine two
or more Investment Divisions, or
substitute a new portfolio for the
portfolio in which an Investment
Division invests. A substitution
may become necessary if, in the
Company's judgment, a portfolio no
longer suits the purposes of this
contract. This may happen due to a
change in the laws or regulations,
or a change in a portfolio's
investment objectives or
restrictions. This may also happen
if the portfolio is no longer
available for investment, or for
some other reason.
- Combine the Variable Account with
other separate accounts.
- Deregister the Variable Account
under the Investment Company Act of
1940, as amended, when registration
of the Variable Account is no
longer required.
- Operate the Variable Account as a
management company under the
Investment Company Act of 1940, as
amended.
- Restrict or eliminate any voting
rights of contract owners or other
persons who have voting rights in
the Variable Account.
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<PAGE> 24
- Make any changes required by the
Investment Company Act of 1940, as
amended, or its related
requirements.
24
<PAGE> 25
VARIABLE ACCOUNT CONTRACT VALUES
DURING THE ACCUMULATION PERIOD
CREDITING ACCUMULATION
UNITS Each Premium Payment allocated to the
Variable Account, and any amount transferred from the
Fixed Account to the Variable Account will be
credited to the specified Investment Divisions in the
form of Accumulation Units.
The number of Accumulation Units to be
credited to a specified Investment Division is
determined by dividing the dollar amount allocated to
such division by the Accumulation Unit value next
computed for such division following acceptance for
investment of the allocated amount by the investment
portfolio in which the Investment Division invests.
The Accumulation Unit value of each Investment
Division is determined on each Valuation Date. The
number of units in each Investment Division will not
change because of subsequent changes in the
Accumulation Unit value.
To determine the number of Accumulation
Units deducted or credited in connection with a
transaction, the dollar amount of the transaction is
divided by the Accumulation Unit value of the
affected Investment Division. The number of
Accumulation Units in the Investment Division will
change only if Accumulation Units are deducted or
credited for the transactions described below.
Accumulation Units are credited to each
Investment Division as a result of:
1. any Premium Payments received and
allocated to the Investment
Division; and
2. transfers to the Investment
Division.
Accumulation Units are deducted from each
Investment Division as a result of:
1. transfers from the Investment
Division;
2. any deductions caused by
withdrawals from the Investment
Division; and
3. any charges due that are assessed
against the Investment Division.
ACCUMULATION UNIT VALUE The value of an Accumulation Unit increases
or decreases in proportion to the net investment
return of the Investment Division. Such value is
determined by multiplying the value of an
Accumulation Unit on the immediately preceding
Valuation Date by the Net Investment Factor (see
definition below) for the period since that date.
Since the purchaser bears the investment risk, there
is no guarantee as to the Aggregate Value of the
contract; such value may be less than, equal to, or
more than the amounts allocated to the Investment
Divisions.
NET INVESTMENT FACTOR The Net Investment Factor is a value which
indicates the percentage change in the net asset
value of an Investment Division since the preceding
Valuation Date. The Net Investment Factor for any
Investment Division for any Valuation Period is
determined by dividing (a) by (b) and then
subtracting (c) from the result where:
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(a) is the net result of:
1. The net asset value of a Fund or
Series share held in the Investment
Division determined as of the end
of the Valuation Period; plus
2. The per share amount of any
dividend or other distribution
declared by the Fund on the shares
held in the Investment Division if
the "ex-dividend" date occurs
during the Valuation Period; plus
or minus
3. A per share credit or charge with
respect to any taxes paid or
reserved for by the Company during
the Valuation Period which are
determined by the Company to be
attributable to the operation of
the Investment Division.
(b) is the net asset value of a Fund share held
in the Investment Division determined as of
the end of the preceding Valuation Period;
and
(c) is the Valuation Period equivalent of the
Mortality and Expense charge and the
Administrative Expense charge for the
Variable Account.
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TRANSFERS WITHIN AND BETWEEN ACCOUNTS
EXCHANGE OF ACCUMULATION
UNITS After the Right to Examine Period and before
the Maturity Date the Owner may elect, by written
notice to the Company at the Delta Variable Annuity
Service Center, to exchange the value of a designated
number of Accumulation Units of a particular
Investment Division then credited to this contract
for other Accumulation Units of an equal dollar value
of another Investment Division.
TRANSFERS BETWEEN THE
FIXED AND VARIABLE
ACCOUNTS After the Right to Examine Period and before
the Maturity Date, the Owner may elect, by written
notice to the Company at the Delta Variable Annuity
Service Center, to:
(a) transfer the value of a designated
number of Accumulation Units of a
particular Investment Division then
credited to this contract to an
equal dollar value in any of the
Fixed Accounts;
(b) transfer a specified dollar value
in any of the Fixed Accounts to one
or more Investment Divisions of the
Variable Account;
(c) transfer a specified dollar amount
in any of the Fixed Accounts to any
of the other Fixed Accounts; or
(d) transfer the value of a designated
number of Accumulation Units of a
particular Investment Division to
one or more other Investment
Divisions of the Variable Account.
Transfers shall be subject to restrictions
in the Contract Data. Transfers involving the
Investment Divisions are subject to such restrictions
as may be imposed by the Funds. The Company may allow
telephonic transfers in accordance with procedures
established by the Company. The Company and the Delta
Variable Annuity Service Center are not liable for
any loss, cost or expense for action on telephonic
transfers which are believed to be genuine in
accordance with Company procedures.
In the event of a transfer from Fixed
Account Two or Fixed Account Three, both the Cash
Value and the Indexed Value will be reduced by the
amount of the transfer. The account to which the
transfer is made will be credited with the Cash
Value. The maximum transfer from Fixed Account Two or
Fixed Account Three shall be the Cash Value. In the
event the entire Fixed Account Two or Fixed Account
Three Cash Value is transferred, the Aggregate Value
and the Indexed Value of such account shall be zero.
The Company reserves the right at any time,
and without prior notice, to terminate, suspend or
modify transfer privileges.
DETERMINATION OF
ACCUMULATION UNIT
VALUES UPON TRANSFER Upon the Company's receipt of a request for
any transfer, the Accumulation Unit Value of any
Investment Division from which transfer is made is
determined at the close of the concurrent Valuation
Period or, if later, at the close of the first
subsequent Valuation Period during which the
underlying investment portfolio of such Investment
Division accepts orders for redemption of shares
relating to such transfer. Upon the Company's receipt
of the redemption proceeds, the Accumulation Unit
Value of any Investment Division to which a transfer
is made is determined at the close of the concurrent
Valuation Period or, if later, at the close of the
first
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subsequent Valuation Period during which the
underlying portfolio of the Investment Division to
which the transfer is made accepts orders for
purchases of shares relating to such transfer.
LIMITATION ON TRANSFERS Transfers are subject to the restrictions and
transfer fees shown in the Contract Data.
Transfers made before the Maturity Date will have the
transfer fee deducted from the amount which is
transferred if the entire amount in the Investment
Division is being transferred, otherwise from the
Investment Division from which the transfer is made.
Any transfer fees will be deducted in the ratio of
the Aggregate Value transferred from each Investment
Division or Fixed Account to the total Aggregate
Value transferred. The sum of transfers and
withdrawals from Fixed Accounts is limited each
Contract Year to 10% of the Fixed Account One
Aggregate Value or Fixed Account Two Cash Value or
Fixed Account Three Cash Value, respectively. If
after the transfer the Investment Division or Fixed
Account will have some amount of Cash Value but less
than the minimum balance requirements shown in the
Contract Data, then the remaining Cash Value will be
transferred also.
AUTOMATIC ASSET
REBALANCING After the Right to Examine Period and before the
Maturity Date, at the election by the Owner on a
form to be provided by the Company, percentages
allocated among the Investment Divisions may be
rebalanced based on the Aggregate Value allocated to
the Investment Divisions. Such rebalancing may be
made quarterly, semi-annually, or annually.
Rebalancing shall occur based on the Owner's
pre-established directed percentages. Rebalancing
percentages may be changed upon thirty (30) days
advance written notice by the Owner. An Aggregate
Value of at least $10,000 in the Variable Account is
required to elect automatic asset rebalancing. Any
rebalancing shall not be subject to the restrictions
on transfers. The Company reserves the right to
discontinue automatic asset rebalancing. Only one of
the following provisions may be elected to be in
effect at any time: dollar cost averaging, automatic
asset rebalancing or systematic withdrawals. The
Company reserves the right to charge an annual fee of
an amount not to exceed $25 for administrative
expenses associated with processing the automatic
asset rebalancing. This fee shall be deducted
proportionately from the Investment Division's in
equal installments during the Contract Year.
DOLLAR COST AVERAGING After the Right to Examine Period and before
the Maturity Date, the Owner may elect, on a form to
be provided by the Company, to transfer funds either
from Fixed Account One or from the Money Market
Portfolio of the Variable Account to Investment
Divisions in the Variable Account. A minimum balance
of $10,000 in Fixed Account One or the Money Market
Portfolio, as applicable, is required. Transfers from
Fixed Account will be made once per month. Each such
transfer from Fixed Account One may not exceed 1/36th
of the Aggregate Value of Fixed Account One at the
time of election. Transfers from the Money Market
Portfolio of the Variable Account may be made at
intervals no more frequently than once per month.
These transfers shall be subject to a $250 minimum
transfer from Fixed Account One or from the Money
Market Portfolio. These transfers are not subject to
the restrictions on transfers in the Contract Data.
The Company reserves the right to discontinue the
dollar cost averaging provision. Only one of the
following provisions may be elected to be in effect
at any time: dollar cost averaging, automatic asset
rebalancing or systematic withdrawals. The Company
reserves the right to charge an annual fee of an
amount not to exceed $25 for administrative expenses
associated with processing the dollar cost averaging.
This fee shall be deducted proportionately from the
transferring Fixed Account One or Investment Division
in equal installments during the Contract Year.
Dollar cost averaging will terminate when
any of the following occurs: (a) the number of
designated transfers has been completed; (b) the
value of the Money Market Investment Division or
Fixed Account One is insufficient to complete the
next transfer; (c) the Owner requests termination in
writing; (d) the Contract is surrendered; or (e) the
Maturity Date is reached.
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WITHDRAWALS AND SURRENDER
WITHDRAWALS-GENERAL After the Right to Examine Period and before
the Maturity Date, the Owner may make withdrawals
from the Aggregate Value of the contract. Withdrawals
are subject to any restrictions described in the
Contract Data. Withdrawals may not reduce the Cash
Value to less than the minimum balances shown on the
Contract Data. Withdrawals are subject to the
Withdrawal Charge (unless otherwise waived as
described below in this Section) and any applicable
premium taxes. The Withdrawal Charge is a percentage
of each Premium Payment withdrawn as stated in the
Contract Data. All withdrawals will be based on
values for the Valuation Period in which the Owner's
written notice or other form of notice acceptable to
the Company is received at the Delta Variable Annuity
Service Center. There is no Withdrawal Charge upon
payments upon the death of the Annuitant. Payment of
the Death Benefit upon the death of the Owner (who is
not the Annuitant) is subject to the Withdrawal
Charge unless an exception applies. The Withdrawal
Charge does not apply on the Maturity Date if payment
is made under a settlement option providing for
payments (1) for the payee's life or (2) for a period
certain, where the last payment is at least ten years
from the date the last Premium Payment was made
(provided there is no guaranteed commutation).
WITHDRAWAL ALLOCATION The withdrawal request must be in a form and
manner acceptable to the Company. The withdrawal
request must specify the amount of the withdrawal or
the percentage of Aggregate Value to be withdrawn
from each account or Investment Division. The Owner
may direct a withdrawal to be made from a specific
Investment Division or the withdrawal may be taken
pro rata from all Investment Divisions. If the Owner
does not specify, the withdrawal will be taken pro
rata from the Investment Divisions and Fixed Account
One in the ratio that each bears to the Aggregate
Value attributable to the Variable Account and Fixed
Account One. A partial withdrawal will result in a
decrease in the Cash Value equal to the amount of the
partial withdrawal plus any applicable Withdrawal
Charges.
The sum of transfers and withdrawals from
Fixed Accounts each Contract Year is limited to 10%
of the Fixed Account One Aggregate Value, Fixed
Account Two Cash Value or Fixed Account Three Cash
Value, respectively.
Unless the Owner designates otherwise, the
Withdrawal Charge will be deducted proportionately
from the Investment Divisions and/or Fixed Account
One from which the withdrawal is made.
If as a result of a partial withdrawal, the
Aggregate Value remaining in an Investment Division
or Fixed Account One is less than the minimum
Aggregate Value established by the Company, the
withdrawal will be limited so that the Aggregate
Value will not be less than the minimum.
The maximum withdrawal from Fixed Account
Two or Fixed Account Three shall be the Cash Value of
Fixed Account Two or Three. In the event the entire
Fixed Account Two or Three Cash Value is withdrawn,
the Aggregate Value and Indexed Value of such account
shall be zero. Partial withdrawals from Fixed Account
Two and Fixed Account Three shall reduce both the
Cash Value and the Indexed Value. Partial Withdrawals
may not be made if after the withdrawal there would
be some Cash Value in Fixed Account Two or Fixed
Account Three but less than the minimum balance
requirements shown on the Contract Data.
PARTIAL WITHDRAWAL OF FUNDS
WITHOUT CHARGES After the first Contract Anniversary, the
Owner may make a withdrawal free of any Withdrawal
Charge twice per Contract Year. The maximum free
withdrawal amount in any Contract Year is the greater
of (1) 10% of total Premium Payments credited for
more than one year or (2) accumulated earnings not
previously withdrawn. For this purpose, accumulated
earnings not previously withdrawn is the Aggregate
Value less Premium Payments plus withdrawals charged
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<PAGE> 30
to Premium Payments. Withdrawals of the maximum free
withdrawal amount are not charged to Premium
Payments. Withdrawals in excess of the maximum free
withdrawal amount are charged to Premium Payments on
a first-in, first- out basis.
SYSTEMATIC WITHDRAWALS After the Right to Examine Period and before
the Maturity Date, if the Aggregate Value minimum is
at least the amount shown on the Contract Data, the
Owner may elect monthly, quarterly, semi-annually or
annual withdrawals of equal amounts from the Variable
Account and Fixed Account One. The minimum withdrawal
under this option is $500. The maximum annual
systematic withdrawals are limited to the maximum
aggregate free withdrawal amount available as of the
election date of the systematic withdrawal. Such
amount is redetermined on each anniversary of such
election. Systematic withdrawals must continue for at
least one year. During the time systematic
withdrawals are being made, no other withdrawals may
be made free of the Withdrawal Charge. Systematic
withdrawals will be in the percentage allocations
specified by the Owner. If the Owner does not
specify, withdrawals will be taken pro rata from the
Investment Division(s) with value. Only one of the
following provisions may be elected to be in effect
at any time: dollar cost averaging, automatic asset
rebalancing or systematic withdrawals. The Company
reserves the right to impose an annual fee of an
amount not to exceed $45 for administrative expenses
associated with processing the systematic withdrawal.
This fee shall be deducted from each systematic
withdrawal in equal proportions during the Contract
Year.
SURRENDER OF CONTRACT At any time prior to the Maturity Date, the
Owner may surrender this contract for its Cash Value.
The surrender request shall be in writing on a form
provided by the Company and signed by the Owner. This
contract shall accompany the request form and be
surrendered. If an assignment of this contract has
been recorded by the Company, any surrender request
must be approved in writing by the assignee.
The Surrender Charges are described in the
Contract Data. A full surrender will incur the full
surrender charge.
The Surrender Charge does not apply to payments
upon the death of the Annuitant. The
Surrender Charge does not apply at the Maturity Date
if payment is made under a settlement option
providing for payments (1) for the payee's life or
(2) for a period certain, where the last payment is
at least ten years from the date the last Premium
Payment was made (provided there is no guaranteed
commutation).
In lieu of payment of the surrender proceeds
in a lump sum, a settlement option may be elected.
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DISTRIBUTIONS UPON DEATH OF OWNER OR ANNUITANT
DEATH BENEFIT PRIOR
TO MATURITY DATE Upon the death of the Annuitant prior to the
Maturity Date, the Death Benefit shall be the
Guaranteed Minimum Death Benefit described in the
Contract Data. Upon the death of the Owner prior to
the Maturity Date, if the Owner is not the Annuitant,
the Death Benefit shall be the Cash Value. Upon
payment of such amount, this contract shall be
surrendered.
OWNER'S BENEFICIARY The Owner's Beneficiary is named in the
application, or if changed, in the most recent change
of Owner's Beneficiary form recorded with the
Company. Upon the death of a Joint Owner, the
surviving Joint Owner shall be the Owner's
Beneficiary. If there are Joint Owners, any other
Owner's Beneficiary designated in the application or
subsequently designated will be treated as a
contingent Owner's Beneficiary. Unless the Owner has
provided otherwise:
1. any Owner's Beneficiary must
survive the Owner; and
2. when there are two or more Owner's
Beneficiaries, the surviving
Owner's Beneficiaries will receive
equal shares.
If there is no surviving Owner's Beneficiary
on the Owner's death, the Annuitant (if not the
Owner) shall be deemed the Owner's Beneficiary. If
there is no surviving Owner's Beneficiary on the
Owner's death and if the Annuitant is the Owner, the
estate of the Owner shall be the Owner's Beneficiary.
Unless irrevocably designated, the Owner may
change the Owner's Beneficiary. The Owner must file
at the Delta Variable Annuity Service Center a
written request for change of Owner's Beneficiary on
a form provided by the Company and signed by the
Owner. The change of Owner's Beneficiary shall take
effect as of the date of execution of the form:
1. whether or not the Owner is living
as of the date such form is
recorded by the Company at its
Delta Variable Annuity Service
Center; and
2. subject to any payment made or
action taken by the Company before
such form is recorded.
If the Owner is not the Annuitant all rights
of the Owner's Beneficiary in this contract shall
terminate upon the Maturity Date. Also, if the Owner
is not the Annuitant and the Annuitant predeceases
the Owner, the proceeds shall be distributed as
determined under Death of Annuitant Prior to Maturity
Date.
DEATH OF OWNER PRIOR
TO MATURITY DATE If the Owner dies prior to the Maturity
Date, the Death Benefit shall be paid to the Owner's
Beneficiary under a settlement option selected by the
Owner's Beneficiary. The form of payment is subject
to the restrictions in this section. If the Owner
dies prior to the Maturity Date and the Owner's
Beneficiary is not an individual, the entire Death
Benefit must be distributed to the Owner's
Beneficiary within five (5) years of the Owner's
death.
If the Owner dies prior to the Maturity Date
and the Owner's Beneficiary is an individual, the
Death Benefit:
1. must be distributed within five (5)
years of the Owner's death; unless
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2. the Owner's Beneficiary elects to
receive a distribution in the form
of a life annuity or an annuity for
a period certain not exceeding his
or her life expectancy. Payments of
an annuity for life or period
certain must begin no later than
one (1) year from the date of the
Owner's death.
If the Owner's Beneficiary is the Owner's
spouse, the spouse may elect to continue the contract
without commencement of distributions. In such case
the spouse shall become the Owner and the
distribution shall be made in accordance with the
distribution upon death rules contained in this
section upon the death of the spouse.
If the Owner is not an individual, the death
of the Annuitant shall be treated as the death of the
Owner for purposes of applying the distributions upon
death rules contained in this section of the
contract.
In the case of joint owners, these
distribution rules are applied on the first death.
If the Owner is not the Annuitant, upon the
death of the Owner prior to the Maturity Date, all
rights of the Annuitant and any Annuitant's
Beneficiary in this contract shall terminate.
ANNUITANT'S BENEFICIARY The Annuitant's Beneficiary is named in the
application, or if changed, in the most recent change
of Annuitant's Beneficiary form recorded with the
Company. Unless provided otherwise:
1. Any Annuitant's Beneficiary must
survive the Annuitant; and
2. When there are two or more
Annuitant's Beneficiaries, the
surviving Annuitant's Beneficiaries
will receive equal shares.
If there is no surviving Annuitant's Beneficiary
on the Annuitant's death:
1. The Owner shall be deemed the
Annuitant's Beneficiary if the
Owner and Annuitant are not the
same persons; and
2. The Owner's estate will be deemed
the Annuitant's Beneficiary if the
Owner and Annuitant are the same
person.
DEATH OF ANNUITANT
PRIOR TO MATURITY DATE If the Annuitant is the Owner, upon the death
of the Owner prior to the Maturity Date, the
Death Benefit shall be distributed as determined
under Death of Owner Prior to Maturity Date.
If the Annuitant is not the Owner and the
Annuitant dies prior to the Maturity Date, the Death
Benefit shall be distributed to the Annuitant's
Beneficiary under a settlement option selected by the
Owner. If the Annuitant is not the Owner and both die
under such circumstances that the order of their
deaths cannot be established by proof, the Death
Benefit shall be paid as if the Owner died first.
DEATH OF OWNER OR ANNUITANT
ON OR AFTER MATURITY DATE If the Annuitant is the Owner, upon the death
of the Annuitant on or after the Maturity Date
and before the entire interest in the contract is
distributed, and if a joint and survivor annuity was
elected, the Company shall pay to the survivor the
remainder of the payments pursuant to such settlement
option. If there is no survivor under a joint and
survivor annuity, any remaining portion must be
distributed to the Annuitant's Beneficiary in
accordance with the settlement option in effect as of
the date of the Annuitant's death.
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If the Annuitant is not the Owner, upon the
death of the Owner on or after the Maturity Date and
before the entire interest in the contract is
distributed, payments shall continue to the Annuitant
under the settlement option elected at the Maturity
Date. Upon any subsequent death of the Annuitant,
payment shall be made under the preceding paragraph.
If the Annuitant is not the Owner, upon the
death of the Annuitant on or after the Maturity Date
and before the entire interest in the contract is
distributed, and if a joint and survivor annuity was
elected, the Company shall pay to the survivor the
remainder of the payments pursuant to such settlement
option. If there is no survivor under a joint and
survivor annuity, any remaining portion must be
distributed to the Annuitant's Beneficiary in
accordance with the settlement option in effect as of
the date of the Annuitant's death. This shall be
subject to the Owner's right of commutation, if
elected.
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CHARGES AND DEDUCTIONS
MORTALITY AND EXPENSE
RISK CHARGE A Mortality and Expense Risk Charge, shown
in the Contract Data, is deducted on each Valuation
Date based on the average daily net assets of each
Investment Division.
ADMINISTRATIVE CHARGE An Administrative Charge, shown in the
Contract Data, is deducted on each Valuation Date
based on the average daily net assets of each
Investment Division.
CONTRACT FEE The Contract Fee, if any, will be deducted
on each Contract Anniversary proportionately to the
Aggregate Value in each Investment Division and Fixed
Account One. At the time of any surrender, the
Contract Fee will be assessed for the entire Contract
Year. At the time of annuitization, a pro rata
Contract Fee will be assessed. The annual Contract
Fee is shown in the Contract Data.
ANNUITY FEE If a Variable Annuity Settlement Option is
selected, the Annuity Fee will be allocated
proportionately among the appropriate Investment
Divisions. The annual Annuity Fee is shown in the
Contract Data.
PREMIUM TAXES AND OTHER
TAXES Premium taxes that a state or other
government charges the Company will be charged
against Aggregate Value at the earlier of:
1. the date such premium tax is due;
or
2. the date the Aggregate Value is
used to determine the value of
annuity payments, or any proceeds
payable upon death, or upon
surrender.
If there is a change in any applicable federal,
state or local tax which imposes increased taxes on
the Variable Account or the operations of the Company
with respect to this contract, the Company may
adjust the Cash Value by a provision or charge for
such taxes.
WAIVER OF FEES OR CHARGES The waiver of any fees or charges, including
but not limited to any transfer fee or Contract Fee
shall not prevent the Company from subsequently
charging such fee or charge in accordance with this
contract. The Company shall give the Owner notice in
that event. The Company may not waive any fee or
charge in violation of applicable law.
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SETTLEMENT OPTIONS
GENERAL On the Maturity Date, or upon death of the
Owner or Annuitant, the Cash Value of the contract
will be applied, as specified by the Owner or
Beneficiary, as the case may be, under one or more of
the settlement options provided in this contract.
Annuity payments may be made on a fixed or variable
basis or both. A settlement option shall provide for
periodic payments to be made at least annually.
CHOICE OF OPTIONS - OWNER The Owner shall elect a settlement option
for the payment of Cash Value for the benefit of the
Annuitant. Election of a settlement option by the
Owner shall occur prior to the Maturity Date. Such
election shall be binding and irrevocable on and
after the Maturity Date.
The Owner may elect a joint and survivor
settlement option under which a secondary Annuitant
may receive payment upon the death of the Annuitant
and shall designate such secondary Annuitant.
Secondary Annuitant shall mean the person so
designated by the Owner prior to the Maturity Date.
If no alternative settlement option has been
elected by the Owner prior to the Maturity Date, the
Cash Value will automatically be applied under Option
4, life with a 10 year guaranteed period. Such
payments will be made on a variable basis to the
extent any of the Cash Value has been allocated to
the Variable Account.
CHOICE OF OPTIONS -
BENEFICIARY If the Owner or Annuitant dies and proceeds
are payable to an Owner's Beneficiary or Annuitant's
Beneficiary, and no settlement option election is in
force, then the payee may make an election of a
settlement option for his/her own benefit, subject to
the Distribution upon Death of Owner or Annuitant
Section. If no settlement option is selected meeting
the requirements of such section, payment of the
Death Benefit shall be made in a single sum
settlement.
PAYMENT/MINIMUM AMOUNT Proceeds may be:
1. paid under a settlement option;
2. divided into two or more parts and
each part paid under a settlement
option; or
3. paid in one lump sum.
If the proceeds to be applied under any
settlement option of any payee are less than $2,000
or if the initial payment to such payee is less than
$25, the Company reserves the right to discharge its
liability in full by paying in one sum the proceeds
then accruing to such payee.
VARIABLE ANNUITY The Owner may elect to allocate all or part
of the Cash Value of this contract to one or more
Investment Divisions of the Variable Account. If such
an election is made by the Owner, the amount of
Annuity Payments will be determined as follows:
On the Maturity Date, the first monthly
Variable Annuity payment is equal to the Cash Value
allocated to Variable Settlement Options, divided
first by $1,000 and then multiplied by the
appropriate monthly Variable Annuity payment in the
Settlement Options tables or their extension to
include ages not shown. The amount of the first
monthly Variable Annuity payment is then deducted
from each Investment Division in proportion to the
allocation of the Cash Value to each Investment
Division as elected by the Owner. In each Investment
Division the number of Annuity Units is determined by
dividing the amount of the first payment so
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allocated by the Annuity Unit Value for a
Valuation Period which includes the seventh day prior
to the Maturity Date. The number of Annuity Units in
each Investment Division then remains unchanged.
On each subsequent Variable Annuity payment
date, the total Variable Annuity payment is the sum
of the Variable Annuity payments determined in each
Investment Division. The Variable Annuity payment in
each Investment Division is determined by multiplying
the number of Annuity Units allocated to said
division by the Annuity Unit Value for said division
for a Valuation Period which includes the tenth day
prior to the Variable Annuity payment date.
ANNUITY UNIT VALUE In each Investment Division, the value of an
Annuity Unit on any Valuation Date is determined by
multiplying the value of an Annuity Unit at the close
of the preceding Valuation Period by the product of
(a) the Net Investment Factor for the Valuation
Period at the close of which the Annuity Unit Value
is being calculated and (b) a factor determined
actuarially to neutralize the assumed investment
rate.
ASSUMED INVESTMENT RATE The assumed investment rate shall be 3.5% or
5%, as selected by the Owner. The Owner may select a
higher assumed investment rate if permitted by
applicable federal and state law and agreed to by the
Company. If no selection is made, the assumed
interest rate shall be 3.5%.
NET INVESTMENT FACTOR The Net Investment Factor for any Investment
Division for any Valuation Period is determined by
dividing (a) by (b) and then subtracting (c) from the
result where:
(a) is the net result of:
1. The net asset value of a Fund or
Series share held in the Investment
Division determined as of the end
of the Valuation Period; plus
2. The per share amount of any
dividend or other distribution
declared by the Fund on the shares
held in the Investment Division if
the "ex-dividend" date occurs
during the Valuation Period; plus
or minus
3. A per share credit or charge with
respect to any taxes paid or
reserved for by the Company during
the Valuation Period which are
determined by the Company to be
attributable to the operation of
the Investment Division.
(b) is the net asset value of a Fund
share held in the Investment
Division determined as of the end
of the preceding Valuation Period;
and
(c) is the Valuation Period equivalent
of the Mortality and Expense Charge
and the Administrative Expense
Charge for the Variable Account.
EXCHANGE OF ANNUITY UNITS After the Maturity Date, the Owner may, by
written notice to the Company at Delta
Variable Annuity Service Center, exchange the value
of a designated number of Annuity Units of particular
Investment Divisions then credited to this contract
for other such Annuity Units, the value of which
would be such that the dollar amount of an Annuity
Payment made on the date the exchange is completed
would be unaffected by the fact of the exchange.
Exchanges after the Maturity Date may be
made only between the Investment Divisions. Exchanges
will be made using Annuity Unit values determined in
the same manner as that described for "Determination
of Accumulation Unit Values Upon Transfer or
Exchange" under the Transfers Within and Between
Accounts Section.
36
<PAGE> 37
FIXED ANNUITY PAYMENTS The first Fixed Annuity Payment will be the
amount that the Cash Value (less taxes incurred but
not yet deducted, if any) will provide as of the
Maturity Date at the guaranteed return rate of not
less than 3%. Under a Fixed Annuity, once the
selection has been made and payments have begun, the
amount of the payments will not vary.
SPLIT OPTION ALLOCATION When a Settlement Option is elected, that
election may include the option to have the Cash
Value applied to provide a Variable Annuity, a Fixed
Annuity, or a combination of both. At least 20% of
your Cash Value must be applied to each option
selected. The Fixed Annuity Settlement Options are
options 1 through 6. The Variable Annuity Settlement
options are options 3 through 6. Once a Split Option
Allocation is selected, the Owner may not change the
allocation between the Fixed Annuity option and the
Variable Annuity option.
COMMUTATION OF PERIOD
CERTAIN PAYMENTS If elected by the Owner at the Maturity
Date, the Company will at any time subsequently
elected by the Owner, commute the remaining payments
under any Fixed Annuity settlement option with period
certain payments. Payment of commuted value will be
made to the Owner. Upon the death of the Owner, this
right of commutation, if elected, shall be held by
the person receiving payments (Annuitant, Owner's
Beneficiary, or Annuitant's Beneficiary) under the
contract. The amount will be the present value of the
remaining period certain payments, based on an
interest rate established by the Company at the
Maturity Date. After commutation, neither the Owner,
nor the Annuitant nor any beneficiary shall have any
further interest in the contract.
INSTALLMENT OPTIONS OPTION 1 - PAYMENTS OF DESIGNATED AMOUNT.
Cash Value paid in periodic installments of such
amount as agreed to by the Company, until the Cash
Value shall be exhausted. The installment dollar
amounts will be equal and the unpaid portion is to
have interest credited at a rate not less than 3% per
annum. The annual amount of periodic installments
must be greater than the annual interest credited
under the settlement option.
OPTION 2 - PAYMENTS FOR DESIGNATED PERIOD.
Cash Value paid in periodic installments in the
amounts and for the periods set forth in the Option 2
Table. The installment dollar amounts will be equal.
The installments may be received for a designated
period of not less than five (5) years nor more than
30 years.
LIFE INCOME OPTIONS OPTION 3 - LIFE ANNUITY. Cash Value paid in
periodic installments during the remaining lifetime
of the payee ceasing with the last payment due prior
to the death of the payee, in accordance with the
Option 3 Table. If a Fixed Annuity is chosen, the
monthly dollar amounts will be equal. If a Variable
Annuity is chosen, the number of Annuity Units of
each installment will be equal, but the dollar
amounts of each installment will vary based on the
Annuity Unit Values of the Investment Division
chosen.
OPTION 4 - LIFE ANNUITY WITH PERIOD CERTAIN.
Cash Value paid in periodic installments during the
guaranteed period (10 or 20 years, whichever is
elected). Thereafter, amounts will be paid during the
remaining lifetime of the payee, in accordance with
the Option 4 Table. If a Fixed Annuity is chosen, the
dollar amount of each installment will be equal. If a
Variable Annuity is chosen, the number of Annuity
Units of each installment will be equal, but the
dollar amounts of each installment will vary based on
the Annuity Unit Values of the Investment Division
chosen.
OPTION 5 - LIFE ANNUITY WITH CASH OR UNIT
REFUND. Cash Value paid in periodic installments
during the remaining lifetime of the payee. The
payee's beneficiary may receive an additional
payment. If a Fixed Annuity is chosen, the additional
payment, if any, will be the Cash Value applied to
this option less the total of all prior payments. If
a Variable Annuity is chosen, the additional payment,
if any, will be the current value of the number of
Annuity Units credited
37
<PAGE> 38
at Maturity Date less the number of Annuity
Units that have been paid. For this purpose, the
number of Annuity Units credited equals the Cash
Value applied to this option divided by the Annuity
Unit Value at the date used to calculate the first
annuity payment.
OPTION 6 Proceeds paid in periodic
installments in any other manner mutually agreed to
by the Company and the payee (e.g., joint and
survivor annuity). The annual amount of periodic
installments must be greater than the interest
credited under the settlement option.
GENERAL CONDITIONS OF
ELECTION AND SETTLEMENT Any election of a settlement option shall be
in writing on a form provided by the Company and
signed by the Owner, if living, or by the person
legally entitled to make such election. Such election
shall be filed with the Company prior to the
effective date of the election. The Company may
require the surrender of this contract in exchange
for a supplementary contract embodying the terms of
the option elected.
An election made by a beneficiary then
entitled to take the proceeds in one sum shall
terminate the interest of any other beneficiary(ies)
designated by the Owner in respect to such proceeds.
CLAIMS Any sum due under this contract shall be
payable at the Delta Variable Annuity Service Center
upon receipt of due proof of claim.
Whenever beneficiaries are designated as a
class and not identified by name, payment by the
Company to all known payees after a reasonable effort
to determine the existence of unnamed beneficiaries
shall to the extent of such payment be a valid
discharge of the Company's obligation under the
contract.
INTEREST ON FIXED
ANNUITY OPTIONS The settlement options illustrated in the
following tables assume an annual interest credit to
the Cash Value of 3% per annum. However, the Company,
at the time such settlement option becomes effective,
shall determine the actual rate of interest (never to
be less than 3%) to be used to calculate the payments
under the Installment or Life Income Options.
The amount paid under a Fixed Annuity settlement
option will never be less than that which
could be purchased based upon the Cash Value payable
and the Settlement Option tables.
SETTLEMENT OPTION TABLES The Installment Options or Life Income Options
payable under the terms of the options set
forth above shall be determined from the tables below
and, when applicable, by: (1) age nearest birthday at
the date of the first payment; (2) sex of payee, and
(3) mortality based on the 1983 Individual Annuity
Mortality Table with ages set back five years.
For Fixed Annuity options, the tables are
based on an interest rate of 3% per annum. Amounts
are based upon proceeds of $1,000 and will apply pro
rata to the proceeds of this contract. To determine
the amounts for guaranteed rates other than monthly
payments, multiply the monthly payments by the
following factors: quarterly, 2.993; semi-annually,
5.963; and annually, 11.839. At other rates, these
factors will be appropriately adjusted.
For Variable Annuity options, the tables are
based on an interest rate of 3.5% per annum and 5%
per annum, respectively. Amounts are based upon
proceeds of $1,000 and will apply pro rata to the
proceeds of this contract. To determine the amounts
for guaranteed rates other than monthly payments at
the 3.5% interest rate, multiply the monthly payments
by the following factors: quarterly, 2.991;
semi-annually, 5.957; and annually, 11.813. To
determine the amounts for guaranteed rates other than
monthly at the 5% interest rate, multiply the monthly
payments by the following factors: quarterly, 2.988;
semi-annually, 5.939; and annually, 11.736. At other
rates these factors will be appropriately adjusted.
38
<PAGE> 39
APPENDIX A
METHODOLOGY FOR CONSTRUCTING THE DELTA INTERNATIONAL COMPOSITE INDEX
The Delta International Composite Index equals the sum of the following
formula calculated for each component Index specified:
100 x Allocation Anniversary Index Value x weighting factor
----------------------------------
Beginning Index Value
where:
Allocation Anniversary Index Value is the value of the relevant index on the
specified allocation anniversary during the current Term Period;
Beginning Index Value is the value of the relevant Index at the beginning of the
Term Period; and
weighting factor is 0.2.
The value at the beginning of the Term Period of the Delta International
Composite Index is 100.
For example, given the following sample table of information:
<TABLE>
<CAPTION>
Country Index Beginning Index Value First Allocation
Anniversary Index Value
<S> <C> <C> <C>
France CAC-40(R) 1634.67 1944.40
Germany DAX(R) 1341.73 1814.84
Japan Nikkei 225(R) 31061.48 37606.73
Switzerland SMI(R) 1487.42 1764.20
United Kingdom FT-SE 100(R) 1887.25 2370.23
</TABLE>
The Company will calculate the Delta International Composite Index on 1st
allocation anniversary as 123.90, which is equal to the sum of:
<TABLE>
<S> <C> <C> <C> <C> <C>
100 x 1944.40 x 0.2 + 100 x 1814.84 x 0.2 + 100 x 37606.73 x 0.2 + 100 x 1764.20 x 0.2 + 100 x 2370.23 x 0.2
------- ------- -------- ------- -------
1634.67 1341.73 31061.48 1487.42 1887.25
</TABLE>
39
<PAGE> 40
APPENDIX B
SAMPLE FIXED ACCOUNT THREE CALCULATIONS
Table of Component Values of Delta International Composite Index: as of Sample
Initial Allocation Date.
<TABLE>
<CAPTION>
Country Name of Index Beginning
Index Value
<S> <C> <C>
France CAC 40(R) 1634.67
Germany DAX(R) 1341.73
Japan Nikkei 225(R) 31061.48
Switzerland SMI(R) 1487.42
United Kingdom FT-SE(R)100 1887.25
</TABLE>
Delta International Composite Index Value 100
Table of Component Values of Delta International Composite Index: as of Sample
Seventh Allocation Anniversary.
<TABLE>
<CAPTION>
Country Name of Index Seventh Allocation
Anniversary Index Value
<S> <C> <C>
France CAC 40(R) 1941.03
Germany DAX(R) 2371.00
Japan Nikkei 225(R) 20406.02
Switzerland SMI(R) 3276.90
United Kingdom FT-SE(R)100 3714.61
</TABLE>
Delta International Composite Index Value 155.66
Assuming 155.66 is the highest value of Delta International Composite Index on
any allocation anniversary during the Term Period:
Sample Annual Index Yield 6.53%
Sample Guaranteed Yield Spread Charge 2.50%
Sample Net Annual Index Yield 4.03%
Assuming if on the sixth allocation anniversary, the prior highest value of the
Delta International Composite Index on any allocation anniversary during the
Term Period was 132.29:
Sample Beginning Allocation Indexed Value $10,000.00
Sample Sixth Allocation Anniversary Indexed Value $10,985.27
Sample Seventh Allocation Anniversary Indexed Increase $ 2,196.42
Sample Seventh Allocation Anniversary Indexed Value $13,181.69
FIXED ANNUITY OPTION ONLY
GUARANTEED MONTHLY PAYMENTS PER $1,000 OF PROCEEDS
40
<PAGE> 41
AT A GUARANTEED INTEREST RATE OF 3%
OPTION 2 - INSTALLMENTS
<TABLE>
<CAPTION>
Months Factor Months Factor Months Factor
- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
60 17.91 180 6.87 300 4.71
72 15.14 192 6.53 312 4.59
84 13.16 204 6.23 324 4.47
96 11.68 216 5.96 336 4.37
108 10.53 228 5.73 348 4.27
120 9.61 240 5.51 360 4.18
132 8.86 252 5.32
144 8.24 264 5.15
156 7.71 276 4.99
168 7.26 288 4.84
</TABLE>
41
<PAGE> 42
FIXED ANNUITY OPTION:
GUARANTEED MONTHLY PAYMENTS PER $1,000 OF PROCEEDS
FOR MALES AT A 3% GUARANTEED INTEREST RATE
OPTIONS 3, 4 and 5 -- SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
YEARS PAYMENTS GUARANTEED CASH YEARS PAYMENTS GUARANTEED CASH
------------------------- -------------------------
AGE NONE 10 20 REFUND AGE NONE 10 20 REFUND
- --- ---- -- -- ------ --- ---- -- -- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10* 2.81 2.81 2.81 2.81 60 4.70 4.62 4.39 4.39
11 2.83 2.82 2.82 2.82 61 4.80 4.72 4.45 4.47
12 2.84 2.84 2.83 2.83 62 4.91 4.82 4.51 4.55
13 2.85 2.85 2.84 2.84 63 5.03 4.92 4.58 4.63
14 2.86 2.86 2.86 2.85 64 5.15 5.03 4.64 4.72
15 2.87 2.87 2.87 2.87 65 5.28 5.14 4.71 4.82
16 2.89 2.89 2.88 2.88 66 5.42 5.26 4.78 4.91
17 2.90 2.90 2.90 2.89 67 5.57 5.39 4.84 5.02
18 2.92 2.91 2.91 2.91 68 5.74 5.52 4.90 5.12
19 2.93 2.93 2.92 2.92 69 5.91 5.66 4.96 5.24
20 2.95 2.95 2.94 2.94 70 6.10 5.81 5.02 5.35
21 2.96 2.96 2.96 2.95 71 6.29 5.96 5.08 5.48
22 2.98 2.98 2.97 2.97 72 6.50 6.11 5.13 5.61
23 3.00 3.00 2.99 2.99 73 6.73 6.28 5.18 5.75
24 3.02 3.01 3.01 3.00 74 6.97 6.44 5.23 5.89
25 3.04 3.03 3.03 3.02 75 7.23 6.61 5.27 6.04
26 3.06 3.05 3.05 3.04 76 7.51 6.78 5.31 6.20
27 3.08 3.07 3.07 3.06 77 7.80 6.96 5.34 6.37
28 3.10 3.09 3.09 3.08 78 8.12 7.14 5.37 6.54
29 3.12 3.12 3.11 3.10 79 8.45 7.32 5.40 6.73
30 3.14 3.14 3.13 3.12 80 8.82 7.49 5.42 6.92
31 3.17 3.16 3.15 3.14 81 9.21 7.67 5.44 7.12
32 3.19 3.19 3.18 3.17 82 9.62 7.84 5.45 7.33
33 3.22 3.22 3.20 3.19 83 10.07 8.01 5.47 7.55
34 3.25 3.24 3.23 3.22 84 10.55 8.17 5.48 7.79
35 3.28 3.27 3.26 3.24 85 11.06 8.33 5.49 8.03
36 3.31 3.30 3.29 3.27 86 11.61 8.48 5.49 8.28
37 3.34 3.33 3.32 3.30 87 12.19 8.61 5.50 8.55
38 3.37 3.37 3.35 3.33 88 12.81 8.74 5.50 8.83
39 3.41 3.40 3.38 3.36 89 13.46 8.86 5.51 9.12
40 3.44 3.44 3.41 3.39 90 14.16 8.97 5.51 9.43
41 3.48 3.48 3.45 3.42 91 14.89 9.06 5.51 9.75
42 3.52 3.51 3.48 3.46 92 15.66 9.15 5.51 10.09
43 3.57 3.56 3.52 3.49 93 16.47 9.23 5.51 10.45
44 3.61 3.60 3.56 3.53 94 17.33 9.30 5.51 10.83
45 3.66 3.64 3.60 3.57 95 18.25 9.36 5.51 11.24
46 3.71 3.69 3.64 3.61 96 19.24 9.42 5.51 11.67
47 3.76 3.74 3.68 3.65 97 20.29 9.46 5.51 12.13
48 3.81 3.79 3.73 3.69 98 21.42 9.50 5.51 12.62
49 3.87 3.85 3.77 3.74 99 22.64 9.53 5.51 13.15
50 3.93 3.90 3.82 3.79 100 23.96 9.56 5.51 13.73
51 3.99 3.96 3.87 3.84 101 25.40 9.57 5.51 14.36
52 4.05 4.02 3.92 3.89 102 26.98 9.59 5.51 15.05
53 4.12 4.09 3.97 3.94 103 28.72 9.60 5.51 15.81
54 4.19 4.15 4.03 4.00 104 30.66 9.61 5.51 16.65
55 4.27 4.22 4.08 4.05 105 32.84 9.61 5.51 17.58
56 4.34 4.29 4.14 4.12 106 35.29 9.61 5.51 18.62
57 4.43 4.37 4.20 4.18 107 38.07 9.61 5.51 19.78
58 4.51 4.45 4.26 4.25 108 41.22 9.61 5.51 21.11
59 4.60 4.54 4.32 4.32 109 44.81 9.61 5.51 22.61
</TABLE>
*and under
AGE is Annuitant's age nearest birthday when first payment is made. Mortality
table is 83IAM 100% Male with 5 year age setback.
42
<PAGE> 43
FIXED ANNUITY OPTION:
GUARANTEED MONTHLY PAYMENTS PER $1,000 OF PROCEEDS
FOR FEMALES AT AN ASSUMED INVESTMENT RATE OF 3%
OPTIONS 3, 4 and 5 -- SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
YEARS PAYMENTS GUARANTEED YEARS PAYMENTS GUARANTEED
------------------------- CASH ------------------------- CASH
AGE NONE 10 20 REFUND AGE NONE 10 20 REFUND
- --- ---- -- -- ------ --- ---- -- -- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10* 2.75 2.75 2.75 2.75 60 4.25 4.22 4.11 4.09
11 2.76 2.76 2.76 2.76 61 4.34 4.30 4.17 4.15
12 2.77 2.77 2.77 2.77 62 4.42 4.38 4.23 4.22
13 2.78 2.78 2.78 2.78 63 4.52 4.47 4.30 4.30
14 2.79 2.79 2.79 2.79 64 4.61 4.56 4.37 4.37
15 2.80 2.80 2.80 2.80 65 4.72 4.66 4.44 4.46
16 2.81 2.81 2.81 2.81 66 4.83 4.76 4.51 4.54
17 2.82 2.82 2.82 2.82 67 4.95 4.86 4.58 4.63
18 2.83 2.83 2.83 2.83 68 5.07 4.98 4.65 4.73
19 2.85 2.85 2.84 2.84 69 5.21 5.10 4.72 4.82
20 2.86 2.86 2.86 2.86 70 5.35 5.22 4.79 4.93
21 2.87 2.87 2.87 2.87 71 5.51 5.36 4.86 5.04
22 2.89 2.89 2.88 2.88 72 5.67 5.50 4.93 5.16
23 2.90 2.90 2.90 2.90 73 5.85 5.65 5.00 5.28
24 2.92 2.92 2.91 2.91 74 6.04 5.80 5.06 5.41
25 2.93 2.93 2.93 2.93 75 6.25 5.96 5.12 5.55
26 2.95 2.95 2.94 2.94 76 6.47 6.14 5.18 5.70
27 2.96 2.96 2.96 2.96 77 6.71 6.31 5.23 5.85
28 2.98 2.98 2.98 2.98 78 6.97 6.50 5.28 6.01
29 3.00 3.00 2.99 2.99 79 7.26 6.69 5.32 6.19
30 3.02 3.02 3.01 3.01 80 7.56 6.89 5.35 6.37
31 3.04 3.04 3.03 3.03 81 7.90 7.09 5.39 6.56
32 3.06 3.06 3.05 3.05 82 8.26 7.29 5.41 6.77
33 3.08 3.08 3.07 3.07 83 8.65 7.49 5.43 6.98
34 3.10 3.10 3.09 3.09 84 9.07 7.69 5.45 7.21
35 3.13 3.12 3.12 3.11 85 9.53 7.89 5.47 7.45
36 3.15 3.15 3.14 3.13 86 10.03 8.08 5.48 7.70
37 3.18 3.17 3.16 3.16 87 10.57 8.26 5.49 7.97
38 3.20 3.20 3.19 3.18 88 11.16 8.43 5.49 8.25
39 3.23 3.23 3.22 3.21 89 11.79 8.59 5.50 8.55
40 3.26 3.26 3.24 3.24 90 12.48 8.74 5.50 8.85
41 3.29 3.29 3.27 3.26 91 13.21 8.87 5.51 9.18
42 3.32 3.32 3.30 3.29 92 14.00 8.99 5.51 9.51
43 3.35 3.35 3.33 3.32 93 14.84 9.09 5.51 9.86
44 3.39 3.38 3.37 3.35 94 15.74 9.18 5.51 10.23
45 3.42 3.42 3.40 3.39 95 16.68 9.26 5.51 10.61
46 3.46 3.46 3.43 3.42 96 17.66 9.33 5.51 11.00
47 3.50 3.50 3.47 3.45 97 18.69 9.38 5.51 11.42
48 3.54 3.54 3.51 3.49 98 19.75 9.43 5.51 11.85
49 3.59 3.58 3.55 3.53 99 20.86 9.48 5.51 12.32
50 3.63 3.63 3.59 3.57 100 22.01 9.51 5.51 12.81
51 3.68 3.67 3.63 3.61 101 23.23 9.54 5.51 13.35
52 3.73 3.72 3.68 3.66 102 24.52 9.56 5.51 13.93
53 3.79 3.77 3.72 3.70 103 25.93 9.58 5.51 14.58
54 3.84 3.83 3.77 3.75 104 27.49 9.59 5.51 15.30
55 3.90 3.89 3.82 3.80 105 29.26 9.60 5.51 16.11
56 3.97 3.95 3.88 3.85 106 31.29 9.61 5.51 17.03
57 4.03 4.01 3.93 3.91 107 33.61 9.61 5.51 18.07
58 4.10 4.08 3.99 3.96 108 36.31 9.61 5.51 19.25
59 4.18 4.15 4.04 4.02 109 39.45 9.61 5.51 20.61
</TABLE>
*and under
AGE is Annuitant's age nearest birthday when first payment is made.
Mortality table is 83IAM 100% Female with 5 year age setback.
VARIABLE ANNUITY OPTION:
43
<PAGE> 44
GUARANTEED MONTHLY PAYMENTS PER $1,000 OF PROCEEDS
FOR MALES AT AN ASSUMED INVESTMENT RATE OF 3.5%
OPTIONS 3, 4 and 5 -- SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
YEARS PAYMENTS GUARANTEED YEARS PAYMENTS GUARANTEED
------------------------- UNIT ------------------------- UNIT
AGE NONE 10 20 REFUND AGE NONE 10 20 REFUND
- --- ---- -- -- ------ --- ---- -- -- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10* 3.15 3.15 3.15 3.15 60 4.99 4.91 4.66 4.70
11 3.16 3.16 3.16 3.16 61 5.09 5.00 4.72 4.78
12 3.17 3.17 3.17 3.17 62 5.20 5.10 4.78 4.87
13 3.18 3.18 3.18 3.18 63 5.32 5.20 4.85 4.95
14 3.20 3.19 3.19 3.19 64 5.44 5.31 4.91 5.04
15 3.21 3.21 3.20 3.20 65 5.57 5.42 4.97 5.14
16 3.22 3.22 3.21 3.22 66 5.71 5.54 5.04 5.24
17 3.23 3.23 3.23 3.23 67 5.86 5.67 5.10 5.34
18 3.25 3.24 3.24 3.24 68 6.02 5.80 5.16 5.45
19 3.26 3.26 3.25 3.25 69 6.20 5.94 5.22 5.57
20 3.28 3.27 3.27 3.27 70 6.38 6.08 5.28 5.69
21 3.29 3.29 3.28 3.28 71 6.58 6.23 5.33 5.82
22 3.31 3.30 3.30 3.30 72 6.79 6.38 5.38 5.95
23 3.32 3.32 3.31 3.31 73 7.02 6.54 5.43 6.09
24 3.34 3.34 3.33 3.33 74 7.26 6.71 5.48 6.24
25 3.36 3.35 3.35 3.35 75 7.52 6.87 5.52 6.40
26 3.38 3.37 3.37 3.37 76 7.80 7.05 5.55 6.56
27 3.40 3.39 3.38 3.38 77 8.09 7.22 5.59 6.73
28 3.42 3.41 3.40 3.40 78 8.41 7.40 5.62 6.91
29 3.44 3.43 3.42 3.42 79 8.75 7.57 5.64 7.10
30 3.46 3.46 3.45 3.44 80 9.12 7.75 5.66 7.30
31 3.48 3.48 3.47 3.47 81 9.51 7.92 5.68 7.51
32 3.51 3.50 3.49 3.49 82 9.92 8.09 5.70 7.73
33 3.53 3.53 3.51 3.51 83 10.37 8.26 5.71 7.96
34 3.56 3.56 3.54 3.54 84 10.85 8.42 5.72 8.20
35 3.59 3.58 3.57 3.56 85 11.37 8.57 5.73 8.46
36 3.62 3.61 3.59 3.59 86 11.92 8.71 5.74 8.72
37 3.65 3.64 3.62 3.62 87 12.50 8.85 5.74 9.00
38 3.68 3.67 3.65 3.64 88 13.12 8.97 5.75 9.29
39 3.71 3.71 3.68 3.67 89 13.78 9.09 5.75 9.59
40 3.75 3.74 3.71 3.70 90 14.47 9.20 5.75 9.91
41 3.79 3.78 3.75 3.74 91 15.20 9.29 5.75 10.24
42 3.83 3.82 3.78 3.77 92 15.98 9.38 5.75 10.59
43 3.87 3.86 3.82 3.81 93 16.79 9.46 5.75 10.96
44 3.91 3.90 3.85 3.84 94 17.66 9.53 5.75 11.36
45 3.96 3.94 3.89 3.88 95 18.58 9.59 5.75 11.77
46 4.01 3.99 3.93 3.92 96 19.56 9.64 5.75 12.22
47 4.06 4.04 3.97 3.96 97 20.61 9.68 5.75 12.69
48 4.11 4.09 4.02 4.00 98 21.74 9.72 5.75 13.20
49 4.17 4.14 4.06 4.05 99 22.97 9.75 5.75 13.75
50 4.22 4.20 4.11 4.10 100 24.29 9.78 5.75 14.35
51 4.29 4.25 4.16 4.15 101 25.73 9.80 5.75 14.99
52 4.35 4.31 4.21 4.20 102 27.30 9.81 5.75 15.70
53 4.42 4.38 4.26 4.25 103 29.05 9.82 5.75 16.48
54 4.49 4.44 4.31 4.31 104 30.99 9.83 5.75 17.35
55 4.56 4.51 4.36 4.37 105 33.16 9.83 5.75 18.31
56 4.64 4.58 4.42 4.43 106 35.61 9.83 5.75 19.37
57 4.72 4.66 4.48 4.49 107 38.39 9.83 5.75 20.58
58 4.80 4.74 4.54 4.56 108 41.53 9.83 5.75 21.95
59 4.89 4.82 4.60 4.63 109 45.12 9.83 5.75 23.47
</TABLE>
*and under
AGE is Annuitant's age nearest birthday when first payment is made. Mortality
table is 83IAM 100% Male with 5 year age setback.
VARIABLE ANNUITY OPTION:
44
<PAGE> 45
GUARANTEED MONTHLY PAYMENTS PER $1,000 OF PROCEEDS
FOR FEMALES AT AN ASSUMED INVESTMENT RATE OF 3.5%
OPTIONS 3, 4 and 5 -- SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
YEARS PAYMENTS GUARANTEED YEARS PAYMENTS GUARANTEED
------------------------- UNIT ------------------------- UNIT
AGE NONE 10 20 REFUND AGE NONE 10 20 REFUND
- --- ---- -- -- ------ --- ---- -- -- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10* 3.09 3.09 3.09 3.10 60 4.54 4.51 4.38 4.39
11 3.10 3.10 3.10 3.10 61 4.62 4.58 4.44 4.46
12 3.11 3.11 3.11 3.11 62 4.71 4.66 4.51 4.53
13 3.12 3.12 3.12 3.12 63 4.80 4.75 4.57 4.60
14 3.13 3.13 3.12 3.13 64 4.90 4.84 4.64 4.68
15 3.14 3.14 3.13 3.14 65 5.00 4.93 4.70 4.76
16 3.15 3.15 3.14 3.15 66 5.11 5.03 4.77 4.85
17 3.16 3.16 3.15 3.16 67 5.23 5.14 4.84 4.94
18 3.17 3.17 3.17 3.17 68 5.36 5.25 4.91 5.04
19 3.18 3.18 3.18 3.18 69 5.49 5.37 4.98 5.14
20 3.19 3.19 3.19 3.19 70 5.64 5.50 5.05 5.24
21 3.20 3.20 3.20 3.20 71 5.79 5.63 5.12 5.36
22 3.22 3.22 3.21 3.22 72 5.95 5.77 5.19 5.48
23 3.23 3.23 3.23 3.23 73 6.13 5.91 5.25 5.60
24 3.24 3.24 3.24 3.24 74 6.32 6.07 5.32 5.74
25 3.26 3.26 3.25 3.26 75 6.53 6.23 5.37 5.88
26 3.27 3.27 3.27 3.27 76 6.75 6.40 5.43 6.03
27 3.29 3.29 3.28 3.29 77 6.99 6.58 5.48 6.19
28 3.31 3.30 3.30 3.30 78 7.26 6.76 5.52 6.36
29 3.32 3.32 3.32 3.32 79 7.54 6.95 5.57 6.53
30 3.34 3.34 3.33 3.34 80 7.85 7.14 5.60 6.72
31 3.36 3.36 3.35 3.35 81 8.18 7.34 5.63 6.92
32 3.38 3.38 3.37 3.37 82 8.54 7.54 5.66 7.13
33 3.40 3.40 3.39 3.39 83 8.94 7.74 5.68 7.36
34 3.42 3.42 3.41 3.41 84 9.36 7.94 5.70 7.59
35 3.44 3.44 3.43 3.43 85 9.82 8.13 5.71 7.84
36 3.46 3.46 3.45 3.45 86 10.32 8.32 5.72 8.11
37 3.49 3.48 3.48 3.48 87 10.87 8.50 5.73 8.38
38 3.51 3.51 3.50 3.50 88 11.46 8.67 5.74 8.68
39 3.54 3.54 3.52 3.52 89 12.09 8.83 5.74 8.98
40 3.57 3.56 3.55 3.55 90 12.78 8.97 5.75 9.30
41 3.60 3.59 3.58 3.58 91 13.52 9.10 5.75 9.64
42 3.63 3.62 3.61 3.60 92 14.31 9.22 5.75 9.99
43 3.66 3.65 3.64 3.63 93 15.16 9.32 5.75 10.35
44 3.69 3.69 3.67 3.66 94 16.05 9.41 5.75 10.73
45 3.73 3.72 3.70 3.70 95 17.00 9.48 5.75 11.13
46 3.76 3.76 3.73 3.73 96 17.98 9.55 5.75 11.54
47 3.80 3.80 3.77 3.76 97 19.01 9.61 5.75 11.97
48 3.84 3.84 3.81 3.80 98 20.08 9.66 5.75 12.42
49 3.89 3.88 3.84 3.84 99 21.18 9.70 5.75 12.89
50 3.93 3.92 3.88 3.88 100 22.34 9.73 5.75 13.40
51 3.98 3.97 3.92 3.92 101 23.55 9.76 5.75 13.95
52 4.03 4.02 3.97 3.96 102 24.84 9.79 5.75 14.55
53 4.08 4.07 4.01 4.01 103 26.25 9.80 5.75 15.22
54 4.14 4.12 4.06 4.05 104 27.82 9.82 5.75 15.96
55 4.20 4.18 4.11 4.10 105 29.59 9.82 5.75 16.79
56 4.26 4.24 4.16 4.16 106 31.61 9.83 5.75 17.73
57 4.32 4.30 4.21 4.21 107 33.93 9.83 5.75 18.80
58 4.39 4.36 4.27 4.27 108 36.63 9.83 5.75 20.01
59 4.46 4.43 4.32 4.33 109 39.76 9.83 5.75 21.42
</TABLE>
*and under
AGE is Annuitant's age nearest birthday when first payment is made. Mortality
table is 83IAM 100% Female with 5 year age setback.
VARIABLE ANNUITY OPTION:
45
<PAGE> 46
GUARANTEED MONTHLY PAYMENTS PER $1,000 OF PROCEEDS
FOR MALES AT AN ASSUMED INVESTMENT RATE OF 5%
OPTIONS 3, 4 and 5 -- SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
YEARS PAYMENTS GUARANTEED YEARS PAYMENTS GUARANTEED
------------------------- UNIT ------------------------- UNIT
AGE NONE 10 20 REFUND AGE NONE 10 20 REFUND
- --- ---- -- -- ------ --- ---- -- -- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10* 4.22 4.22 4.21 4.23 60 5.89 5.79 5.51 5.66
11 4.23 4.23 4.22 4.24 61 5.99 5.88 5.57 5.74
12 4.24 4.23 4.23 4.24 62 6.10 5.97 5.62 5.82
13 4.25 4.24 4.24 4.25 63 6.21 6.07 5.68 5.91
14 4.25 4.25 4.24 4.26 64 6.33 6.17 5.74 6.00
15 4.26 4.26 4.25 4.27 65 6.46 6.28 5.80 6.10
16 4.27 4.27 4.26 4.28 66 6.60 6.40 5.86 6.21
17 4.28 4.28 4.27 4.29 67 6.75 6.52 5.91 6.32
18 4.29 4.29 4.28 4.29 68 6.91 6.64 5.97 6.43
19 4.30 4.30 4.29 4.30 69 7.09 6.78 6.02 6.55
20 4.31 4.31 4.30 4.32 70 7.27 6.91 6.08 6.68
21 4.32 4.32 4.31 4.33 71 7.47 7.06 6.12 6.82
22 4.34 4.33 4.32 4.34 72 7.68 7.21 6.17 6.96
23 4.35 4.35 4.34 4.35 73 7.91 7.36 6.22 7.11
24 4.36 4.36 4.35 4.36 74 8.15 7.52 6.26 7.27
25 4.38 4.37 4.36 4.38 75 8.41 7.68 6.29 7.43
26 4.39 4.39 4.38 4.39 76 8.69 7.84 6.33 7.61
27 4.41 4.40 4.39 4.41 77 8.99 8.01 6.36 7.80
28 4.43 4.42 4.41 4.42 78 9.31 8.18 6.38 7.99
29 4.44 4.44 4.42 4.44 79 9.65 8.35 6.41 8.20
30 4.46 4.46 4.44 4.46 80 10.02 8.52 6.43 8.41
31 4.48 4.48 4.46 4.48 81 10.41 8.68 6.44 8.64
32 4.50 4.50 4.48 4.50 82 10.84 8.85 6.46 8.88
33 4.52 4.52 4.50 4.52 83 11.29 9.00 6.47 9.13
34 4.55 4.54 4.52 4.54 84 11.78 9.16 6.48 9.39
35 4.57 4.56 4.54 4.56 85 12.29 9.30 6.49 9.66
36 4.60 4.59 4.57 4.58 86 12.85 9.44 6.50 9.95
37 4.62 4.62 4.59 4.61 87 13.44 9.57 6.50 10.25
38 4.65 4.64 4.61 4.63 88 14.06 9.69 6.50 10.57
39 4.68 4.67 4.64 4.66 89 14.73 9.80 6.51 10.90
40 4.71 4.70 4.67 4.69 90 15.42 9.90 6.51 11.24
41 4.75 4.74 4.70 4.72 91 16.16 9.99 6.51 11.60
42 4.78 4.77 4.73 4.75 92 16.94 10.07 6.51 11.98
43 4.82 4.81 4.76 4.78 93 17.75 10.15 6.51 12.38
44 4.86 4.85 4.79 4.82 94 18.62 10.21 6.51 12.81
45 4.91 4.89 4.82 4.85 95 19.54 10.27 6.51 13.25
46 4.95 4.93 4.86 4.89 96 20.53 10.32 6.51 13.73
47 5.00 4.97 4.90 4.93 97 21.58 10.36 6.51 14.24
48 5.05 5.02 4.93 4.97 98 22.72 10.40 6.51 14.79
49 5.10 5.07 4.97 5.01 99 23.94 10.43 6.51 15.37
50 5.16 5.12 5.02 5.06 100 25.26 10.45 6.51 16.01
51 5.21 5.17 5.06 5.11 101 26.70 10.47 6.51 16.70
52 5.28 5.23 5.10 5.16 102 28.27 10.49 6.51 17.46
53 5.34 5.29 5.15 5.21 103 30.01 10.49 6.51 18.30
54 5.41 5.35 5.20 5.26 104 31.95 10.50 6.51 19.22
55 5.48 5.41 5.24 5.32 105 34.12 10.51 6.51 20.25
56 5.55 5.48 5.30 5.38 106 36.56 10.51 6.51 21.40
57 5.63 5.55 5.35 5.45 107 39.33 10.51 6.51 22.69
58 5.71 5.63 5.40 5.51 108 42.47 10.51 6.51 24.14
59 5.80 5.70 5.45 5.58 109 46.04 10.51 6.51 25.77
</TABLE>
*and under
AGE is Annuitant's age nearest birthday when first payment is made. Mortality
table is 83IAM 100% Male with 5 year age setback.
VARIABLE ANNUITY OPTION:
46
<PAGE> 47
GUARANTEED MONTHLY PAYMENTS PER $1,000 OF PROCEEDS
FOR FEMALES AT AN ASSUMED INVESTMENT RATE OF 5%
OPTIONS 3, 4 and 5 -- SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
YEARS PAYMENTS GUARANTEED YEARS PAYMENTS GUARANTEED
------------------------- UNIT ------------------------- UNIT
AGE NONE 10 20 REFUND AGE NONE 10 20 REFUND
- --- ---- -- -- ------ --- ---- -- -- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10* 4.18 4.17 4.17 4.19 60 5.44 5.40 5.26 5.33
11 4.18 4.18 4.18 4.19 61 5.52 5.47 5.31 5.39
12 4.19 4.19 4.18 4.20 62 5.60 5.54 5.37 5.46
13 4.19 4.19 4.19 4.20 63 5.69 5.62 5.43 5.54
14 4.20 4.20 4.19 4.21 64 5.79 5.71 5.49 5.61
15 4.21 4.20 4.20 4.22 65 5.89 5.80 5.55 5.70
16 4.21 4.21 4.21 4.22 66 6.00 5.90 5.61 5.78
17 4.22 4.22 4.22 4.23 67 6.11 6.00 5.67 5.88
18 4.23 4.23 4.22 4.24 68 6.23 6.11 5.74 5.97
19 4.24 4.23 4.23 4.25 69 6.37 6.22 5.80 6.08
20 4.24 4.24 4.24 4.25 70 6.51 6.34 5.87 6.19
21 4.25 4.25 4.25 4.26 71 6.66 6.47 5.93 6.30
22 4.26 4.26 4.26 4.27 72 6.82 6.60 5.99 6.43
23 4.27 4.27 4.27 4.28 73 7.00 6.74 6.05 6.56
24 4.28 4.28 4.28 4.29 74 7.19 6.89 6.11 6.70
25 4.29 4.29 4.29 4.30 75 7.39 7.05 6.16 6.85
26 4.31 4.30 4.30 4.31 76 7.62 7.21 6.21 7.01
27 4.32 4.32 4.31 4.32 77 7.86 7.38 6.26 7.18
28 4.33 4.33 4.32 4.34 78 8.12 7.56 6.30 7.35
29 4.34 4.34 4.33 4.35 79 8.41 7.74 6.34 7.54
30 4.36 4.35 4.35 4.36 80 8.72 7.93 6.37 7.75
31 4.37 4.37 4.36 4.38 81 9.05 8.12 6.40 7.96
32 4.39 4.38 4.38 4.39 82 9.42 8.31 6.42 8.19
33 4.40 4.40 4.39 4.41 83 9.81 8.51 6.44 8.43
34 4.42 4.42 4.41 4.42 84 10.24 8.70 6.46 8.69
35 4.44 4.44 4.42 4.44 85 10.71 8.88 6.47 8.96
36 4.46 4.45 4.44 4.46 86 11.22 9.06 6.48 9.24
37 4.48 4.47 4.46 4.48 87 11.76 9.23 6.49 9.55
38 4.50 4.49 4.48 4.50 88 12.36 9.40 6.50 9.87
39 4.52 4.52 4.50 4.52 89 13.00 9.55 6.50 10.20
40 4.55 4.54 4.52 4.54 90 13.70 9.68 6.50 10.56
41 4.57 4.56 4.55 4.56 91 14.44 9.81 6.51 10.93
42 4.60 4.59 4.57 4.59 92 15.24 9.92 6.51 11.31
43 4.62 4.62 4.60 4.61 93 16.10 10.01 6.51 11.71
44 4.65 4.65 4.62 4.64 94 17.00 10.10 6.51 12.13
45 4.69 4.68 4.65 4.67 95 17.95 10.17 6.51 12.56
46 4.72 4.71 4.68 4.70 96 18.94 10.24 6.51 13.00
47 4.75 4.74 4.71 4.73 97 19.98 10.29 6.51 13.47
48 4.79 4.78 4.74 4.76 98 21.05 10.34 6.51 13.95
49 4.83 4.82 4.77 4.80 99 22.16 10.38 6.51 14.46
50 4.87 4.86 4.81 4.84 100 23.32 10.41 6.51 15.01
51 4.91 4.90 4.85 4.87 101 24.53 10.44 6.51 15.59
52 4.96 4.94 4.88 4.91 102 25.82 10.46 6.51 16.23
53 5.01 4.99 4.92 4.96 103 27.22 10.48 6.51 16.94
54 5.06 5.04 4.97 5.00 104 28.78 10.49 6.51 17.72
55 5.12 5.09 5.01 5.05 105 30.54 10.50 6.51 18.61
56 5.17 5.14 5.05 5.10 106 32.56 10.50 6.51 19.61
57 5.23 5.20 5.10 5.15 107 34.88 10.51 6.51 20.74
58 5.30 5.26 5.15 5.21 108 37.56 10.51 6.51 22.05
59 5.37 5.33 5.20 5.27 109 40.69 10.51 6.51 23.54
</TABLE>
*and under
AGE is Annuitant's age nearest birthday when first payment is made. Mortality
table is 83IAM 100% Female with 5 year age setback.
47
<PAGE> 1
EXHIBIT 6(a)
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
DELTA LIFE AND ANNUITY COMPANY
CONSTITUTING A CHARTER OF DELTA LIFE AND ANNUITY COMPANY,
a Stock Insurance Company Redomesticated
From Arkansas to Tennessee
Robert H. Wallace, Jr. and Bettye S. Adams, the President and
Secretary, respectively, of Delta Life and Annuity Company (the "Corporation"),
desiring to give notice of corporate action effecting the amendment and complete
restatement of the Articles of Incorporation of the Corporation, as amended,
resulting in a Charter filed for the purpose of redomestication to the State of
Tennessee.
SUBDIVISION A
THE AMENDMENT
The test of the Articles of Incorporation have been amended and
completely restated so as to provide as follows:
CHARTER
OF
DELTA LIFE AND ANNUITY COMPANY
DELTA LIFE AND ANNUITY COMPANY, a corporation existing under and
pursuant to the laws of the State of Tennessee (the "Corporation") hereby amends
and completely restates the provisions of the "Articles of Incorporation of
Delta Life and Annuity Company", as amended, which became effective on March 23,
1984, as hereinafter set forth in this "Charter of Delta Life and Annuity
Company", (the "Charter").
BE IT REMEMBERED that the following Charter and all matters heretofore
done or hereafter to be done are in accordance with "The Tennessee Business
Corporation Act" at Sections 48-11-101 et seq. and the "Tennessee Insurance Law"
at Section 56-2-102(b) and other applicable sections, all of the Tennessee Code
Annotated, and all acts amendatory thereof and supplemental thereto.
ARTICLE I
NAME
The name of this Corporation shall be DELTA LIFE AND ANNUITY COMPANY.
<PAGE> 2
ARTICLE II
ADDRESS
The complete street address (including zip code) of the Corporation's
principal and initial registered office is:
530 Oak Court, Suite 200
Memphis, Tennessee 38117
County of Shelby
The name and address of its initial registered agent is:
Bettye S. Adams
530 Oak Court, Suite 200
Memphis, Tennessee 38117
ARTICLE III
PURPOSES
The general nature of the business to be transacted by the Corporation
is to grant insurance upon the lives or health of persons and every assurance
pertaining thereto; to grant, purchase or dispose of annuities and endowments;
to reinsure all or any portion of its risks and to accept reinsurance from other
companies, all at rates based on standard tables and secured by the legal
reserve required by law; to appoint and contract with agents to solicit
business; to issue policies on a participating or nonparticipating plan, or
both, as may be determined by the Board of Directors; to serve as trustee for
any pension plans, profit sharing plans, other employee benefit plans or other
trusts; and in general to do all things and perform all such acts as may be
permitted by the laws of the State of Tennessee or as may be necessary or
desirable, for the successful conduct of the business of "life insurance"
(including annuities), "accident and health insurance" and "credit insurance"
(including "credit life insurance" and "credit accident and health insurance")
as those kinds of insurance are defined in the Tennessee Insurance Law, on the
legal reserve plan.
ARTICLE IV
POWERS
The Corporation shall have all the general and special powers granted
by the State of Tennessee and any other state in which it may be authorized to
do business.
The Corporation shall also have power to invest and reinvest its funds;
to prosecute suits, actions, and other proceedings to protect its property,
assets and rights; to lend upon, purchase,
2
<PAGE> 3
hold, guarantee, endorse, mortgage, encumber, pledge, hypothecate, sell, assign,
transfer, convey, lease or otherwise dispose of, mortgage or deal in any
personal property, real property or rights or interests in either; to secure,
mortgage, pledge or borrow on any Corporate assets or property other than trusts
or fiduciary property; to compromise claims, to lend money, negotiate loans, buy
and sell bonds, debentures, coupons and other securities not prohibited by law;
to issue bonds and promissory notes either secured or unsecured; to pay
dividends to stockholders; to pay dividends to policyholders; to pay interest to
policyholders; to issue both participating and nonparticipating policies of
insurance.
To the extent permitted by the statutes of Tennessee, the Corporation
shall also have power to indemnify the officers and directors during their term
of office or thereafter for actions arising during their term of office, either
directly or through the purchase of insurance, for expenditures as parties to
suits by or in the right of the Corporation or other than by or in the right of
the Corporation.
ARTICLE V
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE VI
ORGANIZATIONAL CHARACTER
The Corporation is for profit.
ARTICLE VII
PLAN OF BUSINESS
The Corporation shall transact business as a stock company in
accordance with Article III of this Charter.
ARTICLE VIII
DIRECTORS
The Board of Directors shall conduct the affairs of the Corporation.
Both the number of directors of the Corporation and the term for which they
serve shall, from time to time, be fixed by or otherwise provided for in the
Corporation's Bylaws. The names and addresses of the current members of the
Board of Directors are as follows:
3
<PAGE> 4
Robert Lee Cox William Barnett Rudner
WARING COX Highland Capital Management
Corp. 6077 Primacy Parkway
50 North Front Suite 228
1300 Morgan Keegan Towers Memphis, Tennessee 38119
Memphis, Tennessee 38103
John Tucker Morse Clayton Danford Smith
212 Center Street WARING COX
10th Floor, Center Place 50 North Front
Union Life Building 1300 Morgan Keegan Towers
Little Rock, Arkansas 72201 Memphis, Tennessee 38103
Robert Bradley Martin Robert Harris Wallace, Jr.
RBM Venture Corporation Delta Life and Annuity Company
5810 Shelby Oaks Drive 530 Oak Court, Suite 200
Memphis, Tennessee 38134 Memphis, Tennessee 38117
William Daniel Callaghan
841 Indian Rocks Road
Clearwater, Florida 34616
Each of the above named directors shall serve until the next annual
shareholders' meeting and until his successor is chosen and qualified or, in the
event of resignation, death or disqualification prior thereto, until his
successor can be chosen and qualified.
ARTICLE IX
TERMS OF CAPITAL STOCK
Section 1. Authorized Stock. The authorized shares of capital stock of
the Corporation shall consist of 1,000,000 shares of non-assessable, voting
Common Stock with a par value of $10 per share.
Section 2. Relative Rights. All shares of Common Stock shall have the
same terms, conditions, rights, preferences, limitations and restrictions as all
other shares of Common Stock, and each holder thereof shall receive a pro rata
portion of the net assets of the Corporation upon dissolution.
Section 3. Voting Rights. Each holder of record of shares of Common
Stock of the Corporation shall have the right to one (1) vote for each share of
Common Stock standing in the shareholder's name on the books of the Corporation
on the record date on each matter submitted to a vote at any meeting of the
shareholders.
4
<PAGE> 5
ARTICLE X
REGULATION OF BUSINESS
Section 1. Location of Meetings. Meeting of the shareholders, the Board
of Directors or any committees of the Board of Directors may be held at such
place, within or without the State of Tennessee, as may be specified in the
respective notices or waivers of notice thereof.
Section 2. Directors Liability. To the fullest extent permitted by the
Tennessee Business Corporation Act as in effect on the date hereof and as
amended from time to time, no director may be sued by the Corporation or its
shareholders for breach of his or her fiduciary duty to the Corporation,
provided, however, that this provision shall not absolve a director from a
breach of his or her duty of loyalty, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, or for
distributions in violation of T.C.A. Section 48-18-304.
ARTICLE XI
AMENDMENTS
This Charter may be amended at any regular or legally called special
meeting of the stockholders, provided, notice of the proposed amendment shall
have been mailed to each stockholder not less than ten (10) days prior to such
meeting.
ARTICLE XII
ORIGINAL INCORPORATORS
The original incorporators and their addresses at the time of the
filing of the original Articles of Incorporation are as follows:
S. Doak Foster Benjamin F. Ward
9909 Catskill 544 Haymarket Cove
Little Rock, Arkansas 72207 Memphis, Tennessee 38138
W. H. L. Woodyard, III Robert H. Wallace, Jr.
9 Longfellow Place 193 Lorece Lane
Little Rock, Arkansas 72207 Memphis, Tennessee 38117
Donna K. Lyons
1404 Chesterfield
Sherwood, Arkansas 72116
5
<PAGE> 6
SUBDIVISION B
MANNER OF ADOPTION AND VOTE
Action by Directors. The Board of Directors of the Corporation duly
adopted resolutions proposing to the sole shareholder of the Corporation
entitled to vote in respect of the Articles of Amendment and Restatement of
Articles of Incorporation of Delta Life and Annuity Company Constituting a
Charter of Delta Life and Annuity Company (the "Articles") that the provisions
and terms of the Corporation's Articles of Incorporation be amended and restated
so as to read as set forth above; and called a meeting of such shareholder, to
be held May 4, 1990, to adopt or reject the Articles.
Action by Shareholder. The sole shareholder of the Corporation entitled
to vote in respect of the Articles, at a meeting thereof, duly called,
constituted and held on May 4, 1990, at which the shareholder was present in
person or by proxy, adopted the Articles.
The number of shares entitled to vote in respect of the Articles, the
number of shares voted in favor of the adoption of the Articles, and the number
of shares voted against such adoption are as follows:
<TABLE>
<CAPTION>
Total
-----
<S> <C>
Shares entitled to vote: 200,000
Shares voted in favor: 200,000
Shares voted against: -0-
------------
</TABLE>
IN WITNESS WHEREOF, the undersigned officers execute these Articles of
the Corporation this 15th day of August , 1990.
/s/ Robert H. Wallace, Jr.
---------------------------------
Robert H. Wallace, Jr., President
/s/ Bettye S. Adams
---------------------------------
Bettye S. Adams, Secretary
This Instrument Prepared by Bettye S. Adams, Attorney, 530 Oak Court, Suite 200,
Memphis, Tennessee 38117.
6
<PAGE> 1
Exhibit 6(b)
By-Laws
of
Delta Life and Annuity Company
<PAGE> 2
TABLE OF CONTENTS OF AMENDED AND RESTATED BYLAWS
OF
DELTA LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
I. OFFICES AND REGISTERED AGENTS
<S> <C> <C> <C>
Section 1. Principal Office Page 1
Section 2. Registered Agent Page 1
II. MEETINGS OF STOCKHOLDERS
Section 1. Meeting Page 1
Section 2. Annual Meetings Page 1
Section 3. Special Meetings Page 1
Section 4. Notice of Meetings Page 2
Section 5. Quorum Page 2
Section 6. Meeting Chairman Page 2
Section 7. Shareholders Entitled to Vote Page 2
Section 8. Proxies Page 3
Section 9. Vote Required Page 3
Section 10. Action Without a Meeting Page 3
III. BOARD OF DIRECTORS
Section 1. Number of Directors Page 4
Section 2. Removal of Directors Page 4
Section 3. Filling of Vacancies Page 4
Section 4. Powers Page 4
Section 5. Compensation Page 4
Section 6. Annual Meetings Page 5
Section 7. Special Meetings Page 5
Section 8. Notice of Meetings Page 5
Section 9. Quorum Page 5
Section 10. Action Without a Meeting Page 5
Section 11. Telephone Conference Page 5
Section 12. Dissent Page 6
Section 13. Executive Committee Page 6
IV. OFFICERS
Section 1. Appointment Page 6
Section 2. Terms of Office Page 6
Section 3. Removal Page 6
Section 4. Duties Page 7
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
V. CAPITAL STOCK
<S> <C> <C> <C>
Section 1. Certificates Page 7
Section 2. Required Signature Page 7
Section 3. Notice of Restrictions Page 7
Section 4. Reissuance of Certificates Page 7
Section 5. Transfer of Shares Page 8
Section 6. Endorsement Page 8
VI. DIVIDENDS, SURPLUS AND RESERVE
Section 1. Dividends Page 8
Section 2. Surplus Distributions Page 8
Section 3. Increases of Capital Page 9
VII. MISCELLANEOUS PROVISIONS
Section 1. Corporate Seal Page 9
Section 2. Fiscal Year Page 9
Section 3. Financial Statements Page 9
VIII. AMENDMENTS
Section 1. Shareholder Approval Page 10
Section 2. Director Approval Page 10
IX. INDEMNIFICATION
Section 1. Indemnification Page 10
Section 2. Advance of Costs, Charges
and Expenses Page 11
Section 3. Procedure for Indemnification Page 11
Section 4. Other Rights; Continuation of
Right to Indemnification Page 12
Section 5. Insurance Page 12
Section 6. Savings Clause Page 12
</TABLE>
<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
DELTA LIFE AND ANNUITY COMPANY
I.
OFFICES AND REGISTERED AGENTS
Section 1. Principal Office. The principal office of this Corporation
shall be that office, within the State of Tennessee designated by the Board of
Directors. The Corporation may also have offices in such other places, either
within or without the State of Tennessee as the Board of Directors may from
time to time appoint, or the business of the Corporation may require.
Section 2. Registered Agent. The Corporation has designated and shall
continue to have a registered agent in the State of Tennessee. If the
registered agent resigns or is for any reason unable to perform his/her duties,
the Corporation shall promptly designate another registered agent. The
Corporation may, by Resolution of the Board of Directors, appoint such other
agents for the service of process in such other jurisdictions as the Board of
Directors may determine.
II.
MEETINGS OF SHAREHOLDERS
Section 1. Meetings. Meetings of the shareholders shall be held
within the State of Tennessee, at the principal office of the Corporation.
Section 2. Annual Meetings. Annual meetings of the
shareholders, beginning with the year 1991, shall be held on the first Friday
in May of each year, if said date is not a legal holiday, and if a legal
holiday, then on the next secular day following, or at such other date and time
as shall be designated from time to time by the Board of Directors, for the
purpose of electing directors of the Corporation and for the transacting of
such other business as may properly come before the meeting.
Section 3. Special Meetings. Special meetings of the
shareholders may be called by the Board of Directors, by the Chairman of the
Board, or by the President and shall be called by the Chairman, President,
Secretary, or Assistant Secretary at the request in writing of any member of
the Board of Directors, or at the request in writing of the holders of record
of at least one-third (1/3) of the outstanding shares of the Corporation
entitled to vote at the meeting. Each special meeting shall be held at such
time as the Board of Directors shall determine, or in the absence of such
determination by the Board of Directors, at such time as the person or persons
calling or requesting the call of the meeting shall specify in the notice or in
the written request.
Section 4. Notice of Meetings. All notices of shareholders'
meetings shall be made in writing, stating the place, day and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called and the person or persons calling the meeting, or
otherwise giving notice as provided by statute; provided, however, that the
shareholders may waive the requirement of notice by written waiver duly
executed and filed with the Minutes of the meeting to which it pertains.
Notices of meetings shall be delivered not less than ten (10) nor more than
sixty (60) days before the date of the meeting and shall be deemed to be
delivered when deposited in the United States Mail, addressed to the
shareholder at his/her address as it appears on the Stock Transfer Books of the
Corporation. If delivered personally, such notice shall be given not less than
five (5) nor more than sixty (60) days before the date of the meeting. A
certificate of the Secretary or the person giving the notice, or of a transfer
agent of the Corporation, that the notice required by this Section has been
given, in the absence of fraud, shall be prima facie evidence of the facts
therein stated.
<PAGE> 5
Section 5. Quorum. At any meeting of the shareholders, as a
prerequisite for the transaction of any business, a quorum shall be present. A
quorum shall consist of the holders of record of not less than a majority of
the outstanding shares of the Corporation entitled to vote at such meeting,
present either in person or by proxy. When a quorum is once present to
organize a meeting, it is not broken by the subsequent withdrawal of any of
those present. A meeting may be adjourned, despite the absence of a quorum, by
the Chairman of the meeting, or a majority of the shareholders, present in
person or by proxy, until holders of the requisite amount of shares shall
attend.
Section 6. Meeting Chairman. The Chairman of the Board, or in
his/her absence or inability to serve, the President, or in his/her absence or
inability to serve, the Treasurer or Secretary, shall call meetings of the
shareholders to order and act as Chairman of such meetings. The shareholders
may elect any one of their number to act as Chairman of any meeting in the
absence of the aforenamed individuals.
Section 7. Shareholders Entitled to Vote. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors may provide that the Stock
Transfer Books shall be closed for a stated period, but not to exceed forty
(40) days. If the Stock Transfer Books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the Stock Transfer Books, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not less than ten
(10) days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the Stock Transfer Books are
not closed and no record date is fixed for determination of shareholders
entitled to notice of or entitled to vote at a meeting of shareholders or
shareholders entitled to receive payment of a dividend, close of business on
the day before the date on which notice of the meeting is mailed, or the date
on which the Resolution of the Board declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
Section 8. Proxies. Every shareholder entitled to vote at a
shareholders' meeting, or to express consent or dissent without a meeting, may
authorize another person or persons to act for him/her by proxy. Each proxy
must be in writing and signed by the shareholder or by his/her attorney in
fact. No proxy shall be valid after the expiration of eleven (11) months from
the date thereof unless otherwise provided in the proxy. Each proxy shall be
revocable at the pleasure of the shareholder executing it, and this provision
cannot be waived. All proxies must be delivered to the Secretary of the
Corporation prior to the opening of the meeting, except for proxies granted
after the meeting has opened, which proxies shall be delivered to the Secretary
as soon as practicable after execution.
Section 9. Vote Required. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting
power, present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of statute, the Charter, or these Bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 10. Action Without a Meeting. Unless otherwise provided
in the Charter, any action required or permitted to be taken at any annual or
special meeting of shareholders of the Corporation, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock entitled to vote thereon having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares were present and voted. Prompt notice of the
taking of the Corporate action without a meeting by less than unanimous written
consent shall be given to those shareholders who have not consented in writing.
<PAGE> 6
III
BOARD OF DIRECTORS
Section 1. Number of Directors. The affairs of this Corporation
shall be managed by a Board of not less than three (3) nor more than fifteen
(15) directors, who shall be elected by the shareholders at the regular meeting
for a term of one (1) year until their successors are elected and qualified.
The number of directors may be changed by the shareholders or by the Board by
amending these Bylaws; provided, that the adoption of such an amendment by the
Board of Directors shall require the vote of a majority of the entire Board.
No decrease in the number of directors shall shorten the term of any incumbent
director. Directors need not be residents of the State of Tennessee nor
shareholders of the Corporation.
Section 2. Removal of Directors. Each director shall serve for
the term of one (1) year and until his/her successor shall have been duly
elected and qualified subject, however, to the right of removal, with or
without cause, by the holders of a majority of the shares entitled to vote at
an election of directors.
Section 3. Filling of vacancies. Newly created directorships
resulting from an increase in the number of directors and vacancies occurring
in the Board of Directors for any reason, except the removal of directors
without cause, may be filled by a vote of the majority of the directors then in
office, although less than a quorum exists, or any such newly created
directorships and vacancies occurring in the Board of Directors, for any
reason, may be filled by a vote of the shareholders at any meeting of the
shareholders, notice of which shall have referred to the proposed election.
Any director elected to fill a vacancy shall be elected to hold office for the
unexpired term of his/her predecessor, or, if there is no predecessor, until
the next annual meeting of shareholders.
Section 4. Powers. The business of the Corporation shall be
managed by its Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Charter or by these Bylaws directed or required to be exercised or done by
the shareholders.
Section 5. Compensation. Unless otherwise restricted by the
Charter or these Bylaws, the Board of Directors shall have the authority to fix
the compensation of the directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum or hourly rate for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefore. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 6. Annual Meetings. The annual meeting of the newly
elected Board of Directors may be held- immediately after the annual meeting of
shareholders, and at the same place as such annual meeting of shareholders,
provided a quorum be present, and no notice of such meeting shall be necessary.
In the event such annual meeting of the newly elected Board of Directors is not
held at such time and place, the same shall be held as provided otherwise in
this Article III.
Section 7. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, or the President, or by
any two (2) directors.
Section 8. Notice of Meetings. Notice of each regular or
special meeting of the Board of Directors, except as provided in Section 7,
shall be given by the Secretary, or an Assistant Secretary, or by the person or
persons calling the meeting. Such notice shall be given to each member of the
Board not less than three (3) days before the meeting by depositing the notice
in the United States Mail directed to each member of the Board at the address
designated by him/her for such purpose, or, not less than one (1) day before
the meeting by either delivering the same to each member of the Board of
Directors personally, or, delivering it to the address designated by him/her
for that purpose. Notice of the meeting need not be given to any director who
submits a signed waiver of notice, whether before, at or after the meeting.
The notice of any meeting of the Board of Directors need not specify the
purpose or purposes for which the meeting is called, except as otherwise
provided in these Bylaws.
<PAGE> 7
Section 9. Quorum. At all meetings of the Board of Directors,
except as otherwise provided by law, the Charter, or by these Bylaws, a quorum
shall consist of a majority of the total number of directors then in office.
Section 10. Action Without a Meeting. Directors may take any
action which they are required or permitted to take under the law, the Charter,
or these Bylaws, without a meeting, on written consent in one (1) or more
counterparts, setting forth the actions so taken signed by all of the persons
entitled to vote thereon and included in the Minutes or filed with the
Corporate records.
Section 11. Telephone Conference. Unless otherwise restricted
by the Charter or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 12. Dissent. A director who is present at a meeting of
the Board, at which any action is taken, shall be presumed to have concurred in
the action, unless his/her dissent thereto shall be entered in the Minutes of
the meeting, or unless he/she shall submit his/her written dissent to the
person acting as the Secretary of the meeting before the adjournment thereof,
or shall deliver or send such dissent to the Secretary of the Corporation
promptly after the adjournment of the meeting. Such rights to dissent shall
not apply to a director who voted in favor of any such action. A director who
is absent from a meeting at which such action is taken shall be presumed to
have concurred in the action unless he/she shall deliver or send by registered
or certified mail his/her dissent thereto to the Secretary of the Corporation
or shall cause such dissent to be filed with the Minutes of the proceedings of
the Board within a reasonable time after learning of such action.
Section 13. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the number of directors fixed by the
Bylaws, or otherwise, may designate two (2) or more directors to constitute an
executive committee, which committee, to the extent provided in such
resolution, shall have and exercise all of the authority of the Board of
Directors in the management of the Corporation, except as otherwise required by
law. Vacancies in the membership of the committee shall be filled by the Board
of Directors at a regular or special meeting of the Board of Directors. The
Executive Committee shall keep regular Minutes of its proceedings and report
the same to the Board when required.
IV.
OFFICERS
Section 1. Appointment. The Board of Directors shall annually,
at its first meeting after the annual meeting of shareholders, appoint or elect
a Chairman of the Board, a President, one (1) or more Vice Presidents, a
Secretary and a Treasurer. The Board of Directors may, from time to time,
elect or appoint such additional officers as it may determine are necessary.
Such additional officers shall have such authority and perform such duties as
the Board of Directors prescribes. Any two (2) of the aforementioned offices,
may be filled by the same person, except that no one (1) person may be
Secretary and also President, but no person shall purport to execute or attest
any document or instrument on behalf of the Corporation in more than one (1)
capacity.
Section 2. Terms of Office. The officers of the Corporation
shall hold office for one (1) year, or until their successors are chosen and
qualified, subject, however, to the removal of any officer pursuant to these
Bylaws.
Section 3. Removal. Any officer elected by the Board of
Directors may be removed at any time by the President or by the affirmative
vote of the majority of the entire board.
Section 4. Duties. All officers shall have such authority to
perform such duties in the management of the Corporation as are normally
incident to their offices and as the Board of Directors may from time to time
provide.
<PAGE> 8
V.
CAPITAL STOCK
Section 1. Certificates. The certificates of stock of the
Corporation shall be numbered consecutively and shall be entered on the books
of the Corporation as they are issued. Every shareholder shall be entitled to
a certificate or certificates of capital stock of the Corporation.
Section 2. Required Signature. Certificates of stock shall be
signed by the Chairman of the Board or the President and the countersigned by
the Secretary. If the certificate is countersigned by a transfer agent or
registered by a registrar other than an officer of employee of the Corporation,
the signature and countersignature of the Corporation officers may be
facsimile. In case any officer who has signed or whose facsimile signature has
been placed upon such certificates shall have ceased to be such officer before
such certificates is issued, it may be issued by the Corporation with the same
effect as if he/she were such officer at the date of its issuance.
Section 3. Notice of Restrictions. Each certificate of stock
which is restricted or limited as to its transferability of voting rights, or
which is callable under the Charter, which is preferred or limited as to
dividends or rights upon voluntary or involuntary dissolution, shall have a
notice of such restriction, limitation or preference conspicuously stated on
the face or back of the certificate. Upon the removal or expiration of any
such restriction or limitation, the holder of such certificate shall be
entitled to receive a new certificate upon the surrender of the old restricted
or limited certificate and the payment of the reasonable expenses of the
Corporation incurred in connection therewith.
Section 4. Reissuance of Certificates. The Corporation shall
issue a new stock certificate in the place of any certificate previously issued
where the holder of record of the certificate:
A. Makes proof in affidavit form that it has been lost,
destroyed or wrongfully taken;
B. Satisfies any other reasonable requirements imposed by the
Corporation.
Section 5. Transfer of Shares. The Corporation shall register a
transfer of a stock certificate presented to it for transfer if:
A. The certificate is endorsed by the appropriate person or
persons;
B. The signature of the appropriate person or persons has been
guaranteed by a national banking association, a bank organized and operating
under the statutes of the State of Tennessee, or a member of the National
Association of Security Dealers, and reasonable assurance is given that the
endorsements are effective, unless the Secretary of the Corporation waives
such requirements;
C. The Corporation has no duty to inquire into adverse claims or
has discharged any such duties;
D. There has been compliance with any applicable law relating to
the collection of taxes; and
E. The transfer is in fact rightful or is to a bona fide
purchaser.
Section 6. Endorsement. An endorsement of the stock certificate
in registered form is made when an appropriate person signs on it or on a
separate document an assignment or transfer of it, or a power to assign or
transfer it, or when the signature of this person is written without more upon
the back of the certificate. An endorsement may be in blank, which includes an
endorsement to bearer, or special, which specifies the person to whom the stock
is to be transferred, or who has the power to transfer it. The Corporation may
elect to require reasonable assurance beyond that specified in this Section.
<PAGE> 9
VI.
DIVIDENDS, SURPLUS AND RESERVE
Section 1. Dividends. The Board of Directors may, from time to
time, declare and the Corporation may pay, dividends on its outstanding shares
in cash, property or its own shares, except where the declaration and payment
would violate applicable law.
Section 2.. Surplus Distributions. The Board of Directors may
distribute to the shareholders of the Corporation out of surplus, a portion of
its assets, in cash or property, subject to the following provisions:
A. No such distribution shall be made at a time when the
Corporation is insolvent or when such distribution would render the Corporation
insolvent;
B. No such distribution shall be made unless such distribution is
authorized by the affirmative vote of the holders of the majority of all of the
outstanding shares of stock entitled to vote thereon;
C. No such distribution shall be made to the holders of any class
of shares unless all cumulative dividends accrued on all preferred or special
class(es) of shares entitled to preferential dividends shall have been fully
paid;
D. No such distribution shall be made to the holders of any class
of shares which would reduce the remaining net assets of the Corporation below
the aggregate preferential amount payable in the event of voluntary liquidation
to the holders of shares having preferential rights to the assets of the
Corporation in the event of liquidation;
E. No such distribution shall be made, except in compliance with
applicable law.
Section 3. Increases of Capital. The capital of the Corporation
may be increased from time to time by Resolution of the Board, directing that
all or part of the surplus of the Corporation be transferred to capital. The
Board of Directors may, by Resolution, apply any part of the capital of the
Corporation to the reduction or elimination of any deficit arising from losses
however incurred; provided, however, that the surplus has first been exhausted
by charging such losses to surplus and then only to the extent that such losses
exceed the surplus. Each such application of capital shall, to the extent
thereof, effect a reduction of capital, but it may not be reduced below the
minimum amount required by law, nor in a manner inconsistent with applicable
law.
VII.
MISCELLANEOUS PROVISIONS
Section 1. Corporate Seal. The Corporation shall have a
corporate seal. The presence or absence of a seal on any instrument shall not
affect the character, or validity, or legal effect thereof in any respect. The
affixing of a seal shall not be necessary for the execution of any instrument
or document by the Corporation unless required by law.
Section 2. Fiscal Year. The fiscal year of the Corporation shall
end December 31 of each year, unless otherwise fixed by Resolution of the Board
of Directors.
Section 3. Financial Statements. The Board of Directors shall
cause a true statement of the assets and liabilities of this Corporation as of
the close of each fiscal year and of the results of its operations and of the
changes in surplus for such fiscal year, all in reasonable detail, to be made
and filed at the principal office of the Corporation in this state, within four
(4) months after the end of such fiscal year, and there kept available for a
period of at least ten (10) years for inspection on request by any shareholder.
The officers of the Corporation shall mail or otherwise deliver a copy of the
latest of such statement to any such shareholder upon his/her written request
therefore.
<PAGE> 10
VIII.
AMENDMENTS
Section 1. Shareholder Approval. These Bylaws may be amended by
a vote of a majority of all of the stock issued and outstanding entitled to
vote at any regular or special meeting of the shareholders, provided notice of
intention to amend shall have been contained in the notice of any special
meeting for that purpose.
Section 2. Director Approval. The Board of Directors may, by a
majority vote of the entire Board, at any regular meeting, or at any duly
called special meeting, amend these Bylaws, including Bylaws adopted by the
shareholders; provided, that the shareholders may from time to time specify
particular provision of these Bylaws which shall not be amended by the Board of
Directors.
IX.
INDEMNIFICATION
Section 1. Indemnification. To the full extent permitted by the
applicable laws of the State of Tennessee, the Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including actions or suits by or in
the right of the Corporation to procure a judgment in its favor, by reason of
the fact that he/she is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation, or is or
was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
such capacity, against costs, charges, expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him/her or on his/her behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he/she acted in good faith and in a
manner he/she reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his/her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he/she reasonably believed to be in, or not opposed
to, the best interest of the Corporation, and with respect to any criminal
action or proceeding, had reasonable cause to believe that his/her conduct was
unlawful.
Section 2. Advance of-Costs, Charges and Expenses. Costs,
charges and expenses (including attorneys' fees) incurred by a person referred
to in Section 1 of this Article in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon such terms and conditions,
if any, as the Board of Directors deems appropriate; Provided, however, that
the payment of such costs, charges and expenses incurred by such person in
advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by of on behalf of such person to
repay all amounts so advanced in the event that it shall ultimately be
determined that such person is not entitled to be indemnified by the
Corporation as authorized in this Article. The Board of Directors may, in the
manner set forth above, and upon approval of such director, officer or employee
of the Corporation, authorize the Corporation's counsel to represent such
person, in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
Section 3. Procedure for Indemnification. Any indemnification
under Section I or advance of costs, charges and expenses under Section 2 of
this Article, shall be made promptly, and in any event within sixty (60) days,
upon the written request of the director, officer or employee. The right to
indemnification or advances as granted by this Article shall be enforceable by
the director, officer or employee in any court of competent jurisdiction, if
the Corporation denies such request, in whole or in part, or if no disposition
thereof is made within sixty (60) days. Such person's costs and expenses
incurred in connection with successfully establishing his/her right to
indemnification, in whole or in part, in any such action may be indemnified by
the Corporation. It shall be a defense to any such action (other than an
action brought to enforce a claim for the advance of costs, charges and
expenses under Section 2 of this
<PAGE> 11
Article where the required undertaking, if any, has been received by the
Corporation) that the claimant has not met the standard of conduct set forth in
Section 1 of this Article, but the burden of proving such defense shall be on
the Corporation. Neither the failure of the Corporation (including its Board
of Directors, its independent legal counsel, and its shareholders) to have made
a determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he/she has met the
applicable standard of conduct set forth in Section I of the Article, nor the
fact that there has been an actual determination by the Corporation (including
its Board of Directors, its independent legal counsel, and its shareholders)
that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 4. Other Rights; Continuation of Right to Indemnification.
The indemnification and advancement of expenses provided by this Article shall
not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(common or statutory), agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his/her official capacity and as
to action in another capacity while holding office or while employed by the
Corporation, and shall continue as to a person who has ceased to be a director,
officer or employee, and shall inure to the benefit of the estate, heirs,
executors and administrators of such person. Any repeal or modification of
this Article or any repeal or modification of relevant provisions of the
Tennessee Business Corporation Act or any other applicable laws shall not in
any way diminish any rights to indemnification of such director, officer or
employee, or the obligation of the Corporation arising hereunder.
Section 5. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director, officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him/her and incurred by him/her or on his/her behalf
in any such capacity, or arising out of his/her status as such, whether or not
the Corporation would have the power to indemnify him/her against such
liability under the provisions of this Article, provider that such insurance is
available on acceptable terms, which determination shall be made by a vote of a
majority of the entire Board of Directors.
Section 6. Savings Clause. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation may nevertheless indemnify each director, officer and employee
of the Corporation as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to
the full extent permitted by any applicable portion of this Article that shall
not have been invalidated and to the full extent permitted by applicable law.
The preceding paragraph shall be deemed to be a contract between the
Corporation and each director, officer and employee of the Corporation who
serves in such capacity at any time while this section and the relevant
provisions law are in effect, and any repeal or modification of this section or
such provisions of law shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing as it relates
to any action or preceding theretofore of thereafter brought or threatened
based in whole or in part upon such state of facts; provided, however, that the
right of indemnification provided in this section shall not be deemed exclusive
of any other rights to which any person may now be or hereafter become entitled
apart from this section.
Duly adopted by Resolution May 4, 1990.
/s/ Bettye S. Adams
-----------------------------------
Secretary
<PAGE> 12
MEMORANDUM OF ACTION BY
SOLE SHAREHOLDER OF
DELTA LIFE AND ANNUITY COMPANY
The undersigned, being all of the directors of DELTA LIFE CORPORATION,
a Delaware corporation (the "corporation'), acting on behalf of the corporation
in its capacity of sole shareholder of Delta Life and Annuity Company
(sometimes "Delta Life'), do hereby take, consent to and vote all of the issued
and outstanding shares of Delta Life in favor of, the following action by
unanimous written consent without a meeting of the shareholder of Delta Life
and do hereby waive any required notice with respect thereto
RESOLVED that Article II, Section 2 of the bylaws of Delta
Life is deleted and the following substituted therefore:
Section 2. Annual Meetings. Annual meetings
of the shareholders, beginning with the year 1991, shall be
hold on the second Friday in May of each year, if said date is
not a legal holiday, and if a legal holiday then on the
next secular day following, or at such other date and time as
shall be designated from time to time by the board of
directors. At such meeting the shareholders shall elect the
directors of the corporation and transact such other business
as may properly come before the meeting; provided, however,
directors may also be elected at any duly convened special
meeting of the shareholders.
RESOLVED FURTHER, that this corporation as the sole
Shareholder of Delta Life hereby elects Robert Fogelman to serve on the board
of directors of Delta Life and Annuity Company and to serve on its
investment committee.
In witness hereof, the following directors have signed this consent to
be effective as of the 8th day of November, 1991.
Robert H. Wallace, Jr. Robert L. Cox
Clayton D. Smith William D. Callaghan
R. Brad Martin J. Tucker Morse
William B. Rudner
<PAGE> 13
SECRETARY'S CERTIFICATE
I, Bettye S. Adams, do hereby certify that I am the duly elected and
acting Secretary of Delta Life and Annuity Company (the "Corporation") , a
corporation duly organized and existing under the laws of the State of
Tennessee and that the following is a resolution duly adopted by the board of
directors of the Corporation at a duly convened meeting held May 7, 1992, and
that said resolution remains in full force and effect and unmodified:
RESOLVED, That Article III, Section 13 of the bylaws of the
Corporation be deleted in its entirety and the following substituted therefore:
Section 13. Committees of Directors.
A. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees. Each
committee, except the Investment Committee, shall consist of one or more of the
directors of the Corporation. The board may designate one or more alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member
of a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers.which may
require it; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation, recommending to the shareholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the shareholders a dissolution of the Corporation or a
revocation of a dissolution, amending or repealing any resolution of the board
which by its terms shall not be so amendable or repealable, or amending the
Bylaws of the Corporation; and, unless the resolution or the Certificate of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.
B. Executive Committee. The Executive Committee, if there shall
be one, shall consult with and advise the officers of the Corporation in the
management of its business and shall have and may exercise to the extent
provided in the resolution of the board of directors creating such Executive
Committee such powers of the board of directors as can be lawfully delegated by
the board.
C. Investment Committee. The Investment Committee, if there be
one, shall be appointed by the board of directors by resolution and shall be
charged with the duty of authorizing and supervising all of the Corporation's
loans and investments. Membership on the board of directors of the Corporation
shall not be a requirement for eligibility to serve on the Investment
Committee.
D. Meetings of Committees. Regular meetings of the Executive
Committee and other committees may be held without notice at such time and at
such place as shall from time to time be determined by the Executive Committee
or such other committees and special meetings of the Executive Committee or
such other committees as may be called by any member thereof upon two (2) days
notice to each of the other members of such committee or on such shorter notice
as may be agreed to in writing by each of the other members of such committee,
given either personally or in writing, by mail, addressed to such director at
his address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice to directors may
also be given by telegram or electronic facsimile, in which event it shall be
deemed to have been given when deposited with a telegraph or electronic
facsimile office for transmission.
<PAGE> 14
E. Quorum of Committees At all meetings of the Executive
Committee or such other committees, a majority of the committee members then in
office shall constitute a quorum for the transaction of business. Except for
the Executive Committee and the Investment Committee, if there be such, the
acts of a majority of the members of any committee present at any meeting at
which there is a quorum, shall be the act of such committee. The acts of at
least three (3) members of the Executive Committee, if there shall be one,
present at any meeting at which there is a quorum, shall be the act of such
Committee. The acts of at least three (3) members, (two of which shall be
outside directors), of the Investment Committee, if there shall be one,
present at any meeting at which there is a quorum, shall be the act of such
Committee.
F. Minutes of Committees. The Executive Committee, if there
shall be one, and such other committees shall keep regular minutes of their
proceedings and report the same to the board of directors when required.
G. Compensation. Members of the Executive Committee and such
other committees may be paid compensation in accordance with the provisions of
Section 5 of Article III of the Bylaws (pertaining to compensation of
directors).
IN WITNESS WHEREOF, I have set my hand this 9th day of October, 1992.
/s/ Bettye S. Adams
-------------------------------------
Bettye S. Adams, Secretary
( S E A L )
<PAGE> 15
SECRETARY'S CERTIFICATE
I, Bettye S. Adams, do hereby certify that I am the duly elected and
acting Secretary of Delta Life and Annuity Company (the "Corporation") , a
corporation duly organized and existing under the laws of the State of
Tennessee and that the following are resolutions duly adopted by the board of
directors of the Corporation at a duly convened meeting held February 12, 1993
and that said resolutions remain in full force and effect and unmodified:
RESOLVED, that Article IV, Section 1 of the bylaws of the Corporation
be deleted in its entirety and the following substituted therefore:
Section 1. Appointment
The Board of Directors shall annually, at its first meeting after the
annual meeting of shareholders or at any duly convened meeting of the
Board of Directors or by action without a meeting evidenced by written
consent as provided in these bylaws, appoint or elect a Chairman of
the Board, a President, one (1) or more Vice Presidents, a Secretary
and a Treasurer. The Board of Directors may, from time to time, elect
or appoint such additional officers as it may determine are necessary.
Such additional officers shall have such authority and perform such
duties as the Board of Directors prescribes. Any two (2) of the
aforementioned offices, may be filled by the same person, except that
no one (1) person may be Secretary and also President, but no person
shall purport to execute or attest any document or instrument on
behalf of the Corporation in more than one (1) capacity.
RESOLVED, that Article III, Section 13, Subsection "Compensation
Committee", Number 7, be deleted in its entirety.
IN WITNESS WHEREOF, I have set my hand this 2nd day, of June, 1993.
(S E A L)
/s/ Bettye S. Adams
------------------------------
Bettye S. Adams, Secretary
<PAGE> 16
Delta Life and Annuity Company February 18, 1994
Page 3
The Chairman stated that the next order of business would be to
consider an amendment to the Corporation, s bylaws. After a brief discussion,
upon motion duly made and seconded, the following resolution was unanimously
adopted:
RESOLVED, That Article IX of the bylaws of the Corporation be, and it
hereby is, deleted in its entirety and the following substituted therefor:
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify to the full extent authorized
or permitted by the TennesseeBusiness Corporation Act of the State of Tennessee
any person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the f act that he or
she is or was a director or officer of the Corporation or, as such officer or
director, is or was serving at the request of the Corporation as a director,
officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
