<PAGE>
As filed with the Securities and Exchange Commission on March 22, 1996
Registration No. 33-14032
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 13 TO
FORM 485B24F
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
PACIFIC SELECT SEPARATE ACCOUNT OF
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Exact Name of Registrant)
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
(Address of Depositor's Principal Executive Office)
______________________________________________________________________________
Sharon A. Cheever
Vice President and Investment Counsel of
Pacific Mutual Life Insurance Company
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
(Name and Address of Agent for Service of Process)
Copies to:
Jeffrey S. Puretz, Esq.
Dechert Price & Rhoads
1500 K Street, N.W., Suite 500
Washington, D.C. 20005
______________________________________________________________________________
It is proposed that this filing will become effective on April 1, 1996 pursuant
to paragraph (b) of Rule 485.
Title of securities being registered: Interests in the Separate Account under
flexible premium variable life insurance policies.
Filing fee: None
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940 and will file its Rule 24f-2 Notice for the fiscal year ending December
31, 1996, on or before February 28, 1997.
<PAGE>
Pacific Select Separate Account of Pacific Mutual
Life Insurance Company
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
1.(a) Name of trust Prospectus front cover
(b) Title of securities issued Prospectus front cover
2. Name and address of each depositor Prospectus front cover
3. Name and address of trustee N/A
4. Name and address of each principal Pacific Mutual Life
underwriter Insurance Company
5. State of organization of trust Pacific Select
Separate Account
6. Execution and termination of trust Pacific Select
agreement Separate Account
7. Changes of name N/A
8. Fiscal year Federal Income Tax
Considerations
9. Litigation N/A
II. General Description of the Trust
and Securities of the Trust
10.(a) Registered or bearer
securities The Policy
<PAGE>
(b) Cumulative or distributive
securities The Policy
(c) Conversion, transfer, etc. Transfers, Surrenders,
Withdrawals and
Policy Loans;
Surrender
(d) Periodic payment plan N/A
(e) Voting rights Voting on Fund Shares
(f) Notice to security holders Reports to Owners
(g) Consents required Disregard of Voting
Instructions;
Substitution of
Investments
(h) Other provisions The Policy
11. Type of securities comprising
units The Policy
12. Certain information regarding
periodic payment plan
certificates N/A
13.(a) Load, fees, expenses, etc. Charges and Deductions
(b) Certain information regarding
periodic payment plan
certificates N/A
(c) Certain percentages Charges and Deductions
(d) Certain other fees, etc. Charges and Deductions
(e) Certain other profits or
benefits The Policy
(f) Ratio of annual charges to
income N/A
14. Issuance of trust's securities The Policy
<PAGE>
15. Receipt and handling of payments
from purchasers The Policy; Premiums
16. Acquisition and disposition of Introduction; Pacific
underlying securities Select Separate
Account; The Policy
17. Withdrawal or redemption Transfers, Surrenders,
Withdrawals and
Policy Loans;
Surrender
18.(a) Receipt, custody and dis-
position of income The Policy
(b) Reinvestment of
distributions N/A
(c) Reserves or special funds N/A
(d) Schedule of distributions N/A
19. Records, accounts and reports Reports to Owners
20. Certain miscellaneous provisions
of trust agreement:
(a) Amendment Other Information
(b) Termination N/A
(c) and (d) Trustees, removal and
successor N/A
(e) and (f) Depositors, removal
and successor N/A
21. Loans to security holders Policy Loans
22. Limitations on liability N/A
23. Bonding arrangements N/A
24. Other material provisions of
trust agreement N/A
<PAGE>
III. Organizations, Personnel and
Affiliated Persons of Depositor
25. Organization of depositor Pacific Mutual Life
Insurance Company
26. Fees received by depositor See Items 13(a) and
13(e)
27. Business of depositor Pacific Mutual Life
Insurance Company
28. Certain information as to officials
and affiliated persons of More about Pacific
depositor Mutual
29. Voting securities of depositor N/A
30. Persons controlling depositor N/A
31. Payments by depositor for certain
services rendered to trust N/A
32. Payments by depositor for certain
other services rendered to
trust N/A
33. Remuneration of employees of
depositor for certain services
rendered to trust Charges and Deductions
34. Remuneration of other persons
for certain services rendered
to trust Charges and Deductions
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities
by states N/A
36. Suspension of sales of trust's
securities N/A
37. Revocation of authority to
distribute N/A
<PAGE>
38.(a) Method of distribution Distribution of the
Policy
(b) Underwriting agreements Distribution of the
Policy
(c) Selling agreements Distribution of the
Policy
39.(a) Organization of principal
underwriters See Item 25
(b) N.A.S.D. membership of
principal underwriters See Item 25
40. Certain fees received by principal See Items 13(a) and
underwriters 13(e)
41.(a) Business of each principal
underwriter See Item 27
(b) Branch offices of each
principal underwriter N/A
(c) Salesmen of each principal
underwriter N/A
42. Ownership of trust's securities
by certain persons N/A
43. Certain brokerage commissions
received by principal
underwriters N/A
44.(a) Method of valuation Determination of
Accumulated Value
(b) Schedule as to offering
price Charges and Deductions
(c) Variation in offering price
to certain persons Charges and Deductions
45. Suspension of redemption rights Surrender
<PAGE>
46.(a) Redemption valuation See Items 10(c) and (d)
(b) Schedule as to redemption
price Surrender
47. Maintenance of position in
underlying securities The Pacific Select Fund
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of
trustee N/A
49. Fees and expenses of trustees N/A
50. Trustee's lien N/A
VI. Information Concerning Insurance of
Holders of Securities
51. Insurance of holders of trust's Pacific Mutual Life
securities Insurance Company;
The Policy
52.(a) Provisions of trust agreement
with respect to selection or
elimination of under- Substitution of
lying securities Investments
(b) Transactions involving elimi-
nation of underlying Substitution of
securities Investments
(c) Policy regarding substitution
or elimination of under- See Items 13(a) and
lying securities 52(a)
(d) Fundamental policy not other-
wise covered N/A
53. Tax status of trust Federal Income Tax
Considerations
VIII. Financial and Statistical Information
<PAGE>
54. Trust's securities during last
ten years N/A
55. N/A
56. Certain information regarding peri- Premiums; Additional
odic payment plan certificates Premiums Payments
57. N/A
58. N/A
59. Financial statements (Instruc-
tion 1(c) of "Instructions as Financial Statements
to the Prospectus" of Form of Pacific Select
S-6) Separate Account
<PAGE>
PROSPECTUS
<PAGE>
[LOGO of PACIFIC SELECT]
Variable Universal Life
PROSPECTUSES FOR
PACIFIC SELECT
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
PACIFIC MUTUAL LIFE INSURANCE COMPANY
DATED APRIL 1, 1996
--------------
PACIFIC SELECT FUND
DATED APRIL 1, 1996
<PAGE>
[LOGO of PACIFIC SELECT]
PACIFIC SELECT
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
ISSUED BY PACIFIC MUTUAL LIFE INSURANCE
COMPANY
700 NEWPORT CENTER DRIVE
NEWPORT BEACH, CALIFORNIA 92660
1-800-800-7681
This prospectus describes Pacific Select--a Flexible Premium Variable Life
Insurance Policy (individually, the "Policy," and collectively, the
"Policies") offered by Pacific Mutual Life Insurance Company ("Pacific
Mutual," "we," "us," or "our"). The Policy provides lifetime insurance
protection on the Insured named in the Policy through the Maturity Date so
long as the Policy is not surrendered or in default beyond the Grace Period.
The Policy also provides for a Net Cash Surrender Value if it is surrendered
during the lifetime of the Insured. The Policy can be purchased for a minimum
initial premium of $10,000. The Policy provides considerable flexibility to
pay additional premiums, although it may under certain circumstances provide
insurance protection through the Maturity Date for only the initial premium.
Premium payments may be allocated at the Policy Owner's discretion to one or
more of the Investment Options currently available. Each of the twelve
Variable Investment Options ("Variable Account") is a subaccount of our
separate account called the Pacific Select Separate Account (the "Separate
Account"). Any portion of the premium payments allocated to the Variable
Accounts is invested in one or more of the corresponding Portfolios of the
Pacific Select Fund (the "Fund"), which are: the Money Market Portfolio, the
High Yield Bond Portfolio, the Managed Bond Portfolio, the Government
Securities Portfolio, the Growth Portfolio, the Aggressive Equity Portfolio,
the Growth LT Portfolio, the Equity Income Portfolio, the Multi-Strategy
Portfolio, the Equity Index Portfolio, the International Portfolio, and the
Emerging Markets Portfolio. A fixed option (the "Fixed Account") is also
available to you. The Accumulated Value in the Fixed Account will accrue
interest at an interest rate that is guaranteed by Pacific Mutual.
To the extent that all or a portion of the premium payments are allocated to
the Separate Account, the Accumulated Value under the Policy will vary based
upon the investment performance of the Variable Accounts to which the
Accumulated Value is allocated. No minimum amount of Accumulated Value is
guaranteed.
The death benefit will be the Face Amount of insurance stated in the Policy
or, under certain circumstances, a higher amount. Although the Accumulated
Value allocated to the Variable Accounts will vary, the amount and duration of
the death benefit may or may not vary with the investment performance of the
Variable Accounts depending upon several factors. At the death of the Insured,
Pacific Mutual will pay the Beneficiary the death benefit minus any
Indebtedness under the Policy.
The Policy is a type of life insurance policy classified as a modified
endowment contract (other than certain Policies entered into before June 21,
1988). For information on the tax treatment of modified endowment contracts,
see "Federal Income Tax Considerations," on page 23. A Policy may be returned
according to the terms of its Free-Look Right (see "Right to Examine a
Policy--Free-Look Right," page 19), during which time premium payments
allocated to the Separate Account will be invested in the Money Market
Variable Account.
It may not be advantageous to replace existing insurance with the Policy.
This prospectus generally describes only the portion of the Policy involving
the Separate Account. For a brief summary of the Fixed Account, see "The Fixed
Account," page 29.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCU-
RACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUS FOR THE PACIFIC
SELECT FUND.
BOTH PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE
REFERENCE.
DATE: APRIL 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Important Terms............................................................ 4
Summary of the Policy...................................................... 6
Purpose of the Policy.................................................... 6
Policy Values............................................................ 6
The Death Benefit........................................................ 6
Premium Features......................................................... 6
Allocation Options....................................................... 7
Free-Look Right.......................................................... 7
Surrender Right.......................................................... 7
Preferred and Partial Withdrawal Benefits................................ 7
Policy Loans............................................................. 7
Charges and Deductions................................................... 7
Tax Treatment of Increases in Accumulated Value.......................... 9
Tax Treatment of Death Benefit........................................... 9
The Fixed Account........................................................ 9
Contacting Pacific Mutual................................................ 9
Information About Pacific Mutual, the Separate Account
and the Fund.............................................................. 10
Pacific Mutual Life Insurance Company.................................... 10
Pacific Select Separate Account.......................................... 10
The Pacific Select Fund.................................................. 10
The Investment Adviser................................................... 11
The Policy................................................................. 12
Application for a Policy................................................. 12
Premiums................................................................. 12
Additional Premium Payments.............................................. 12
Allocation of Premiums................................................... 13
Portfolio Rebalancing.................................................... 13
Dollar Cost Averaging Option............................................. 13
Transfer of Accumulated Value............................................ 14
Death Benefit............................................................ 14
Changes in Face Amount................................................... 15
Policy Values............................................................ 16
Determination of Accumulated Value....................................... 16
Policy Loans............................................................. 17
Benefits at Maturity..................................................... 18
Surrender................................................................ 18
Preferred and Partial Withdrawal Benefits................................ 18
Right to Examine a Policy--Free-Look Right............................... 19
Lapse.................................................................... 19
Reinstatement............................................................ 20
Charges and Deductions..................................................... 20
Premium Load from the Initial Premium.................................... 20
Premium Load from Additional Premiums.................................... 21
Variations in Premium Load............................................... 21
Deductions from Accumulated Value........................................ 21
Deductions from the Variable Accounts.................................... 22
Other Charges............................................................ 22
Guarantee of Certain Charges............................................. 23
Other Information.......................................................... 23
Federal Income Tax Considerations........................................ 23
Charge for Pacific Mutual Income Taxes................................... 26
Voting of Fund Shares.................................................... 26
Disregard of Voting Instructions......................................... 26
Confirmation Statements and Other Reports to Owners...................... 27
Substitution of Investments.............................................. 27
Changes to Comply with Law............................................... 27
Performance Information.................................................... 28
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Fixed Account........................................................... 29
General Description....................................................... 29
Death Benefit............................................................. 29
Policy Charges............................................................ 29
Transfers, Surrenders, Withdrawals, and Policy Loans...................... 29
More About the Policy....................................................... 30
Ownership................................................................. 30
Beneficiary............................................................... 30
Exchange of Insured....................................................... 30
The Contract.............................................................. 31
Payments.................................................................. 31
Assignment................................................................ 31
Errors on the Application................................................. 31
Incontestability.......................................................... 32
Payment in Case of Suicide................................................ 32
Participating............................................................. 32
Policy Illustrations...................................................... 32
Payment Plan.............................................................. 32
Distribution of the Policy................................................ 32
More About Pacific Mutual................................................... 33
Management................................................................ 33
State Regulation.......................................................... 35
Telephone Transfer and Loan Privileges.................................... 35
Legal Proceedings......................................................... 36
Legal Matters............................................................. 36
Registration Statement.................................................... 36
Independent Accountants................................................... 36
Financial Statements...................................................... 36
Appendix.................................................................... 59
Illustrations............................................................... 60
</TABLE>
----------------
THE POLICY IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE
LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE
FUND'S PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION OF THE FUND OR
ANY SUPPLEMENT THERETO.
3
<PAGE>
IMPORTANT TERMS
Accumulated Value--The total value of the amounts in the Investment Options
for the Policy as well as any amount set aside in the Loan Account to secure
Policy Indebtedness as of any Valuation Date.
Age--The Insured's age as of his or her nearest birthday as of the Policy
Date, increased by the number of complete policy years elapsed. With respect
to any increases in Face Amount, riders, or other policy benefits which have
an effective date not falling on a Policy Anniversary, Age means age nearest
birthday as of the effective date increased by the number of complete years
elapsed since the effective date.
Beneficiary--The person or persons you name in the application or by proper
later designation to receive the death benefit proceeds upon the death of the
Insured.
Cash Surrender Value--The Accumulated Value less any applicable unrecovered
deferred load.
Face Amount--The minimum death benefit for so long as the Policy remains in
force. The Face Amount may be increased or decreased under certain
circumstances.
Fixed Account--An account that is part of our General Account to which all or
a portion of premium payments may be allocated for accumulation at a fixed
rate of interest (which may not be less than 4.0%) declared periodically by
us.
General Account--All of our assets other than those allocated to the Separate
Account or to any of our other segregated separate accounts.
Guideline Single Premium or Guideline Level Premiums--The maximum amount of
premium or premiums that can be paid to qualify a Policy as life insurance for
tax purposes as specified in Section 7702 of the Internal Revenue Code.
Home Office--The Policy Benefits and Services Department at Pacific Mutual's
main office at 700 Newport Center Drive, Newport Beach, California 92660.
Indebtedness--The unpaid loan balance including accrued loan interest.
Insured--The person upon whose life the Policy is issued and whose death is
the contingency upon which the death benefit proceeds are payable.
Investment Option--A Variable Account or the Fixed Account.
Loan Account--An account to which amounts are transferred from the Variable
Accounts and the Fixed Account as collateral for policy loans.
Maturity Date--The Policy Anniversary on which the Insured is Age 95.
Monthly Payment Date--The day each month on which certain deductions and
charges are assessed against the Accumulated Value. The first Monthly Payment
Date is the Policy Date.
Net Cash Surrender Value--The Cash Surrender Value less Policy Indebtedness.
Policy Owner, Owner, you, or your--The person who owns the Policy. The Policy
Owner will be the Insured unless otherwise stated in the application. If your
Policy has been absolutely assigned, the assignee becomes the Owner. A
collateral assignee is not the Owner.
Policy Date--The date used to determine the Monthly Payment Date, Policy
Years, and Policy Monthly, Quarterly, Semi-Annual, and Annual Anniversaries.
It is usually the date the initial premium is received at our Home Office. The
term "Issue Date" is substituted for Policy Date with respect to Policies
issued to residents of the Commonwealth of Massachusetts.
4
<PAGE>
Premium Load--A charge assessed in connection with each premium payment
consisting of a sales load, an administrative load, and a state and local
premium tax charge. The Premium Load assessed against the first premium is
deferred and deducted monthly starting on the first and continuing to the
eleventh Policy Anniversary.
Valuation Date--Each date on which the Separate Account is valued, which
currently includes each day that the New York Stock Exchange is open for
trading and on which our administrative offices are open. The New York Stock
Exchange is closed on weekends and on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, July Fourth, Labor Day,
Thanksgiving, and Christmas. Our administrative offices are normally not open
on the following: the Monday before New Year's Day, July Fourth, or Christmas
Day if any of those holidays falls on a Tuesday; the Tuesday before Christmas
Day if that holiday falls on a Wednesday; the Friday after New Year's Day,
July Fourth or Christmas Day if any of these holidays falls on a Thursday; and
the Friday after Thanksgiving. If any transaction or event called for under a
Policy is scheduled to occur on a day that is not a Valuation Day, such
transaction or event will be deemed to occur on the next following Valuation
Day unless otherwise specified.
Valuation Period--The period that starts at the close of a Valuation Date and
ends at the close of the next succeeding Valuation Date.
Variable Account--A separate account of Pacific Mutual or a subaccount of such
a separate account, which is used only to support the variable death benefits
and policy values of variable life insurance policies, and the assets of which
are segregated from our General Account and its other separate accounts. The
Pacific Select Separate Account serves as the funding vehicle for the
Policies. The Money Market Variable Account, High-Yield Bond Variable Account,
Managed Bond Variable Account, Government Securities Variable Account, Growth
Variable Account, Aggressive Equity Variable Account, Growth LT Variable
Account, Equity Income Variable Account, Multi-Strategy Variable Account,
Equity Index Variable Account, International Variable Account, and Emerging
Markets Variable Account are all subaccounts of the Pacific Select Separate
Account.
5
<PAGE>
SUMMARY OF THE POLICY
This summary is intended to provide a brief overview of the more significant
aspects of the Policy. Further detail is provided in this prospectus and in the
Policy. Unless the context indicates otherwise, the discussion in this summary
and the remainder of the prospectus relates to the portion of the Policy
involving the Separate Account. The Fixed Account is briefly described under
"The Fixed Account," on page 29 and in the Policy.
PURPOSE OF THE POLICY
The Policy offers you insurance protection on the life of the Insured through
the Maturity Date so long as your Policy is not surrendered or in default
beyond the Grace Period. Like traditional fixed life insurance, the Policy
provides for a death benefit equal to its Face Amount, accumulation of cash
values, and surrender and loan privileges. Unlike traditional fixed life
insurance, the Policy offers a choice of investment alternatives and an
opportunity for the Policy's Accumulated Value and, under certain
circumstances, its death benefit to grow based on investment results.
POLICY VALUES
You may allocate premium payments among the various Variable Accounts that
comprise the Separate Account and which invest in corresponding Portfolios of
the Pacific Select Fund (and to the Fixed Account).
Depending on the investment experience of the selected Variable Accounts, the
Accumulated Value may increase or decrease on any day. The death benefit may or
may not increase or decrease depending upon several factors, although the death
benefit will never decrease below the Face Amount provided your Policy is in
force. There is no guarantee that your Policy's Accumulated Value and death
benefit will increase. You bear the investment risk on that portion of the
Accumulated Value allocated to the Variable Accounts.
Your Policy will remain in force unless Indebtedness equals or exceeds Cash
Surrender Value or unless Cash Surrender Value less Indebtedness is
insufficient to pay certain charges deducted on each Monthly Payment Date, and
a Grace Period expires without sufficient additional premium payments or loan
repayments by you.
THE DEATH BENEFIT
Upon the death of the Insured, we will pay to the named Beneficiary death
benefit proceeds, which will be the death benefit under your Policy reduced by
any Policy Indebtedness. The death benefit will be the greater of the Face
Amount under your Policy or the Accumulated Value multiplied by a specified
percentage (see "Death Benefit," page 14).
PREMIUM FEATURES
The Policy can be purchased for a minimum initial premium payment of the
greater of $10,000 or 50% of the Guideline Single Premium. The Guideline Single
Premium is the maximum premium that can be paid for any given Face Amount in
order for an insurance policy to qualify as a life insurance contract for tax
purposes. As a flexible premium Policy, the Policy provides considerable
flexibility to pay additional premiums at your discretion, so you have some
flexibility to vary premium payments to reflect changing financial conditions.
Your Policy may provide insurance protection through the Maturity Date for only
the initial premium, or alternatively, additional premium payments may be
required to keep your Policy in force, depending upon the Face Amount you
choose, the investment performance of the Variable Accounts selected, and other
factors.
The Policy is not available to insure residents of certain municipalities in
Kentucky where premium taxes in excess of 4.0% are imposed.
6
<PAGE>
ALLOCATION OPTIONS
The Variable Accounts invest in portfolios of a mutual fund, which offers you
the opportunity to direct us to invest in diversified portfolios of stocks,
bonds, money market instruments, or a combination of these securities, or in
securities of foreign issuers. The Variable Accounts invest exclusively in
shares of corresponding Portfolios of the Pacific Select Fund (the "Fund"),
which are: the Money Market Portfolio, the High Yield Bond Portfolio, the
Managed Bond Portfolio, the Government Securities Portfolio, the Growth
Portfolio, the Aggressive Equity Portfolio, the Growth LT Portfolio, the Equity
Income Portfolio, the Multi-Strategy Portfolio, the Equity Index Portfolio, the
International Portfolio, and the Emerging Markets Portfolio (see "The Pacific
Select Fund," page 10).
You may choose to allocate premium payments to any of the twelve Variable
Accounts and the Fixed Account. You may transfer Accumulated Value among the
Variable Accounts, and, subject to certain limitations, between the Variable
Accounts and the Fixed Account. Transfer may be made by telephone if an
Authorization for Telephone Requests has been signed and filed at our Home
Office. (See "Transfer of Accumulated Value," page 14.)
FREE-LOOK RIGHT
You may obtain a full refund of the premium paid if your Policy is returned
within 10 days after you receive it (30 days if you reside in California and
are age 60 or older) or 45 days after the application for your Policy is
completed, whichever is later. In Pennsylvania, you may obtain a full refund of
the premium paid only if your Policy is returned within 10 days after you
receive it. During the Free-Look Period, premiums will be allocated to the
Money Market Variable Account which invests in the Money Market Portfolio of
the Fund. See "Allocation of Premiums," page 13.
SURRENDER RIGHT
You can surrender the Policy during the life of the Insured and receive its
Net Cash Surrender Value, which is equal to the Accumulated Value less
unrecovered deferred load and less any outstanding Policy Indebtedness.
PREFERRED AND PARTIAL WITHDRAWAL BENEFITS
Two partial surrender benefits are available under the Policy. The first, the
Preferred Withdrawal Benefit, permits one withdrawal per year of up to 10% of
the sum of your premium payments without a surrender charge and without
reducing the death benefit under your Policy. However, a preferred withdrawal
may increase the Face Amount. This benefit is available on the first Policy
Anniversary until the 15th Policy Anniversary. On the 15th Policy Anniversary
and thereafter, the second surrender benefit, the Partial Withdrawal Benefit,
is available, which permits you to make Partial Withdrawals of Net Cash
Surrender Value within certain limits.
POLICY LOANS
You may borrow from us up to 90% of your Cash Surrender Value, less any
Policy Indebtedness. The minimum loan that can be taken at any time is $1,000;
if you reside in Indiana the minimum is $500. The Policy will be the only
security required for the loan. See "Policy Loans," page 17. The amount of any
Policy Indebtedness will be subtracted from Death Benefit or your Cash
Surrender Value, if your Policy matures or is surrendered.
A Policy loan is treated as a distribution from a Policy that is a modified
endowment contract and therefore may result in taxable income. See "Federal
Income Tax Considerations," page 23.
CHARGES AND DEDUCTIONS
Premium Load from the Initial Premium
We do not make any deductions from the initial premium payment before
allocating it to your Accumulated Value.
7
<PAGE>
A Premium Load that consists of certain charges is assessed in connection
with each premium payment. The Premium Load assessed in connection with the
initial premium, referred to as "deferred load," is deferred and deducted from
Accumulated Value in equal monthly deductions starting on the first Policy
Anniversary to the eleventh. Deferred load is not deducted during the first
Policy Year unless you surrender your Policy, in which case the deferred load
will be deducted in full. The Premium Load consists of the following items:
--A sales load equal to 4.15% of the premium;
--A charge to pay applicable state and local premium taxes equal to 2.35%;
and
--An administrative load, the amount of which varies with the size of the
premium payment as follows: 3.0% of the premium if it is less than
$50,000, 1.50% of the premium if it is at least $50,000 but less than
$100,000, and 0.50% of the premium if it is $100,000 and over.
Deferring Premium Load on the initial premium payment as opposed to charging
it at the Policy Date has the effect of transferring to you the investment
experience on the portion of the Premium Load that remains in the Accumulated
Value. If you surrender your Policy, the unrecovered deferred load will be
deducted from the Accumulated Value.
Premium Load from Additional Premiums
Additional premium payments after the initial premium payment are subject to
Premium Load to the same extent as described above under "Premium Load from the
Initial Premium." The Premium Load on an additional premium will be assessed
upon acceptance of the additional premium and will not be deferred.
Deductions from Accumulated Value
--Cost of Insurance Charge: A cost of insurance charge is deducted on each
Monthly Payment Date to compensate us for the cost of providing life
insurance coverage for the Insured;
--Administrative Charge: We charge an administrative charge equal to $5 on
each Monthly Payment Date. This charge is waived on Policies with initial
premium payments of $20,000 or more; and
--Face Amount Increase Charge: If you request an increase in Face Amount
that is accepted by us, a charge of $100 will be deducted on the effective
date of the increase to cover processing costs.
Deductions from the Variable Accounts
--Mortality and Expense Risk Charge: We make a daily charge against the
Variable Accounts to compensate us for mortality and expense risks
assumed. This charge is equal to an annual rate of 0.70% of the average
daily net assets.
The operating expenses of the Separate Account are paid by us. Investment
advisory fees and operating expenses of the Fund are paid by the Fund. For a
description of these charges, see "Charges and Deductions," page 20.
We sometimes use the simplified method of underwriting, which involves no
medical or paramedical examination of the Insured. Because this method presents
additional mortality risks for us in determining rates for the cost of
insurance, we have assumed less favorable mortality experience than that
provided in the 1980 Commissioners Standard Ordinary ("CSO") Mortality Table B,
and have established guaranteed rates that are 137.5% of the 1980 CSO Mortality
Table B. If the guaranteed rates are in effect, Insureds in a standard
underwriting classification will pay a higher cost of insurance than if they
had been medically underwritten in an otherwise identical policy, which may be
viewed as charging substandard rates for Insureds in a standard underwriting
classification. However, we currently use cost of insurance rates that are
lower (i.e., less expensive) than the guaranteed rates. These current rates are
less than or equal to 100% of the 1980 CSO Mortality Table B at all ages
(except for smokers of certain ages on Policies entered into before October 21,
1988).
8
<PAGE>
TAX TREATMENT OF INCREASES IN ACCUMULATED VALUE
The Accumulated Value under the Policy is currently subject to the same
federal income tax treatment as the cash value under fixed life insurance.
Therefore, generally, you will not be deemed to be in constructive receipt of
the Accumulated Value unless and until actual surrender of a Policy or upon
making a Preferred or Partial Withdrawal or a Policy Loan. Any such
distribution may give rise to taxable income to you and may, under certain
circumstances, subject you to an additional income tax of 10% of the amount
includable in taxable income. For more information on the tax treatment of the
Policy and the tax treatment of distributions see "Federal Income Tax
Considerations," page 23.
TAX TREATMENT OF DEATH BENEFIT
The death benefit under the Policy is currently subject to federal income tax
treatment consistent with that of fixed life insurance. Therefore, generally
the death benefit will be fully excludable from the gross income of the
Beneficiary under the Internal Revenue Code (see "Federal Income Tax
Considerations," page 23).
THE FIXED ACCOUNT
You may allocate all or a portion of premium payments and transfer
Accumulated Value to the Fixed Account. Amounts allocated to the Fixed Account
are held in our General Account. We guarantee that the Accumulated Value
allocated to the Fixed Account will be credited interest monthly at a rate
equivalent to an effective annual rate of 4%. In addition, we may in our sole
discretion pay interest in excess of the guaranteed amount at a rate that will
be effected thereafter on each Policy Anniversary and guaranteed until the next
Policy Anniversary (see "The Fixed Account," page 29).
CONTACTING PACIFIC MUTUAL
All written requests, notices, and forms required by the Policies, and any
questions or inquiries should be directed to Pacific Mutual, Policy Benefits
and Services Department, at 700 Newport Center Drive, P.O. Box 7500, Newport
Beach, California 92658-7500.
The effective date of certain notices or of instructions is determined by the
date and time on which Pacific Mutual "receives" the notice or instructions.
Unless otherwise stated, we "receive" this information only when it arrives
"properly completed" at our Home Office. Premium payments after your initial
premium payment, transfer requests, and withdrawal requests we receive before
4:00 p.m. Eastern time (or the close of the New York Stock Exchange, if
earlier) will normally be effective as of the end of Valuation Day that we
receive them "properly completed," unless the transaction or event is scheduled
to occur on another day. Transactions are effected as of the end of the
Valuation Date on which they are effective. "Properly completed" may require,
among other things, a signature guarantee or other verification of
authenticity. We do not generally require a signature guarantee unless it
appears that your signature may have changed over time or due to other
circumstances. Requests regarding death benefits must be accompanied by both
proof of death and instructions regarding payment satisfactory to us. You
should call your registered representative or Pacific Mutual if you have
questions regarding the required form of a request.
9
<PAGE>
INFORMATION ABOUT PACIFIC MUTUAL, THE SEPARATE ACCOUNT, AND THE FUND
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Pacific Mutual is a mutual life insurance company organized under the laws
of the State of California. We were authorized to conduct business as a life
insurance company on January 2, 1868, as Pacific Mutual Life Insurance Company
of California, and were reincorporated under our present name on July 22,
1936.
We offer a complete line of life insurance policies and annuity contracts,
as well as financial and retirement services. We are admitted to do business
in the District of Columbia, and in all states except New York. As of the end
of 1995, we had $44.2 billion of life insurance in force and total assets of
$17.6 billion. Together with our subsidiaries and affiliated enterprises, we
had total assets and funds under management of over $116.6 billion. We have
been ranked according to assets as the 24th largest life insurance carrier in
the nation for 1994.
The Principal Underwriter for the Policies is Pacific Mutual Distributors,
Inc. ("PMD") (formerly known as Pacific Equities Network). PMD is registered
as a broker-dealer with the Securities and Exchange Commission ("SEC") and is
a wholly-owned subsidiary of Pacific Mutual.
PACIFIC SELECT SEPARATE ACCOUNT
The Pacific Select Separate Account is one of our separate investment
accounts used only to support the variable death benefits and policy values of
variable life insurance policies. The assets in the Separate Account are kept
separate from the assets of our General Account and our other separate
accounts.
We own the assets in the Separate Account and are required to maintain
sufficient assets in the Separate Account to meet anticipated obligations of
the Policies funded by the Account. The Separate Account is divided into
subaccounts called Variable Accounts. The income, gains, or losses, realized
or unrealized, of each Variable Account are credited to or charged against the
assets held in the Variable Account without regard to our other income, gains,
or losses. Assets in the Separate Account attributable to the reserves and
other liabilities under the Policies are not chargeable with liabilities
arising from any other business that we conduct. However, we may transfer to
our General Account assets which exceed anticipated obligations of the
Account. All obligations arising under the Policy are general corporate
obligations of Pacific Mutual. We may accumulate in the Account proceeds from
recovered deferred charges and other charges and investment results applicable
to those assets.
The Separate Account was established under California law by a resolution of
our Board of Directors adopted on November 20, 1986. The Separate Account is
registered as a unit investment trust with the SEC. Such registration does not
involve any supervision by the SEC of the administration or investment
practices or policies of the Account.
Each Variable Account invests exclusively in shares of designated Portfolios
of the Fund. We may in the future establish additional Variable Accounts
within the Separate Account, which may invest in other Portfolios of the Fund
or in other securities.
THE PACIFIC SELECT FUND
The Fund is a diversified, open-end management investment company of the
series type. The Fund is registered with the SEC under the Investment Company
Act of 1940. The Fund currently offers twelve separate Portfolios to the
Separate Account. Each Portfolio pursues different investment objectives and
policies. We purchase the shares of each Portfolio for the corresponding
Variable Account at net asset value, i.e., without sales load. All dividends
and capital gains distributions received from a Portfolio are automatically
reinvested in such Portfolio at net asset value, unless we, on behalf of the
Separate Account, elect otherwise. Fund shares will be redeemed by us at their
net asset value to the extent necessary to make payments under the Policies.
Shares of the Fund currently are offered only for purchase by our Separate
Accounts to serve as an investment medium for variable life insurance policies
and for variable annuity contracts issued by us and to a separate account of
Pacific Corinthian Life Insurance Company, a subsidiary of Pacific Mutual, to
serve as an
10
<PAGE>
investment medium for variable annuity contracts administered by Pacific
Corinthian. Shares of the Fund may also be sold in the future to separate
accounts of other insurance companies, both affiliated and not affiliated with
us. Investment in the Fund by other separate accounts in connection with
variable annuity and variable life insurance contracts may create conflicts.
See "MORE ON THE FUND'S SHARES" in the accompanying prospectus of the Fund.
The chart below summarizes some basic data about each Portfolio of the Fund
offered to the Separate Account. There can be no assurance that any Portfolio
will achieve its objective. This chart is only a summary. You should read the
more detailed information which is contained in the accompanying prospectus of
the Fund, including information on the risks associated with the investments
and investment techniques of each of the Portfolios.
THE FUND'S PROSPECTUS ACCOMPANIES THIS PROSPECTUS AND SHOULD BE READ
CAREFULLY BEFORE INVESTING.
<TABLE>
<CAPTION>
PRIMARY INVESTMENTS
PORTFOLIO OBJECTIVE (UNDER NORMAL CIRCUMSTANCES) PORTFOLIO MANAGER
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Current income Highest quality money Pacific Mutual
consistent with market instruments
preservation of capital
- --------------------------------------------------------------------------------------------
High-Yield High level of current Intermediate and long- Pacific Mutual
Bond income term, high-yielding, lower
and medium quality (high
risk) fixed-income
securities
- --------------------------------------------------------------------------------------------
Managed Bond Maximize total return Investment grade Pacific Investment
consistent with prudent marketable debt Management Company
investment management securities. Will normally
maintain an average
portfolio duration of 3-7
years
- --------------------------------------------------------------------------------------------
Government Maximize total return U.S. Government securities Pacific Investment
Securities consistent with prudent including futures and Management Company
investment management options thereon and high-
grade corporate debt
securities. Will normally
maintain an average
portfolio duration of 3-7
years
- --------------------------------------------------------------------------------------------
Growth Growth of capital Common stock Capital Guardian
Trust Company
- --------------------------------------------------------------------------------------------
Aggressive Capital appreciation Stocks of small- and Columbus Circle
Equity medium-sized companies Investors
- --------------------------------------------------------------------------------------------
Growth LT Long-term growth of Common stock Janus Capital
capital consistent with Corporation
the preservation of
capital
- --------------------------------------------------------------------------------------------
Equity Income Long-term growth of Dividend paying common J.P. Morgan
capital and income stock Investment Management
Inc.
- --------------------------------------------------------------------------------------------
Multi-Strat- High total return Equity and fixed income J.P. Morgan
egy securities Investment Management
Inc.
- --------------------------------------------------------------------------------------------
Equity Index Provide investment Stocks included in the S&P Bankers Trust Company
results that correspond 500
to the total return
performance of common
stocks publicly traded
in the U.S.
- --------------------------------------------------------------------------------------------
International Long-term capital Equity securities of Templeton Investment
appreciation corporations domiciled Counsel, Inc.
outside the United States
- --------------------------------------------------------------------------------------------
Emerging Mar- Long-term growth of Common stocks of companies Blairlogie Capital
kets capital domiciled in emerging Management
market countries
- --------------------------------------------------------------------------------------------
</TABLE>
THE INVESTMENT ADVISER
Pacific Mutual, located at 700 Newport Center Drive, Newport Beach,
California 92660, serves as Investment Adviser to each Portfolio of the Fund.
We are registered with the SEC as an Investment Adviser. For ten of the
Portfolios, the Investment Adviser and the Fund have engaged other firms to
serve as Portfolio Managers which are shown in the chart above.
11
<PAGE>
THE POLICY
The variable life insurance benefits provided by your Policy are funded
through your Accumulated Value in the Pacific Select Separate Account and the
Fixed Account. The information included below describes the benefits,
features, charges, and other major provisions of the Policy.
APPLICATION FOR A POLICY
Any person wishing to purchase the Policy may submit an application to us. A
Policy can be issued on the life of an Insured for ages up to and including
age 80 with evidence of insurability satisfactory to us. The Insured's age is
calculated as of the Insured's nearest birthday. Acceptance is subject to our
underwriting rules, and we reserve the right to request additional information
and to reject an application.
After your Policy is issued, insurance coverage under the Policy will be
deemed to have begun as of the Policy Date. Your Policy Date is usually the
date the initial premium is received at our Home Office. Your Policy Date is
the date used to determine Policy Years, Policy Months, and Policy Monthly,
Quarterly, Semi-Annual and Annual Anniversaries. For purposes of determining
the Monthly Payment Date for all Policies issued, the Policy Date will never
be the 29th, 30th, or 31st of any month.
Insureds are assigned to underwriting classes which are used in calculating
the cost of insurance rates. In assigning Insureds to underwriting classes, we
will usually use either simplified or medical underwriting, although other
forms of underwriting may be used when deemed appropriate by us.
PREMIUMS
The minimum initial premium to purchase the Policy is $10,000. You may
choose a minimum initial premium payment that constitutes at least 50% and up
to 100% of the Guideline Single Premium for the initial Face Amount. The
Guideline Single Premium is the maximum premium that can be paid for a given
Face Amount in order for an insurance policy to qualify as a life insurance
contract for tax purposes. We may reduce the minimum initial premium required
under certain circumstances, such as for group or sponsored arrangements. The
maximum initial premium that will be routinely accepted is $1,000,000. Larger
premiums may be accepted on a case-by-case basis subject to prior approval.
ADDITIONAL PREMIUM PAYMENTS
The Policy is a flexible-premium policy, and it provides considerable
flexibility, subject to the limitations described below, to pay additional
premiums at your discretion. Depending upon the Face Amount you choose and the
investment performance of the Variable Accounts among other factors, your
Policy may provide insurance protection through the Maturity Date for only the
initial premium, or alternatively, additional premium payments may be required
to keep your Policy in force.
The minimum additional premium payment amount is $5,000, except smaller
amounts may be paid during the Grace Period. We may require evidence of
insurability for any payment that would result in an immediate increase in the
difference between the death benefit and Accumulated Value. Any portion of a
premium payment will be returned to you if it would exceed the limitations
based on the Guideline Single Premium or Guideline Level Premiums. A premium
or a portion thereof may also be returned to you if it would result in an
immediate increase in the difference between the death benefit and the
Accumulated Value and we have not received satisfactory evidence of
insurability.
Additional payments will first be treated as repayments of Policy
Indebtedness unless you request otherwise. Any portion of a payment that
exceeds the amount of Indebtedness will be applied as an additional premium
payment. For Policies entered into before June 21, 1988, making an additional
premium payment may result in the Policy becoming a modified endowment
contract. For more information, see "Federal Income Tax Considerations," page
23.
12
<PAGE>
ALLOCATION OF PREMIUMS
In the application for your Policy, you select the Investment Options to
which premium payments will be allocated after the Free-Look Period. During
the Free-Look Period, premium payments will be allocated to the Money Market
Variable Account, which invests in the Money Market Portfolio of the Fund
(except for amounts allocated to the Loan Account to secure a Policy loan).
Your Accumulated Value will be automatically allocated according to your
instructions contained in the application (or if received more recently, in
written instructions) the later of 15 days after the Policy is issued or 45
days after the application is completed, or, if longer, upon receipt of the
minimum initial premium (the "Free-Look Period"). Currently, twelve Variable
Accounts and the Fixed Account are available to you.
Additional premium payments less the premium load will be allocated among
the Variable Accounts and the Fixed Account according to your most recent
instructions. You may change the allocation of payments by submitting a proper
written request to our Home Office, or by telephone if an Authorization for
Telephone Requests for changes in premium allocation instruction has been
completed, signed and filed at our Home Office.
PORTFOLIO REBALANCING
You may direct us to automatically re-set the percentage of your Accumulated
Value allocated to each Variable Account at a predetermined level. This
process is called portfolio rebalancing. (The Fixed Account is not available
for portfolio rebalancing.) Over time, the variations in each Variable
Account's investment results will shift the percentage allocations of your
Accumulated Value. The portfolio rebalancing feature will automatically
transfer your Accumulated Value among the Variable Accounts back to the preset
percentages. Rebalancing can be made quarterly, semi-annually or annually,
measured from your Policy Date ("frequency period"). Rebalancing may result in
transferring amounts from a Variable Account with relatively higher investment
performance to a Variable Account with relatively lower investment
performance.
You may initiate portfolio rebalancing by sending our Home Office a signed,
written request in good form or a properly completed Automatic Portfolio
Rebalancing form. You must specify the frequency for rebalancing and a
beginning date. The first rebalancing will usually occur on your Monthly
Payment Date that starts the frequency period you elected and that occurs on
or follows the beginning date you elected. If you stop portfolio rebalancing,
you must wait 30 days to begin again. Portfolio rebalancing cannot be used
with the Dollar Cost Averaging Option.
We may modify, terminate or suspend the portfolio rebalancing feature at any
time.
DOLLAR COST AVERAGING OPTION
We currently offer an option under which you may dollar cost average your
allocations in the Variable Accounts under your Policy by authorizing us to
make periodic allocations of Accumulated Value from any one Variable Account
to one or more of the other Variable Accounts. Dollar cost averaging is a
systematic method of investing in which securities are purchased at regular
intervals in fixed dollar amounts so that the cost of the securities gets
averaged over time and possibly over various market cycles. The option will
result in the allocation of Accumulated Value to one or more Variable
Accounts, and these amounts will be credited at the Accumulation Unit values
as of the end of the Valuation Dates on which the transfers are processed.
Since the value of Accumulation Units will vary, the amounts allocated to a
Variable Account will result in the crediting of a greater number of units
when the Accumulation Unit value is low and a lesser number of units when the
Accumulation Unit value is high. Similarly, the amounts transferred from a
Variable Account will result in a debiting of a greater number of units when
the Accumulation Unit value is low and a lesser number of units when the
Accumulation Unit value is high. Dollar cost averaging does not guarantee
profits, nor does it assure that you will not have losses.
A Dollar Cost Averaging Request form is available upon request. On the form,
you must designate the specific dollar amounts or percentage to be
transferred, the Variable Account or Accounts to which the transfer will be
made, the desired frequency of the transfer, which may be on a monthly,
quarterly, semi-annual, or annual basis, and the length of time during which
the transfers shall continue or the total amount to be transferred over time.
13
<PAGE>
To elect the Dollar Cost Averaging Option, your Accumulated Value in the
Variable Account from which the Dollar Cost Averaging transfers will be made
must be at least $5,000; the Dollar Cost Averaging Request form will not be
considered complete until this requirement is met. After we have received a
Dollar Cost Averaging Request in proper form at our Home Office, we will
transfer Accumulated Value in amounts you designate from the Variable Account
from which transfers are to be made to the Variable Account or Accounts you
choose. The minimum amount that may be transferred to any one Variable Account
is $50. After the Free-Look Period, the first transfer will be effected on
your Policy's Monthly, Quarterly, Semi-Annual, or Annual Anniversary,
whichever corresponds to the period selected by you, coincident with or next
following receipt at our Home Office of a Dollar Cost Averaging Request in
proper form, and subsequent transfers will be processed on the following
Monthly, Quarterly, Semi-Annual, or Annual Anniversary for so long as you
designate until the total amount elected has been transferred, until
Accumulated Value in the Variable Account from which transfers are made has
been depleted, or until your Policy enters the Grace Period. Amounts
periodically transferred under this option will not be subject to any transfer
charges that may be imposed by us in the future, except as may be required by
applicable law.
You may instruct us at any time to terminate the option by written request
to our Home Office. In that event, the Accumulated Value in the Variable
Account from which transfers were being made that has not been transferred
will remain in that Variable Account, subject to monthly deductions, unless
you instruct otherwise or until your Policy enters the Grace Period. If you
wish to continue transferring on a dollar cost averaging basis after the
expiration of the applicable period, the total amount elected has been
transferred, or the Variable Account has been depleted, or after the Dollar
Cost Averaging Option has been cancelled, a new Dollar Cost Averaging Request
must be completed and sent to our Home Office. The Variable Account from which
transfers are to be made must meet the $5,000 minimum amount of the
Accumulated Value. We may discontinue, modify, or suspend the Dollar Cost
Averaging Option at any time.
TRANSFER OF ACCUMULATED VALUE
You may transfer Accumulated Value among the Variable Accounts after the
Free-Look Period upon proper written request to our Home Office. Transfers
(other than transfers in connection with the Dollar Cost Averaging Option) may
be made by telephone if a properly completed, Authorization for Telephone
Requests is on file at our Home Office. Currently, there are no limitations on
the number of transfers between Variable Accounts, no minimum amount required
for a transfer, nor any minimum amount required to be remaining in a given
Variable Account after a transfer (except as required under the Dollar Cost
Averaging Option). No transfers are allowed during the Grace Period if the
required premium has not been paid. No charges are currently imposed upon such
transfers. We reserve the right, however, at a future date to limit the size
of transfers and remaining balances, to assess transfer charges, to limit the
number and frequency of transfers, and to modify, suspend and/or discontinue
telephone transfers.
Accumulated Value may also be transferred from the Variable Accounts to the
Fixed Account, however, such a transfer will only be permitted in the Policy
Month preceding a Policy Anniversary, except that Policy Owners residing in
Maryland, Connecticut, and Pennsylvania may make such a transfer at any time
during the first 18 Policy Months. Transfers from the Fixed Account to the
Variable Accounts are restricted as described in "The Fixed Account" on page
29.
DEATH BENEFIT
When your Policy is issued, we will determine the initial amount of
insurance for the initial premium payment based on the instructions provided
in your application. That amount will be shown on the specifications page of
the Policy and is called the "Face Amount."
Upon the death of the Insured, we will pay to your named Beneficiary death
benefit proceeds, which will be the death benefit under your Policy reduced by
adjustments for any outstanding Policy Indebtedness. The death benefit will be
the greater of the Face Amount under your Policy or Accumulated Value
multiplied by a specified percentage. The specified percentages vary according
to the Age of the Insured, and will be at least equal to the
14
<PAGE>
cash value corridor in Section 7702 of the Internal Revenue Code, which
addresses the definition of a life insurance policy for tax purposes. A table
showing the specified percentages is in the Appendix and in the Policy.
Because the specified percentage is applied to your Accumulated Value, an
increase in Accumulated Value may increase the death benefit. However, because
the death benefit will never be less than the Face Amount, a decrease in
Accumulated Value may decrease the death benefit but never below the Face
Amount. The following examples illustrate how the death benefit will be
determined:
EXAMPLES
<TABLE>
<CAPTION>
POLICY A POLICY B
-------- --------
<S> <C> <C>
Face Amount........................................... $100,000 $100,000
Insured's Age......................................... 40 40
Accumulated Value on Date of Death.................... $ 46,500 $ 34,000
Specified Percentage.................................. 250% 250%
</TABLE>
- --------
In Policy A, the death benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Accumulated Value at the date of death of
$46,500 multiplied by the specified percentage of 250%). Assuming that there
is no outstanding Policy Indebtedness, this amount constitutes the death
benefit proceeds that would be paid to the Beneficiary.
In Policy B, the death benefit is $100,000, i.e., the greater of $100,000 (the
Face Amount) or $85,000 (the Accumulated Value of $34,000 multiplied by the
specified percentage of 250%).
The death benefit will be reduced by the amount of any outstanding
Indebtedness (and, if in the Grace Period, any overdue charges). All
calculations of death benefit will be made as of the end of the Valuation
Period during which the Insured dies.
Death benefit proceeds may be paid to your Beneficiary in a lump sum or
under the payment plan offered by us under the Policy. The plan offers monthly
income for the lifetime of the Beneficiary with a minimum period of ten years.
The Policy should be consulted for details.
CHANGES IN FACE AMOUNT
After the first Policy Year, you may request an increase or decrease in the
Face Amount under your Policy subject to our approval. Increasing or
decreasing the Face Amount could increase or decrease the death benefit under
your Policy, and the amount of change in the death benefit will depend, among
other things, upon whether, and the degree to which, the death benefit under
your Policy exceeds the Face Amount prior to the change. Changing the Face
Amount could affect the subsequent level of the death benefit while your
Policy is in force and the subsequent level of Policy values. A change in the
Face Amount may affect the net amount at risk under your Policy, which may
affect your cost of insurance charge. For these purposes, the net amount at
risk is equal to the death benefit less your Accumulated Value.
Any request for an increase or decrease must be in writing and received at
our Home Office. It will become effective on the Monthly Payment Date on or
next following our acceptance of the request. You may make only one request
for a change per Policy Year. If you are not the Insured, we will also require
the consent of the Insured before accepting a request. For Policies entered
into before June 21, 1988, changing the Face Amount may result in the Policy
becoming a modified endowment contract. For more information see "Federal
Income Tax Considerations," on page 23.
Increases
A written application must be submitted to us for an increase in Face
Amount. Additional evidence of insurability satisfactory to Pacific Mutual
will also be required. An increase in Face Amount will not be given for
amounts less than $10,000. An increase need not be accompanied by an
additional premium. A charge of $100 will be deducted from the Accumulated
Value on the effective date of the increase in Face Amount to cover the costs
of processing the request. This fee will be deducted from the Investment
Options in the proportion that each bears to your Accumulated Value less
Indebtedness.
15
<PAGE>
Decreases
A written application must be submitted to us for a decrease in Face Amount.
Any decrease in Face Amount will first be applied to the most recent
increases, then the next most recent increases successively, and finally to
the original Face Amount. If a decrease in the Face Amount would result in
total premiums paid exceeding the premium limitations prescribed under tax law
to qualify your Policy as a life insurance contract, we will pay you the
amount of such excess above the premium limitations.
We reserve the right to disallow a requested decrease, and will not permit a
requested decrease, among other reasons, (1) if compliance with the guideline
premium limitations under tax law resulting from the requested decrease would
result in immediate termination of your Policy or likely result in its
termination before its Maturity Date, or (2) if, to effect the requested
decrease, payments to you would have to be made from Accumulated Value for
compliance with the guideline premium limitations, and the amount of such
payments would exceed the Net Cash Surrender Value under your Policy.
POLICY VALUES
Accumulated Value
Your Accumulated Value is the sum of the amounts under your Policy held in
each Investment Option, as well as the amount set aside in the Loan Account to
secure any Policy Indebtedness.
On each Valuation Date, the portion of your Accumulated Value allocated to
any particular Variable Account will be adjusted to reflect the investment
experience of that Variable Account (see "Determination of Accumulated Value,"
described below) and to collect any applicable charges.
Cash Surrender Value
Your Cash Surrender Value of your Policy equals your Accumulated Value less
any unrecovered deferred load. Thus, your Accumulated Value will exceed your
Policy's Cash Surrender Value by the amount of unrecovered deferred load. Once
all deferred load has been recovered, your Accumulated Value will equal your
Cash Surrender Value. Your Policy's Cash Surrender Value increases or
decreases daily to reflect the investment experience of the selected Variable
Accounts. No minimum amount of Cash Surrender Value is guaranteed. You bear
the risk for the investment experience of such amounts.
Net Cash Surrender Value
Your Net Cash Surrender Value is the Cash Surrender Value minus any
outstanding Policy Indebtedness. You can surrender your Policy at any time
while the Insured is living and receive your Net Cash Surrender Value (see
"Surrender," page 18).
DETERMINATION OF ACCUMULATED VALUE
Although your Policy's death benefit can never be less than the Face Amount
for as long as your Policy is in force, the Policy's Accumulated Value in the
Separate Account will vary to a degree that depends upon several factors,
including investment performance of the Variable Accounts to which Accumulated
Value has been allocated, payment of additional premiums, the amount of any
outstanding Policy Indebtedness, any Preferred or Partial Withdrawals, and the
charges assessed in connection with your Policy. There is no guaranteed
minimum Accumulated Value and you bear the entire investment risk relating to
the investment performance of the Variable Accounts.
The amounts allocated to the Variable Accounts will be invested in shares of
the corresponding Portfolios of the Fund. The investment performance of each
Variable Account will reflect increases or decreases in the net asset value
per share of the corresponding Portfolio and any dividends or distributions
declared by a Portfolio. Any dividends or distributions from any Portfolio of
the Fund will be automatically reinvested in shares of the same Portfolio,
unless we, on behalf of the Separate Account, elect otherwise.
16
<PAGE>
Since your Accumulated Value during the first 11 Policy Years will exceed
your Cash Surrender Value by the amount of unrecovered deferred load, the
effect of the addition of the deferred load to your Accumulated Value during
this period provides a larger amount for allocation to the Variable Accounts
than if the amount of the deferred load had been taken from premiums when
paid. This has the effect of transferring to you the investment experience on
the portion of deferred load that remains in Accumulated Value. However, the
full amount of the deferred load for the initial payment will be deducted from
your Accumulated Value over a 10-year period according to the terms described
in this prospectus.
Assets in the Variable Accounts are divided into accumulation units, which
are a measure of value used for bookkeeping purposes. When you allocate
premiums to a Variable Account, your Policy is credited with accumulation
units. In addition, other transactions including loans, surrender, Preferred
or Partial Withdrawals, transfers, and assessment of charges against your
Policy affect the number of accumulation units credited to your Policy. The
number of units credited or debited in connection with any such transaction is
determined by dividing the dollar amount of such transaction by the unit value
of the affected Variable Account. The unit value of each Variable Account is
determined on each Valuation Date. The number of units credited will not
change because of subsequent changes in unit value.
The accumulation unit value of each Variable Account's unit initially was
$10. The unit value of a Variable Account on any Valuation Date is calculated
by adjusting the unit value from the previous Valuation Date for (1) the
investment performance of the Variable Account, which is based upon the
investment performance of the corresponding Portfolio of the Fund, (2) any
dividends or distributions paid by the corresponding Portfolio, and (3) the
charge assessed on each Valuation Period for assumption of mortality and
expense risks as well as any charges that may be assessed by us for income
taxes attributable to the operation of the Variable Account.
POLICY LOANS
You may borrow money from us using your Policy as the only security for the
loan by submitting a proper written request to our Home Office. We may in our
discretion permit loans to be made by telephone if an Authorization for
Telephone Requests has been completed, signed and filed at our Home Office. A
loan may be taken any time your Policy is in force. The minimum loan that can
be taken at any time is $1,000, except that the minimum for Owners residing in
Indiana is $500. The maximum amount that can be borrowed at any time is 90% of
the Policy's Cash Surrender Value, less any Policy Indebtedness.
When you take a loan, an amount equal to the loan is transferred out of your
Accumulated Value in the Investment Options into the Loan Account to secure
the loan. Unless you request otherwise, loan amounts will be deducted from the
Investment Options in the proportion that each bears to the Accumulated Value
less Indebtedness.
The interest rate on loans is 4.75% a year. We will credit interest monthly
on amounts held in the Loan Account to secure the loan at an annual rate of
4.0%.
You may repay all or part of the loan at any time while your Policy is in
force. Interest on a loan is accrued daily and is due on each Policy
Anniversary for the prior year. If interest is not paid when due, it will be
added to the amount of the loan principal and interest will begin accruing
thereon from that date. An amount equal to the loan interest charged will be
transferred to the Loan Account from the Variable Accounts and Fixed Account
on a proportional basis.
Unless you request otherwise, any loan repayment will be transferred into
the Investment Options in accordance with your current premium allocation
instructions. In addition, any interest earned on the loan balance held in the
Loan Account will be transferred to each of the Investment Options in
accordance with your current premium allocation instructions.
While the amount to secure the loan is held in the Loan Account, you forgo
the investment experience of the Variable Accounts. Thus, a loan, whether or
not repaid, will have a permanent effect on the Policy's values and may have
an effect on the amount and duration of the death benefit. If not repaid, your
Policy Indebtedness
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will be deducted from the amount of death proceeds paid upon the death of the
Insured, the Cash Surrender Value paid upon surrender or maturity, or the
refund of premium upon exercise of the Free-Look Right.
A loan may affect the length of time your Policy remains in force. Your
Policy will lapse when Indebtedness equals or exceeds your Cash Surrender
Value and the minimum payment required is not made during the Grace Period.
Moreover, your Policy may enter the Grace Period more quickly when a loan is
outstanding, because the loaned amount is not available to cover monthly
deductions and charges. Additional payments or repayment of a portion of
Indebtedness may be required to keep the Policy in force (see "Lapse," page
19).
A loan is treated as a distribution from a Policy that is a modified
endowment contract, and therefore may give rise to taxable income to you. For
information on the tax treatment of loans, see "Federal Income Tax
Considerations," page 23.
BENEFITS AT MATURITY
If the Insured is living on your Policy Anniversary nearest the Insured's
Age 95, we will pay to you your Accumulated Value, reduced by any Policy
Indebtedness. Payment ordinarily will be made within seven days of your Policy
Anniversary, although payments may be postponed in certain circumstances (see
"Payments," page 31).
SURRENDER
You may fully surrender your Policy at any time during the life of the
Insured. The amount received in the event of a full surrender is your Policy's
Net Cash Surrender Value, which is equal to your Accumulated Value less
unrecovered deferred load and less any outstanding Policy Indebtedness.
PREFERRED AND PARTIAL WITHDRAWAL BENEFITS
We offer two partial surrender benefits by which you can obtain a portion of
your Net Cash Surrender Value: the Preferred Withdrawal Benefit and the
Partial Withdrawal Benefit. The Preferred Withdrawal Benefit is available on
your first Policy Anniversary until your 15th Policy Anniversary. Under this
Benefit, you may make one "Preferred Withdrawal" per year of up to 10% of the
amount of your initial premium payment and any additional payments received
and accepted prior to the withdrawal. Preferred Withdrawals do not result in
the assessment of any charge and do not reduce the death benefit under the
Policy. No withdrawals other than Preferred Withdrawals may be made until your
15th Policy Anniversary.
The Partial Withdrawal Benefit is available on your 15th Policy Anniversary
and thereafter. Under this Benefit, you may make "Partial Withdrawals" of your
Net Cash Surrender Value. The limit of one withdrawal per year and the limit
on the amount that can be withdrawn of 10% of premiums paid do not apply to
Partial Withdrawals.
Both Preferred Withdrawals and Partial Withdrawals must be for at least
$1000. The amount of any withdrawal, Preferred or Partial, may not exceed your
Cash Surrender Value. In addition, the amount that can be withdrawn is limited
so that after the withdrawal, (1) your Accumulated Value is at least $5000 and
(2) any Policy Indebtedness is no greater than 90% of your new Cash Surrender
Value. If you do not exercise the Preferred Withdrawal Benefit during one of
your first 15 Policy Years, the amount that you could have withdrawn does not
carry over to the following year.
You may make a Preferred or Partial Withdrawal by submitting a proper
written request to us. As of the effective date of any withdrawal, your
Accumulated Value and Cash Surrender Value will be reduced by the amount of
the withdrawal. The amount of the withdrawal will be allocated proportionately
to your Accumulated Value in the Investment Options unless you request
otherwise. If the Insured dies after the request for a withdrawal is sent to
us and prior to the withdrawal being effected, the amount of the withdrawal
will be deducted from the death benefit proceeds, which will be determined
without taking into account the withdrawal.
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No surrender charge or withdrawal fee will be charged for a Preferred
Withdrawal. However, the amount of the deferred load determined at the time of
your initial premium payment remains the same. No surrender or withdrawal fee
will be charged for a Partial Withdrawal.
A Preferred Withdrawal will not affect your Policy's death benefit. If the
death benefit is greater than the Face Amount at the time of the Preferred
Withdrawal, the Face Amount will be increased to the level of the death
benefit as of the Valuation Date immediately preceding the Preferred
Withdrawal. This adjustment is necessary to ensure the death benefit will not
decrease as a result of the Preferred Withdrawal (see "Death Benefit," page
14).
When a Partial Withdrawal is made, the Face Amount under the Policy is
decreased by the lesser of (1) the amount of the Partial Withdrawal or (2) if
the death benefit prior to the withdrawal is greater than the Face Amount, the
amount, if any, by which the Face Amount exceeds the difference between the
death benefit and the amount of the Partial Withdrawal. A Partial Withdrawal
may cause the death benefit under your Policy to decrease by an amount other
than the amount of the Partial Withdrawal to the extent the death benefit is
based upon the Accumulated Value times the specified percentage applicable to
the Insured (see "Death Benefit," page 14).
A Preferred or Partial Withdrawal is treated as a distribution from the
Policy that may give rise to taxable income to you. For information on the tax
treatment of Preferred and Partial Withdrawals, see "Federal Income Tax
Considerations," page 23.
RIGHT TO EXAMINE A POLICY--FREE-LOOK RIGHT
You have a Free-Look Right, under which your Policy may be returned within
10 days after you receive it (30 days if you are a resident of California and
age 60 or older), or within 45 days after you complete the application for
insurance, whichever is later. However, in Pennsylvania, you have a different
Free-Look Right, under which your Policy may be returned only within 10 days
after you receive it. It can be mailed or delivered to us or our agent. The
returned Policy will be treated as if we never issued it and we will promptly
refund the full amount of the premium paid. If you have taken a loan during
the Free-Look Period, your Policy Indebtedness will be deducted from the
amount refunded. During the Free-Look Period, premiums will be allocated to
the Money Market Variable Account which invests in the Money Market Portfolio
of the Fund (except for amounts allocated to the Loan Account to secure a
Policy loan). See "Allocation of Premiums," page 13.
LAPSE
Your Policy will lapse only when your Net Cash Surrender Value is
insufficient to cover deductions and your charges on a Monthly Payment Date,
and a Grace Period expires without you making a sufficient payment. If your
Net Cash Surrender Value is insufficient to cover deductions and charges on a
Monthly Payment Date, you must pay during the Grace Period an amount equal to
the amount by which your Net Cash Surrender Value is less than zero plus a
minimum of three times the full charges and deductions due on the Monthly
Payment Date when the insufficiency occurred to avoid termination. We will not
accept such payment if it would cause your total premium payment to exceed the
maximum permissible premium under the Internal Revenue Code. This will
probably not be a problem unless you have outstanding Policy Indebtedness, in
which case you could repay a sufficient portion of the Indebtedness to avoid
termination.
To avoid recurrence of the potential lapse, you may wish to repay a portion
of any Indebtedness. If premium payments have not exceeded the maximum
permissible premium, you may wish to make a larger payment.
If your Net Cash Surrender Value is insufficient to cover the deductions and
charges on a Monthly Payment Date, we will deduct the amount available to pay
for any portion of the monthly deductions and charges due. The amount
available is equal to the amount by which your Accumulated Value exceeds your
Cash Surrender Value. Any remaining Accumulated Value in the Variable Accounts
will be transferred to the Money Market Variable Account. We will notify you
(and any assignee of record) of the payment required to keep the Policy in
force. You will then have a "Grace Period" of 61 days, measured from the date
the notice is sent, to make the
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required payment. Your Policy will remain in force through the Grace Period.
Failure to make the required payment within the Grace Period will result in
termination of coverage under your Policy, and your Policy will lapse with no
value. If the required payment is made during the Grace Period, any premium
paid and any Accumulated Value in the Money Market Variable Account will be
allocated among the Investment Options in accordance with your current premium
allocation instructions. Any monthly deductions and charges due will be
charged to the Investment Options on a proportionate basis. If the Insured
dies during the Grace Period, the death benefit proceeds will equal the amount
of the death benefit immediately prior to the commencement of the Grace
Period, reduced by any unpaid monthly deductions and charges due and any
Policy Indebtedness.
REINSTATEMENT
We will reinstate a lapsed Policy (but not a Policy which has been
surrendered for its Net Cash Surrender Value) at any time within five years
after the end of the Grace Period but before the Maturity Date provided we
receive the following: (1) your written application; (2) evidence of
insurability satisfactory to us; and (3) payment of all monthly charges and
deductions that were due and unpaid during the Grace Period, payment of the
amount by which Net Cash Surrender Value was less than zero at the beginning
of the Grace Period, and payment of a premium at least equal to three times
the most recent monthly deduction.
When your Policy is reinstated, your Accumulated Value will be equal to your
Accumulated Value on the date of the lapse subject to the following: If your
Policy is reinstated after your first Monthly Payment Date following lapse,
your Accumulated Value will be reduced by the amount of Policy Indebtedness on
the date of lapse and no Policy Indebtedness will exist on the date of the
reinstatement. If your Policy is reinstated on your Monthly Payment Date next
following lapse, any Policy Indebtedness on the date of lapse will also be
reinstated. No interest on amounts held in the Loan Account to secure Policy
Indebtedness will be paid or credited between lapse and reinstatement.
Reinstatement will be effective as of your Monthly Payment Date on or next
following the date of our approval, and your Accumulated Value minus Policy
Indebtedness will be allocated among the Investment Options in accordance with
your current premium allocation instructions.
CHARGES AND DEDUCTIONS
PREMIUM LOAD FROM THE INITIAL PREMIUM
We do not make any deductions from the initial premium payment before
allocating it to your Accumulated Value.
A Premium Load that consists of certain charges is assessed in connection
with each premium payment. The Premium Load assessed in connection with the
initial premium, referred to as "deferred load," is deferred and deducted from
Accumulated Value in monthly deductions starting on your first Policy
Anniversary and continuing to your eleventh Policy Anniversary. Deferred load
is not deducted during your first Policy Year unless you surrender the Policy,
in which case the deferred load will be deducted in full. The Premium Load
consists of the following items:
Sales Load. A sales load equal to 4.15% of the premium is assessed to
compensate us for sales and other expenses of distributing the Policies.
The amount we derive from the sales load is not expected to be sufficient
to cover the sales expenses in connection with a Policy. To the extent that
all sales expenses are not recovered from the sales load, such expenses may
be recovered from other charges, including amounts derived indirectly from
the charge for mortality and expense risks and from mortality gains.
Administrative Load. We assess an administrative load for administrative
expenses, the amount of which varies with the size of your premium payment
as follows: 3.0% of your premium if it is less than $50,000; 1.50% of your
premium if it is at least $50,000 but less than $100,000; and .50% of your
premium if it is $100,000 or greater.
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The administrative load is to cover administrative expenses in connection
with the Policies including expenses of underwriting and issuing the
Policy, recordkeeping, determining Policy values and benefits, processing
death benefit claims, processing withdrawals and transfers, preparing
reports to Policy Owners, and overhead costs. We do not expect to profit
from this charge.
State and Local Premium Tax Charge. A charge equal to 2.35% is assessed
to pay applicable state and local premium taxes. Premium taxes vary from
state to state, and in some instances, among municipalities. The 2.35% rate
approximates the average tax rate expected to be paid on premiums from all
states. The Policy is not available to insure residents of certain
municipalities in Kentucky where premium taxes in excess of 4.0% are
imposed.
As long as your Policy remains in force, the deferred load attributable to
your initial premium payment is not collected until after the end of your
first Policy Year (unless your Policy is surrendered in full during the first
year). It is then deducted from your Accumulated Value in equal monthly
installments during your second through the eleventh Policy Years. Any
unrecovered portion of the deferred load is deducted from your Accumulated
Value in the event of a full cash surrender, or lapse (see "Surrender," page
18 and "Lapse," page 19).
The monthly deduction for deferred load is collected on Monthly Payment
Dates. The amount of this monthly charge is calculated by taking the total
amount of the deferred load and dividing it by 120. Each time this expense
charge is collected, the unrecovered deferred load is reduced by the same
amount. Thus, the unrecovered deferred load decreases each month until it is
reduced to zero following the last monthly deduction made in the eleventh
Policy year. Due to the effects of rounding, the last deduction may differ
slightly from that of other months.
PREMIUM LOAD FROM ADDITIONAL PREMIUMS
Additional premium payments after your initial premium payment are subject
to the Premium Load to the same extent as described above under "Premium Load
from the Initial Premium." Premium Load on additional premium payments will
not be deferred, but will be assessed upon acceptance of an additional
premium.
The total amount of the Premium Load will range from 7.0% to 9.5% of your
additional premium payments depending upon the amount of your premium payment.
The Premium Load will consist of the sales load of 4.15%; an administrative
load of 3.0% of your additional premium if it is less than $50,000, 1.5% if it
is at least $50,000 but less than $100,000, and .50% if it is $100,000 or
greater, and the state and local premium tax charge of 2.35%.
VARIATIONS IN PREMIUM LOAD
We may reduce or waive the amount of the administrative load, sales load or
other charges for Policies where the expenses associated with the sale of the
Policy or the administrative costs associated with the Policy are reduced for
reasons such as the amount of the initial premium payment, the amounts of
projected premium payments, or that the Policy is sold in connection with a
group or sponsored arrangement. We may also reduce or waive the sales load on
Policies sold to the directors or employees of Pacific Mutual or any of its
affiliates or to trustees or any employees of the Fund.
DEDUCTIONS FROM ACCUMULATED VALUE
Cost of Insurance. A charge for the cost of insurance is deducted from your
Accumulated Value on each Monthly Payment Date. This monthly charge
compensates us for the anticipated cost of paying death benefits in excess of
Accumulated Value to Beneficiaries of Insureds who die. We may use any profit
derived from this charge for any lawful purpose, including the cost of claims
processing and investigation. The amount of the charge is equal to the net
amount at risk under your Policy at the beginning of the month multiplied by
the current cost of insurance rate. The net amount at risk for this purpose is
equal to the amount of death benefit payable at the beginning of the Policy
Month divided by 1.004074 (a discount factor to account for return deemed to
be
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earned during the month) less your Accumulated Value at the beginning of your
Policy Month. The cost of insurance rate is calculated based on the Age and
underwriting classification of the Insured. Your Policy contains guaranteed
rates, but, as of the date of this prospectus, we charge "current rates" that
are lower (i.e., less expensive) than the guaranteed rates. We may also charge
current rates in the future. The cost of insurance rate generally increases
with the Age of the Insured.
In reviewing applications for Policies, we may use the simplified method of
underwriting, depending, among other things, upon the Insured's Age and the
amount of the initial premium payment. Simplified underwriting involves no
medical or paramedical examination of the Insured. Because the health
information obtained on many Insureds is limited when the simplified
underwriting method is used, this method presents us with additional mortality
risks. As a result, in determining the guaranteed rates for the cost of
insurance, we have assumed less favorable mortality experience than that
provided in the 1980 Commissioners Standard Ordinary ("CSO") Mortality Table
B, and have established guaranteed rates that are 137.5% of the 1980 CSO
Mortality Table B. If the guaranteed rates are in effect, Insureds in a
standard underwriting classification will pay a higher cost of insurance than
if they had been medically underwritten in an otherwise identical policy,
which may be viewed as charging substandard rates for Insureds in a standard
underwriting classification. However, the current cost of insurance rates are
lower (i.e., less expensive) than the guaranteed rates. These current rates
are less than or equal to 100% of the 1980 CSO Mortality Table B at all ages
(except for smokers of certain ages on Policies entered into before October
21, 1988).
Administrative Charge. A monthly charge of $5 is imposed to reimburse us for
the expenses associated with administration and maintenance of the Policies.
This charge will be waived if your initial premium payment is at least
$20,000. This charge contains no element of anticipated profit. It is first
deducted from your Accumulated Value on your Policy Date, and deducted
thereafter on each succeeding Monthly Payment Date.
Face Amount Increase Charge. If you request an increase in Face Amount that
is accepted by us, a charge of $100 will be deducted from your Accumulated
Value on the effective date of the increase to cover processing costs. The
charge will be deducted from the Investment Options in the proportion each
bears to your Accumulated Value less Indebtedness.
DEDUCTIONS FROM THE VARIABLE ACCOUNTS
Mortality and Expense Risk Charges. We make a daily charge to the Variable
Accounts for mortality and expense risks we assume which is equal to an annual
rate of 0.70% of daily net assets. This charge is made to compensate us for
assuming certain mortality and expense risks under the Policies. The mortality
risk assumed is that Insureds, as a group, may live for a shorter period of
time than estimated and, therefore, the cost of insurance charges specified in
the Policy will be insufficient to meet actual claims. The expense risk
assumed is that other expenses incurred in issuing and administering the
Policies and operating the Separate Account will be greater than the charges
assessed for such expenses. We will realize a gain from this charge to the
extent it is not needed to provide the mortality benefits and expenses under
the Policies, and will realize a loss to the extent the charge is not
sufficient. We may use any profit derived from this charge for any lawful
purpose, including any distribution expenses not covered by the sales load.
OTHER CHARGES
We may charge the Variable Accounts for the federal income taxes incurred by
us that are attributable to the Separate Account and its Variable Accounts. No
such charge is currently assessed (see "Charge for Pacific Mutual Income
Taxes," page 26).
We will bear the operating expenses of the Separate Account. Each Variable
Account purchases shares of the corresponding Portfolio of the underlying
Fund. The Fund and each of its Portfolios incur certain charges including the
investment advisory fee and certain operating expenses. The Fund is governed
by its Board of Trustees. The Fund's expenses are not fixed or specified under
the terms of the Policy. The advisory fees and other expenses are more fully
described in the prospectus of the Fund.
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GUARANTEE OF CERTAIN CHARGES
We guarantee that certain charges will not increase, including the
guaranteed rates for the cost of insurance, the charge for mortality and
expense risk, the administrative load, and the administrative charge.
OTHER INFORMATION
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion provides a general description of the federal
income tax considerations relating to the Policy. This discussion is based
upon our understanding of the present federal income tax laws as they are
currently interpreted by the Internal Revenue Service ("IRS"). This discussion
is not intended as tax advice. Because of the inherent complexity of such laws
and the fact that tax results will vary according to the particular
circumstances of the individual involved, tax advice may be needed by a person
contemplating the purchase of the Policy. It should therefore be understood
that these comments concerning federal income tax consequences are not an
exhaustive discussion of all tax questions that might arise with respect to
the Policy and that special rules which are not discussed herein may apply in
certain situations. Moreover, no representation is made as to the likelihood
of continuation of federal income tax or estate tax laws or of the current
interpretations by the IRS or the courts. Future legislation may adversely
affect the tax treatment of life insurance policies or other tax rules
described in this discussion or that relate directly or indirectly to life
insurance policies. Finally, these comments do not take into account any
considerations relating to state or local income or other taxes which may be
involved in the purchase or ownership of the Policy.
While we believe that the Policy meets the statutory definition of life
insurance and hence will receive federal income tax treatment consistent with
that of fixed life insurance the area of the tax law relating to the
definition of life insurance does not explicitly address all relevant issues
(including, for example, the treatment of substandard risk Policies and
Policies with term insurance on the Insured). We reserve the right to make
changes to the Policy if changes are deemed appropriate by us to attempt to
assure qualification of the Policy as a life insurance contract. If a Policy
were determined not to qualify as life insurance, the Policy would not provide
the tax advantages normally provided by life insurance. The discussion below
summarizes the tax treatment of life insurance contracts.
The death benefit under a Policy should be excludable from the gross income
of the Beneficiary under Section 101(a)(1) of the Internal Revenue Code
("IRC") for purposes of the regular federal income tax and you generally
should not be deemed to be in constructive receipt of the cash values,
including increments thereof, under your Policy until a full or partial
surrender thereof, maturity or lapse of your Policy, or until receipt of
deemed distributions (including, in the case of a modified endowment contract,
policy loans). Prospective Owners that intend to use Policies to fund deferred
compensation arrangements for their employees are urged to consult their tax
advisers with respect to the tax consequences of such arrangements.
Prospective corporate Owners should consult their tax advisers about the
treatment of life insurance in their particular circumstances for purposes of
the alternative minimum tax applicable to corporations and the environmental
tax under IRC section 59A. Changing the Policy Owner may also have tax
consequences. Exchanging a Policy for another involving the same Insured
generally will not result in the recognition of gain or loss according to
Section 1035(a) of the IRC. Changing the Insured under a Policy will, however,
not be treated as a tax-free exchange under Section 1035, but rather as a
taxable exchange.
Diversification Requirements. To comply with regulations under Section
817(h) of the IRC, each Portfolio of the Fund will be required to diversify
its investments. For details on these diversification requirements, see "What
is the Federal Income Tax Status of the Fund" in the Fund's prospectus.
The IRS has stated in published rulings that a variable contract owner will
be considered the owner of separate account assets if the contract owner
possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In those circumstances, income
and gains from the separate account assets would be includable in the variable
policy owner's gross income. The Treasury Department also announced, in
connection with the issuance of regulations concerning diversification, that
those regulations "do
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not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor [i.e.,
the Policy Owner], rather than the insurance company, to be treated as the
owner of the assets in the account." This announcement also stated that
guidance would be issued by way of regulations or rulings on the "extent to
which policyholders may direct their investments to particular subaccounts
without being treated as owners of the underlying assets." As of the date of
this prospectus, no such guidance has been issued.
The ownership rights under your Policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, you have additional flexibility in allocating premium payments and
Policy Values. These differences could result in you being treated as the
owner of your Policy's pro rata portion of the assets of the Separate Account.
In addition, we do not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. We therefore reserve the right to modify the Policy, as deemed
appropriate by us, to attempt to prevent you from being considered the owner
of your Policy's pro rata share of the assets of the Separate Account.
Moreover, in the event that regulations are adopted or rulings are issued,
there can be no assurance that the Portfolio will be able to operate as
currently described in the Prospectus, or that the Fund will not have to
change any Portfolio's investment objective or investment policies.
Modified Endowment Contracts. IRC Section 7702A defines a class of insurance
contracts referred to as modified endowment contracts. Under this provision,
the Policies will be treated for tax purposes in one of two ways. Pacific
Select Policies entered into on or after June 21, 1988 will be modified
endowment contracts.
A life insurance contract becomes a "modified endowment contract" if, at any
time during the first seven contract years, the sum of actual premiums paid
exceeds the sum of the "seven pay premium." Generally, the "seven-pay premium"
is the level annual premium, such that if paid for each of the first seven
years, will fully pay for all future death and endowment benefits under a
contract. For example, if the "seven-pay premium" were $1,000, the maximum
premiums that could be paid during the first seven years to avoid "modified
endowment" treatment would be $1,000 in the first year; $2,000 through the
first two years; and $3,000 through the first three years, etc.
Pre-death distributions from modified endowment contracts may give rise to
taxable income. Upon full surrender or maturity of your Policy, you would
recognize ordinary income for federal income tax purposes equal to the amount
by which the Net Cash Surrender Value plus Indebtedness exceeds the investment
in your Policy (usually the premiums paid plus pre-death distributions that
were taxable less any premiums previously recovered that were excludable from
gross income). Upon Preferred and Partial Withdrawals and Policy loans, you
would recognize ordinary income to the extent allocable to income (which
includes all previously non-taxed gains) on your Policy. The amount allocated
to income is the amount by which the Accumulated Value of your Policy exceeds
investment in the Policy immediately before the distribution. Under a tax law
provision, if two or more policies which are classified as modified endowment
contracts are purchased from any one insurance company, including Pacific
Mutual, during any calendar year, all such policies will be aggregated for
purposes of determining the portion of the pre-death distributions allocable
to income on the policies and the portion allocable to investment in the
policies.
If you assign or pledge (or agree to assign or pledge) any portion of the
value of a modified endowment contract, such amount or portion generally will
be treated as a pre-death distribution.
The portion of pre-death distributions that are treated as taxable income
will also be subject to an additional income tax of 10%, except where the
distribution (1) occurs on or after the date on which the taxpayer attains age
59 1/2, (2) is attributable to the taxpayer becoming disabled, or (3) occurs
as part of a series of substantially equal (annual or more frequent) periodic
payments made for the life (or life expectancy) of the taxpayer or the joint
lives (or joint life expectancies) of the taxpayer and his or her beneficiary.
With respect to Policy loans, it is unclear whether interest paid (or
accrued by an accrual basis taxpayer) constitutes interest for federal income
tax purposes. Tax law provisions may limit the deduction of interest payable
on loan proceeds that are used to purchase or carry certain life insurance
policies.
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Policies that are Not Modified Endowment Contracts. Policies entered into
before June 21, 1988, may not be subject to treatment as modified endowment
contracts even though they fail to meet the seven-pay premium test provided
that such Policies do not experience a "material change." The definition of
"material change" is complex, but, in general, if you do not pay any further
premium or institute any changes to the death benefits, there will be no
material change. In this connection, an additional premium payment necessary
to keep your Policy in force should not constitute a material change so long
as the death benefit under the Policy does not increase. If a Policy that was
not a modified endowment contract becomes one, under Treasury Department
regulations which may be prescribed, pre-death distributions received in
anticipation of a failure of a Policy to meet the seven-pay premium test will
be treated as pre-death distributions from a modified endowment contract (and,
therefore, will be taxable as described above) even though, at the time of the
distribution(s), the Policy was not yet a modified endowment contract. For
this purpose, pursuant to the IRC, any distribution made within two years
before the Policy is classified as a modified endowment contract shall be
treated as being made in anticipation of the Policy's failing to meet the
seven-pay premium test.
Pre-death distributions from Policies that are not modified endowment
contracts may also give rise to taxable income. Upon full surrender or
maturity of your Policy for its Net Cash Surrender Value, the excess, if any,
of the Net Cash Surrender Value plus any outstanding Policy Indebtedness over
the cost basis under your Policy will be treated as ordinary income for
federal income tax purposes. Your Policy's cost basis will usually equal the
premiums paid less any premiums previously recovered in Preferred or Partial
Withdrawals. Under Section 7702 of the IRC, if a partial withdrawal is
accompanied by a reduction in benefits under a life insurance contract,
special rules apply to determine whether part or all of the cash received is
paid out of the income of the contract and is taxable. Provided that the cash
received by you on a Preferred Withdrawal within 15 years of the Policy Date
does not exceed investment in your Policy (generally, premiums paid less any
premiums previously recovered in Preferred Withdrawals), we believe that no
portion of such cash will be treated as paid out of the income of your Policy
and taxed to you because the death benefit under your Policy is not reduced.
The absence of regulations or other authority interpreting Section 7702,
however, creates some uncertainty and thus there can be no assurance that the
IRS might not take the position that a portion of the cash distributed to you
on a Preferred Withdrawal should be treated as being paid out of income of
your Policy and taxed to you. Cash distributed to you on Partial Withdrawals
occurring more than 15 years after the Policy Date will be taxable as ordinary
income to you to the extent that it exceeds the cost basis under your Policy.
We also believe that loans received under Policies that are not modified
endowment contracts will be treated as Indebtedness of the Owner, and that no
part of any loan under the Policy will constitute income to you unless your
Policy is surrendered or matures or lapses. However, interest on Policy
Indebtedness paid (or accrued by an accrual basis taxpayer) may be deductible.
Tax law provisions may limit the deduction of interest payable on loan
proceeds that are used to purchase or carry certain life insurance policies.
Other. Another provision of the tax law deals with allowable charges for
mortality costs and other expenses that are used in making calculations to
determine whether a contract qualifies as life insurance for federal income
tax purposes. For life insurance policies entered into on or after October 21,
1988, these calculations must be based upon reasonable mortality charges and
other charges reasonably expected to be actually paid. The Treasury Department
has issued proposed regulations and is expected to promulgate temporary or
final regulations governing reasonableness standards for mortality charges.
While we believe under IRS pronouncements currently in effect, that the
mortality costs and other expenses used in making calculations to determine
whether the Policy qualifies as life insurance meet the current requirements,
complete assurance cannot be given that the IRS would necessarily agree. It is
possible that future regulations will contain standards that would require us
to modify our mortality charges used for the purpose of the calculations in
order to retain the qualification of the Policy as life insurance for federal
income tax purposes, and we reserve the right to make any such modifications.
Federal estate and gift and state and local estate, inheritance, and other
tax consequences of ownership or receipt of Policy proceeds depend on the
jurisdiction and the circumstances of each Owner or Beneficiary.
For complete information on federal, state, local and other tax
considerations, a qualified tax adviser should be consulted.
PACIFIC MUTUAL DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY
POLICY.
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<PAGE>
CHARGE FOR PACIFIC MUTUAL INCOME TAXES
In the provisions of the IRC on life insurance, variable life insurance is
treated in a manner consistent with fixed life insurance. We will periodically
review the question of a charge to the Separate Account for our federal income
taxes. A charge may be made for any federal income taxes incurred by us that
are attributable to the Separate Account. This might become necessary if our
tax treatment is ultimately determined to be other than what we currently
believe it to be, if there are changes made in the federal income tax
treatment of variable life insurance at the insurance company level, or if
there is a change in our tax status.
Under current laws, we may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, we
reserve the right to charge the Account for such taxes, if any, attributable
to the Account.
VOTING OF FUND SHARES
In accordance with its view of present applicable law, we will exercise
voting rights attributable to the shares of each Portfolio of the Fund held in
the Variable Accounts at any regular and special meetings of the shareholders
of the Fund on matters requiring shareholder voting under the Investment
Company Act of 1940. We will exercise these voting rights based on
instructions received from persons having the voting interest in corresponding
Variable Accounts of the Separate Account. However, if the Investment Company
Act of 1940 or any regulations thereunder should be amended, or if the present
interpretation thereof should change, and as a result we determine that we are
permitted to vote the shares of the Fund in its own right, we may elect to do
so.
You are the person having the voting interest under a Policy. Unless
otherwise required by applicable law, the number of votes as to which you will
have the right to instruct will be determined by dividing your Accumulated
Value in a Variable Account by the net asset value per share of the
corresponding Portfolio of the Fund. Fractional votes will be counted. The
number of votes as to which you will have the right to instruct will be
determined as of the date coincident with the date established by the Fund for
determining shareholders eligible to vote at the meeting of the Fund. If
required by the Securities and Exchange Commission, we reserve the right to
determine in a different fashion the voting rights attributable to the shares
of the Fund based upon instructions received from Policy Owners. Voting
instructions may be cast in person or by proxy.
Voting rights attributable to your Accumulated Value held in each Variable
Account for which no timely voting instructions are received will be voted by
us in the same proportion as the voting instructions which are received in a
timely manner for all policies participating in that Variable Account. We will
also exercise the voting rights from assets in each Variable Account which are
not otherwise attributable to Policy Owners, if any, in the same proportion as
the voting instructions which are received in a timely manner for all Policies
participating in that Variable Account. If we hold shares of a Portfolio in
our General Account and/or if any of our non-insurance subsidiaries holds
shares of a Portfolio, such shares will be voted in the same proportion as
votes cast by the Separate Account and our other separate accounts, in the
aggregate.
DISREGARD OF VOTING INSTRUCTIONS
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that voting rights be
exercised so as to cause a change in the subclassification or investment
objective of a Portfolio or to approve or disapprove an investment advisory
contract. In addition, we may disregard voting instructions of changes
initiated by Policy Owners in the investment policy or the investment adviser
(or portfolio manager) of a Portfolio, provided that our disapproval of the
change is reasonable and is based on a good faith determination that the
change would be contrary to state law or otherwise inappropriate, considering
the Portfolio's objectives and purpose, and considering the effect the change
would have on us. In the event we do disregard voting instructions, a summary
of that action and the reasons for such action will be included in the next
report to Owners.
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<PAGE>
CONFIRMATION STATEMENTS AND OTHER REPORTS TO OWNERS
We will send you confirmations for premium payments and transfers, loans,
loan repayments, loan interest transfers, Preferred and Partial Withdrawals, a
surrender, and on payment of any death benefit proceeds. Confirmation of
scheduled transactions under dollar cost averaging, portfolio rebalancing, and
monthly deductions will appear on your quarterly statement.
A statement will be sent quarterly to you setting forth a summary of the
transactions which occurred during the quarter, indicating the death benefit,
Accumulated Value, Cash Surrender Value, and any Policy Indebtedness as of the
end of each quarter. In addition, the statement will indicate the allocation
of Accumulated Value among the Investment Options and any other information
required by law.
You will also be sent an annual and a semiannual report containing financial
statements for the Separate Account and the Fund, the latter of which will
include a list of the portfolio securities of the Fund, as required by the
Investment Company Act of 1940, and/or such other reports as may be required
by federal securities laws.
SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to compliance with the laws as then in effect,
to make additions to, deletions from, or substitutions for the securities that
are held by the Separate Account or any Variable Account or that the Separate
Account or any Variable Account may purchase. If shares of any or all of the
Portfolios of the Fund should no longer be available for investment, or if, in
the judgment of Pacific Mutual's management, further investment in shares of
any or all Portfolios of the Fund should become inappropriate in view of the
purposes of the Policies, we may substitute shares of another Portfolio of the
Fund or of a different fund for shares already purchased, or to be purchased
in the future, under the Policies.
Where required, we will not substitute any shares attributable to your
interest in a Variable Account or the Separate Account without notice, your
approval, or prior approval of the Securities and Exchange Commission and
without following the filing or other procedures established by applicable
state insurance regulators.
We also reserve the right to establish additional Variable Accounts of the
Separate Account, each of which would invest in a new Portfolio of the Fund,
or in shares of another investment company, a portfolio thereof, or suitable
investment vehicle, with a specified investment objective. New Variable
Accounts may be established when, in our sole discretion, marketing needs or
investment conditions warrant, and any new Variable Accounts will be made
available to existing Policy Owners on a basis to be determined by us. We may
also eliminate one or more Variable Accounts if, in our sole discretion,
marketing, tax, or investment conditions so warrant.
In the event of any such substitution or change, we may, by appropriate
endorsement, make such changes in this and other policies as may be necessary
or appropriate to reflect such substitution or change. If deemed by us to be
in the best interests of persons having voting rights under the Policies, the
Separate Account may be operated as a management investment company under the
Investment Company Act of 1940 or any other form permitted by law, it may be
deregistered under that Act in the event such registration is no longer
required, or it may be combined with other separate accounts of Pacific Mutual
or an affiliate thereof. Subject to compliance with applicable law, we also
may combine one or more Variable Accounts and may establish a committee,
board, or other group to manage one or more aspects of the operation of the
Separate Account.
CHANGES TO COMPLY WITH LAW
We reserve the right to make any changes without your consent to the
provisions of the Policy to comply with, or give you the benefit of, any
Federal or State statute, rule, or regulation, including but not limited to
requirements for life insurance contracts under the Internal Revenue Code of
the United States or regulations thereunder, or any state statute or
regulation.
27
<PAGE>
PERFORMANCE INFORMATION
Performance information for the Variable Accounts may appear in
advertisements, sales literature, or reports to Policy Owners or prospective
purchasers. Performance information in advertisements or sales literature may
be expressed in any fashion permitted under applicable law, which may include
presentation of a change in a Policy Owner's Accumulated Value attributable to
the performance of one or more Variable Accounts, or as a change in a Policy
Owner's death benefit. Performance quotations of a change in a Policy Owner's
Accumulated Value may be expressed in terms of a change in Accumulated Value
over time or the average annual compounded rate of return on the Policy
Owner's Accumulated Value. Performance quotations may be based upon a
hypothetical Policy in which premiums have been allocated to a particular
Variable Account over certain periods of time that will include one year, or
from the commencement of operation of the Variable Account. Any such quotation
may reflect the deduction of all applicable charges to the Policy including
premium load, the cost of insurance, and the mortality and expense risk charge
that is assessed against each Variable Account. The quotation may also reflect
the deduction of the unrecovered deferred load, if applicable, by assuming a
surrender at the end of the particular period, although other quotations may
simultaneously be given that do not assume a surrender and do not take into
account deduction of unrecovered deferred load.
Performance information for a Variable Account may be compared, in
advertisements, sales literature, and reports to Policy Owners to: (i) other
variable life separate accounts or investment products tracked by research
firms, ratings services, companies, publications, or persons who rank separate
accounts or investment products on overall performance or other criteria; and
(ii) the Consumer Price Index (measure for inflation) to assess the real rate
of return from the purchase of a Policy. Reports and promotional literature
may also contain our rating or a rating of our claim-paying ability as
determined by firms that analyze and rate insurance companies and by
nationally recognized statistical rating organizations.
Performance information for any Variable Account reflects only the
performance of a hypothetical Policy whose Accumulated Value is allocated to
the Variable Account during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies, characteristics and quality of the
Portfolio of the Fund in which the Variable Account invests, and the market
conditions during the given period of time, and should not be considered as a
representation of what may be achieved in the future.
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<PAGE>
THE FIXED ACCOUNT
You may allocate all or a portion of your premium payments and transfer
Accumulated Value to the Fixed Account. Amounts allocated to the Fixed Account
become part of our General Account, which supports insurance and annuity
obligations. Because of exemptive and exclusionary provisions, interests in
the Fixed Account have not been registered under the Securities Act of 1933
and the Fixed Account has not been registered as an investment company under
the Investment Company Act of 1940. Accordingly, neither the Fixed Account nor
any interest therein is generally subject to the provisions of these Acts and,
as a result, the staff of the Securities and Exchange Commission has not
reviewed the disclosure in this prospectus relating to the Fixed Account.
Disclosures regarding the Fixed Account may, however, be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in the prospectus. For more
details regarding the Fixed Account, see the Policy itself.
GENERAL DESCRIPTION
Amounts allocated to the Fixed Account become part of our General Account
which consists of all assets owned by us other than those in the Separate
Account and our other separate accounts. Subject to applicable law, we have
sole discretion over the investment of the assets of our General Account.
You may elect to allocate premium payments to the Fixed Account, the
Variable Account, or both. You may also transfer Accumulated Value from the
Variable Accounts to the Fixed Account, or from the Fixed Account to the
Variable Accounts, subject to the limitations described below. We guarantee
that the Accumulated Value in the Fixed Account will be credited with interest
at a rate of 0.327374% per month, compounded monthly, for an effective annual
rate of 4%. Such interest will be paid regardless of the actual investment
experience of the Fixed Account. In addition, we may in our sole discretion
pay current interest in excess of the 4% guarantee. The current interest rate
will be that rate in effect on the Policy Date and as effected thereafter for
each Policy Anniversary. Once declared for a Policy on its anniversary, the
current rates are guaranteed for one year until the next Policy Anniversary.
The portion of your Accumulated Value that has been used to secure Policy
Indebtedness will accrue interest at a rate of 0.327374% per month, compounded
monthly, for an effective annual rate of 4%.
We bear the full investment risk for the Accumulated Value allocated to the
Fixed Account.
DEATH BENEFIT
The death benefit under the Policy will be determined in the same fashion
for an Owner who has Accumulated Value in the Fixed Account as for an Owner
who has Accumulated Value in the Variable Accounts. The death benefit will be
the greater of the Face Amount or Accumulated Value multiplied by a specified
percentage (see "Death Benefit," page 14).
POLICY CHARGES
Premium load and the Policy charges for the administrative charge and the
cost of insurance will be the same whether you allocate premium payments or
transfer Accumulated Value to the Fixed Account or allocate premium payments
to the Variable Accounts. The charge for mortality and expense risks will not
be assessed against the Fixed Account, and any amounts that Pacific Mutual
pays for income taxes allocable to the Variable Accounts will not be charged
against the Fixed Account. In addition, the investment advisory fees and
operating expenses paid by the Fund will not be paid directly or indirectly by
you to the extent the Accumulated Value is allocated to the Fixed Account;
however, to such extent, you will not participate in the investment experience
of the Variable Accounts.
TRANSFERS, SURRENDERS, WITHDRAWALS, AND POLICY LOANS
Amounts may be transferred from the Variable Accounts to the Fixed Account
and from the Fixed Account to the Variable Accounts, subject to the following
limitations. You may not make more than one transfer from
29
<PAGE>
the Fixed Account to the Variable Accounts in any 12-month period. Further,
effective June 1, 1996, you may not transfer more than the greater of 25% of
your accumulated value in the Fixed Account or $5,000 in any year. Until June
1, 1996, if you have $1000 or more in the Fixed Account, you may not transfer
more than 20% of such amount to the Variable Accounts in any year. Currently
there is no charge imposed upon transfers; however, we reserve the right to
assess such a charge in the future and to impose other limitations on the
number of transfers, the amount of transfers, and the amount remaining in the
Fixed Account or Variable Accounts after a transfer. Transfers from the
Variable Accounts to the Fixed Account may only be made in the Policy Month
preceding a Policy Anniversary, except that Policy Owners residing in
Maryland, Connecticut and Pennsylvania may make such a transfer at any time
during the first 18 Policy Months.
You may also make full surrenders, Preferred Withdrawals, and Partial
Withdrawals to the same extent as a Policy Owner who has allocated Accumulated
Value to the Variable Accounts. See "Surrender," page 18, and "Preferred and
Partial Withdrawal Benefits," page 18. In addition, to the same extent as
Policy Owners with Accumulated Value in the Variable Accounts, you may obtain
a Policy Loan and borrow up to 90% of Cash Surrender Value attributable to the
Fixed Account less Policy Indebtedness. See "Policy Loans," page 17.
Transfers, surrenders, and withdrawals payable from the Fixed Account, and the
payment of Policy loans allocated to the Fixed Account may be delayed for up
to six months.
MORE ABOUT THE POLICY
OWNERSHIP
The Policy Owner is the individual named as such in the application or in
any later change shown in our records. While the Insured is living, the Policy
Owner alone has the right to receive all benefits and exercise all rights that
the Policy grants or we allow.
Joint Owners. If more than one person is named as Policy Owner, they are
joint owners. Any Policy transaction requires the signature of all persons
named jointly. Unless otherwise provided, if a joint owner dies, ownership
passes to the surviving joint owner(s). When the last joint owner dies,
ownership passes through that person's estate, unless otherwise provided.
BENEFICIARY
The Beneficiary is the individual named as such in the application or any
later change shown in our records. You may change the Beneficiary at any time
during the life of the Insured by written request on forms provided by us and
received by us at our Home Office. The change will be effective as of the date
this form is signed. Contingent and/or concurrent Beneficiaries may be
designated. You may designate a permanent Beneficiary, whose rights under the
Policy cannot be changed without his or her consent. Unless otherwise
provided, if no designated Beneficiary is living upon the death of the
Insured, you or your estate is the Beneficiary.
We will pay the death benefit proceeds to the Beneficiary. Unless otherwise
provided, in order to receive proceeds at the Insured's death, the Beneficiary
must be living at the time of the Insured's death.
EXCHANGE OF INSURED
After the first Policy year and subject to our approval, you may exchange
the named Insured on the Policy upon written application, evidence of
insurability satisfactory to us, and payment of a charge of $100. The exchange
is effective the first Monthly Payment Date on or after the date the exchange
is approved. Coverage on the new Insured will become effective on the exchange
date. Coverage on the current Insured will terminate on the day preceding the
exchange date. The Policy Date will not be changed unless the new Insured was
born after the Policy Date. In such case, the Policy Date will be changed to
the Policy anniversary on or next following the birth date of the new Insured.
The cost of insurance charge will be based on the new Insured's Age and risk
classification.
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<PAGE>
We reserve the right to disallow a requested exchange of the named Insured,
and will not permit a requested exchange, among other reasons, (1) if
compliance with the guideline premium limitations under tax laws resulting
from the exchange of Insured would result in the immediate termination of the
Policy or likely result in its termination before the Policy's Maturity Date,
or (2) if, to effect the requested exchange of Insured, payments to you would
have to be made from Accumulated Value for compliance with the guideline
premium limitations, and the amount of such payments would exceed the Net Cash
Surrender Value under the Policy.
The charge of $100 will be imposed to cover the costs of processing an
exchange of Insured. This amount will not be credited to or deducted from
Accumulated Value, but must be paid directly to us by you before the request
for an exchange of Insured will be processed.
THE CONTRACT
The Policy is a contract between you and us. The entire contract consists of
the Policy, a copy of the initial application, all subsequent applications to
change the Policy, any endorsements, and all additional Policy information
sections (specification pages) added to the Policy.
PAYMENTS
We ordinarily will pay death benefit proceeds, Net Cash Surrender Value on
surrender, Preferred Withdrawals, Partial Withdrawals, and loan proceeds based
on allocations made to the Variable Accounts, and will effect a transfer
between Variable Accounts or from a Variable Account to the Fixed Account
within seven days after we receive all information needed to process a payment
or transfer or, if sooner, other period required by law.
However, we can postpone the calculation or payment of such a payment or
transfer of amounts based on investment performance of the Variable Accounts
if:
. The New York Stock Exchange is closed on other than customary weekend
and holiday closings or trading on the New York Stock Exchange is
restricted as determined by the SEC; or
. An emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Account's net
assets; or
. The SEC by order permits postponement for the protection of Policy
Owners.
ASSIGNMENT
You may assign a Policy as collateral security for a loan or other
obligation. No assignment will bind us unless the original, or a copy, is
received and recorded by our Home Office. An assignment does not change the
ownership of the Policy. However, after an assignment, the rights of any Owner
or Beneficiary will be subject to the assignment. The entire Policy, including
any attached option or rider, will be subject to the assignment. We will rely
solely on the assignee's statement as to the amount of the assignee's
interest. We will not be responsible for the validity of any assignment.
Unless otherwise provided, the assignee may exercise all rights this Policy
grants except (a) the right to change the Owner or Beneficiary; and (b) the
right to elect a payment option. Assignment of a Policy that is a modified
endowment contract may generate taxable income. (See "Federal Income Tax
Considerations," page 23.)
ERRORS ON THE APPLICATION
If the Age of the Insured has been misstated, the death benefit under this
Policy will be the greater of that which would be purchased by the most recent
cost of insurance charge at the correct Age, or the death benefit derived by
multiplying Accumulated Value by the specified percentage for the correct Age.
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INCONTESTABILITY
We may contest the validity of this Policy if any material misstatements are
made in the application. However, this Policy will be incontestable after the
expiration of the following: the initial Face Amount cannot be contested after
the Policy has been in force during the Insured's lifetime for two years from
the Policy Date; if the Insured is changed, the Policy cannot be contested
after it has been in force during the new Insured's lifetime for two years
from the effective date of the exchange; and an increase in the Face Amount
cannot be contested after the increase has been in force during an Insured's
lifetime for two years from its effective date.
PAYMENT IN CASE OF SUICIDE
If the Insured dies by suicide, while sane or insane, within two years from
the Policy Date, we will limit the death benefit proceeds to the premium
payments less any Policy Indebtedness and less the amount of any Preferred
Withdrawals. If the Insured has been changed and the new Insured dies by
suicide, while sane or insane, within two years of the exchange date, we will
limit the death benefit proceeds to the Net Cash Surrender Value as of the
exchange date, plus the premiums paid since the exchange date, less the sum of
any Indebtedness, withdrawal amounts, and any dividends paid in cash since the
exchange date. If an Insured dies by suicide, while sane or insane, within two
years of the effective date of any increase in the Face Amount, we will refund
the cost of insurance charges made with respect to such increase.
PARTICIPATING
The Policy is participating and will share in our surplus earnings. However,
the current dividend scale is zero and we do not anticipate that dividends
will be paid. Any dividends that do become payable will be paid in cash.
POLICY ILLUSTRATIONS
Upon request, we will send you an illustration of estimated future benefits
under the Policy based on both guaranteed and current cost factor assumptions.
However, we reserve the right to charge a fee for requests for illustrations
in excess of one per Policy Year.
PAYMENT PLAN
Maturity, surrender, or withdrawal benefits may be used to purchase a
payment plan providing monthly income for the lifetime of the Insured, and
death benefit proceeds may be used to purchase a payment plan providing
monthly income for the lifetime of the Beneficiary. The monthly payments
consisting of proceeds plus interest will be paid in equal installments for at
least ten years. The purchase rates for the payment plan are guaranteed not to
exceed those shown in the Policy, but current rates that are lower (i.e.,
providing greater income) may be established by us from time to time. This
benefit is not available if the income would be less than $25 a month.
Maturity, surrender, withdrawal, or death benefits may be used to purchase any
other Payment Plan that we make available at that time.
DISTRIBUTION OF THE POLICY
Pacific Mutual Distributors, Inc. ("PMD"), a wholly-owned subsidiary of
Pacific Mutual, is Principal Underwriter of the Policies. PMD is registered as
a broker-dealer with the SEC and is a member of the National Association of
Securities Dealers ("NASD"). Pacific Mutual pays PMD for acting as Principal
Underwriter under a Distribution Agreement.
Pacific Mutual and PMD have sales agreements with various broker-dealers
under which the Policy will be sold by registered representatives of the
broker-dealers. The registered representatives are required to be authorized
under applicable state regulations to sell variable life insurance. The
broker-dealers are required to be registered with the SEC and members of the
NASD. We pay compensation directly to broker-dealers for promotion and sales
of the Policy. The compensation payable to a broker-dealer by Pacific Mutual
and PMD for
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sales of the product may vary with the Sales Agreement, but is not expected to
exceed 5% of premium payments. Broker-dealers may also receive an annual
renewal compensation of no more than .20% of the excess of Accumulated Value
less Policy Indebtedness over $50,000, computed monthly and payable at the end
of each Policy Year. In addition, we may also pay override payments, expense
allowances, bonuses, wholesaler fees and training allowances. Registered
representatives earn commissions from the broker-dealers with whom they are
affiliated for selling our Policies. Compensation arrangements vary among
broker-dealers. In addition, registered representatives who meet specified
production levels may qualify, under sales incentive programs adopted by us,
to receive non-cash compensation such as expense-paid trips, expense-paid
educational seminars and merchandise. We make no separate deductions, other
than as previously described, from premiums to pay sales commissions or sales
expenses.
MORE ABOUT PACIFIC MUTUAL
MANAGEMENT
The directors and officers of Pacific Mutual are listed below together with
information as to their principal occupations during the past five years and
certain other current affiliations. Unless otherwise indicated, the business
address of each director and officer is c/o Pacific Mutual Life Insurance
Company, 700 Newport Center Drive, Newport Beach, California 92660.
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION LAST FIVE YEARS
----------------- ------------------------------------
<S> <C>
Thomas C. Sutton Director, Chairman of the Board and Chief Executive Officer
Director, Chairman of of Pacific Mutual; Equity Board Member of PIMCO Advisors
the Board and L.P.; Director of Pacific Corinthian Life Insurance
Chief Executive Company; similar positions with other subsidiaries of
Officer Pacific Mutual; Director of: Newhall Land & Farming; The
Irvine Company; The Edison Company.
Glenn S. Schafer Director and President of Pacific Mutual, January 1995 to
Director and President present; Executive Vice President and Chief Financial
Officer of Pacific Mutual, March 1991 to January 1995;
Equity Board Member of PIMCO Advisors L.P.; Director of
Pacific Corinthian Life Insurance Company; similar
positions with other subsidiaries of Pacific Mutual.
Harry G. Bubb Director and Chairman Emeritus of Pacific Mutual.
Director and
Chairman Emeritus
Richard M. Ferry Director of Pacific Mutual; President, Director and Chairman
Director of Korn/Ferry International; Director of: Avery Dennison
Corporation; ConAm Management; First Business Bank;
Northwestern Restaurants, Inc.; Dole Food Co. Address: 1800
Century Park East, Suite 900, Los Angeles, California
90067.
Donald E. Guinn Director of Pacific Mutual; Chairman Emeritus and Director
Director of Pacific Telesis Group; Director of: The Dial Corp.; Bank
of America NT & SA; BankAmerica Corporation. Address:
Pacific Telesis Center, 130 Kearny Street, Room 3719, San
Francisco, California 94108-4818.
Ignacio E. Lozano, Jr. Director of Pacific Mutual; Chairman and Editor-in-Chief of
Director La Opinion; Director of: BankAmerica Corporation; Bank of
America NT&SA; Pacific Enterprises; The Walt Disney
Company. Address: 411 West Fifth Street, 12th Floor, Los
Angeles, California 90015.
Charles A. Lynch Director of Pacific Mutual; Chairman and Chief Executive
Director Officer of Fresh Choice, Inc.; Director of: Nordstrom,
Inc.; PST Vans, Inc.; SRI International, Inc.; Age Wave;
Artmaster, Inc.; Bojangles Acquisition Corp.; Cucina
Holdings, Inc.; Dakin, Inc.; Greyhound Lines, Inc.;
Krh' Thermal Systems; La Salsa Restaurants; Mid Peninsula
Bank; Syntex Corporation; Former Chairman of Market Value
Partners Company. Address: 2901 Tasman Drive, Suite 109, Santa
Clara, California 95054-1169.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION LAST FIVE YEARS
----------------- ------------------------------------
<S> <C>
Dr. Allen W. Mathies, Director of Pacific Mutual; Director and President Emeritus
Jr. of Huntington Memorial Hospital; Director of Occidental
Director College; Former President and Chief Executive Officer of
Huntington Memorial Hospital. Address: 100 W. California
Blvd., Pasadena, California 91109-7103.
Charles D. Miller Director of Pacific Mutual; Director, Chairman, and Chief
Director Executive Officer of Avery Dennison Corporation; Director
of: Great Western Financial Corporation; Nationwide Health
Properties, Inc.; Southern California Edison Company.
Address: 150 N. Orange Grove Boulevard, Pasadena,
California 91103.
Donn B. Miller Director of Pacific Mutual; President, Chief Executive
Director Officer and Director of Pearson-Sibert Oil Co. of Texas;
Director of: The Irvine Company; Automobile Club of
Southern California; St. John's Hospital and Health Center
Foundation; Former Senior Partner with the law firm of
O'Melveny & Meyers. Address: 136 El Camino, Suite 216,
Beverly Hills, California 90212.
Jacqueline C. Morby Director of Pacific Mutual, February 28, 1996 to present;
Director Managing Director, TA Associates, Inc., Director of Axent
Technologies Inc. Address: High Street Tower, Suite 2500,
125 High Street, Boston, Massachusetts 02110.
J. Fernando Niebla Director of Pacific Mutual, May 1995 to present; Director,
Director Chairman and Chief Executive Officer of Infotec
Development, Inc.; Director of: Bank of California; Defense
Policy Advisory Commission on Trade; California Commission
on Science and Technology; Center for Occupational Research
and Development. Address: 3611 South Harbor Boulevard,
Suite 260, Santa Ana, CA 92704.
Susan Westerberg Prager Director of Pacific Mutual; Dean of the UCLA School of Law
Director at the University of California at Los Angeles; Director of
Lucille Salter Packard Children's Hospital of Stanford.
Address: 405 Hilgard Avenue, Room 3374, Los Angeles,
California 90095-1476.
Richard M. Rosenberg Director of Pacific Mutual, November 1995 to present;
Director Chairman and Chief Executive Officer of BankAmerica
Corporation; Bank of America NT&SA; Director of: Airborne
Express Corporation; Northrop Grumman Corporation; Potlatch
Corporation; Pacific Telesis Group. Address: 555 California
Street, 40th Floor, San Francisco, California 94107.
James R. Ukropina Director of Pacific Mutual; Partner with the law firm of
Director O'Melveny & Myers; Former Chairman and Chief Executive
Officer of Pacific Enterprises; Director of Lockheed
Corporation; Trustee of Stanford University. Address:
400 S. Hope Street, 16th Floor, Los Angeles, California
90071-2899.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION LAST FIVE YEARS
----------------- ------------------------------------
<S> <C>
Raymond L. Watson Director of Pacific Mutual; Vice Chairman and Director of
Director The Irvine Company; Director of: The Walt Disney Company;
The Mitchell Energy and Development Company. Address: 550
Newport Center Drive, Ninth Floor, Newport Beach,
California 92660.
Lynn C. Miller Executive Vice President, Individual Insurance, of Pacific
Executive Vice President Mutual, January 1995 to present; Sr. Vice President,
Individual Insurance of Pacific Mutual 1989 to 1995.
David R. Carmichael Senior Vice President and General Counsel of Pacific Mutual,
Senior Vice President April 1992 to present; Vice President and Investment
and Counsel of Pacific Mutual, April 1989 to April 1992;
General Counsel Director of: Pacific Corinthian Life Insurance Company; PM
Group Life Insurance Company; Director of Association of
California Life Insurance Companies.
Marilee Roller Senior Vice President, Corporate Finance and Administration,
Senior Vice President of Pacific Mutual, January 1995 to present; President and
Chief Operating Officer of Pacific Corinthian Life
Insurance Company, 1992 to present; Vice President of
Pacific Mutual, 1994 and 1995; Vice President and
Controller of Pacific Mutual, 1990 to 1992, similar
positions with other subsidiaries of Pacific Mutual.
Audrey L. Milfs Vice President and Corporate Secretary of Pacific Mutual;
Vice President and Similar positions with other subsidiaries of Pacific
Corporate Secretary Mutual.
Edward Byrd Vice President and Controller of Pacific Mutual, June 1992
Vice President and to present; Vice President, Corporate Audit and Financial
Controller Planning of Pacific Mutual, November 1991 to June 1992;
Assistant Vice President, Corporate Audit of Pacific
Mutual, May 1990 to November 1991.
Khanh T. Tran Vice President and Treasurer of Pacific Mutual, November
Treasurer 1991 to present; Assistant Vice President and Treasurer of
Pacific Mutual, September 1990 to November 1991; Treasurer
to other subsidiaries of Pacific Mutual.
</TABLE>
No officer or director listed above receives any compensation from the
Separate Account. No separately allocable compensation has been paid by
Pacific Mutual or any of its affiliates to any person listed for services
rendered to the Account.
STATE REGULATION
We are subject to the laws of the state of California governing insurance
companies and to regulation by the Commissioner of Insurance of California. In
addition, we are subject to the insurance laws and regulations of the other
states and jurisdictions in which we are licensed or may become licensed to
operate. An annual statement in a prescribed form must be filed with the
Commissioner of Insurance of California and with regulatory authorities of
other states on or before March 1st in each year. This statement covers our
operations for the preceding year and our financial condition as of December
31st of that year. Our affairs are subject to review and examination at any
time by the Commissioner of Insurance or his agents, and subject to full
examination of our operations at periodic intervals.
TELEPHONE TRANSFER AND LOAN PRIVILEGES
You may request a transfer of Accumulated Value or a Policy Loan by
telephone if a properly completed Authorization for Telephone Requests
("Telephone Authorization") is on file at our Home Office. All or part of
35
<PAGE>
any telephone conversation with respect to transfer or loan instructions may
be recorded by us. Telephone instructions received by us by 1:00 P.M. Pacific
time, or the close of the New York Stock Exchange, if earlier, on any
Valuation Date will be effected as of the end of that Valuation Date in
accordance with your instructions (presuming that the Free-Look Period has
expired). We reserve the right to deny any telephone transfer or loan request.
If all telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), you might not be able to request
transfers and loans by telephone and would have to submit written requests.
We have established procedures to confirm that instructions communicated by
telephone are genuine. Under the procedures, any person requesting a transfer
by telephone must provide certain personal identification as requested by us,
and we will send a written confirmation of all transfers requested by
telephone within 7 days of the transfer. Upon your submission of a Telephone
Authorization, you authorize us to accept and act upon telephonic instructions
for transfers or loans involving your Policy, and agree that neither Pacific
Mutual, any of our affiliates, Pacific Select Fund, nor any of their
directors, trustees, officers, employees or agents, will be liable for any
loss, damages, cost, or expense (including attorneys fees) arising out of any
requests effected in accordance with the Telephone Authorization and believed
by us to be genuine, provided that we have complied with our procedures. As a
result of this policy on telephonic requests, you will bear the risk of loss
arising from the telephone transfer and loan privileges.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Account is a party, or
which would materially affect the Account.
LEGAL MATTERS
Legal matters in connection with the issue and sale of the Policies
described in this Prospectus and the organization of Pacific Mutual, our
authority to issue the Policies under California law, and the validity of the
forms of the Policies under California law have been passed on by our General
Counsel.
Legal matters relating to the federal securities and federal income tax laws
have been passed upon by Dechert Price & Rhoads.
REGISTRATION STATEMENT
A Registration Statement under the Securities Act of 1933 has been filed
with the SEC relating to the offering described in this Prospectus. This
Prospectus does not include all of the information set forth in the
Registration Statement, as portions have been omitted pursuant to the rules
and regulations of the SEC. The omitted information may be obtained at the
SEC's principal office in Washington, D.C., upon payment of the SEC's
prescribed fees.
INDEPENDENT ACCOUNTANTS
The audited financial statements for the Separate Account and for Pacific
Mutual included in this Prospectus and in the Registration Statement have been
audited by Deloitte & Touche LLP, independent certified public accountants, as
indicated in their report hereon, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
The audited financial statements for the Separate Account as of and for the
years ended December 31, 1995 and 1994, are set forth herein, starting on page
37. The audited financial statements of Pacific Mutual as of and for the years
ended December 31, 1995 and 1994 are set forth herein starting on page 44.
The financial statements of the Separate Account and Pacific Mutual have
been audited by Deloitte & Touche LLP. The financial statements of Pacific
Mutual should be distinguished from the financial statements of the Separate
Account and should be considered only as bearing upon our ability to meet our
obligations under the Policies.
36
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pacific Mutual Life Insurance Company
We have audited the accompanying statements of assets and liabilities of the
Pacific Select Separate Account (comprised of the Money Market, Managed Bond,
Government Securities, High Yield Bond, Growth, Equity Income, Multi-Strategy,
International, Equity Index, and Growth LT Variable Accounts) as of December 31,
1995 and the related statements of operations for the year then ended and
statements of changes in net assets for each of the two years ended December 31,
1995 and 1994. These financial statements are the responsibility of the
Separate Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective Variable
Accounts constituting the Pacific Select Separate Account as of December 31,
1995 and the results of their operations for the year then ended and the changes
in their net assets for each of the two years then ended, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 16, 1996
37
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1995
(In thousands)
<TABLE>
<CAPTION>
High
Money Managed Government Yield
Market Bond Securities Bond Growth
Variable Variable Variable Variable Variable
Account Account Account Account Account
ASSETS -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Investments in Pacific Select Fund:
Money Market Portfolio (139 shares; cost $1,395)....... $ 1,388
Managed Bond Portfolio (43 shares; cost $445).......... $ 474
Government Securities Portfolio (33 shares; cost $358). $ 361
High Yield Bond Portfolio (380 shares; cost $3,398).... $ 3,722
Growth Portfolio (429 shares; cost $6,741)............. $ 7,959
Equity Income Portfolio (130 shares; cost $1,915)......
Multi-Strategy Portfolio (61 shares; cost $713)........
International Portfolio (122 shares; cost $1,458)......
Equity Index Portfolio (15 shares; cost $189)..........
Growth LT Portfolio (65 shares; cost $803).............
-------- -------- -------- -------- --------
TOTAL ASSETS.............................................. 1,388 474 361 3,722 7,959
-------- -------- -------- -------- --------
LIABILITIES
Payables:
Mortality and expense risk fee.......................... 1 2 5
-------- -------- -------- -------- --------
TOTAL LIABILITIES......................................... 1 2 5
-------- -------- -------- -------- --------
NET ASSETS................................................ $ 1,387 $ 474 $ 361 $ 3,720 $ 7,954
======== ======== ======== ======== ========
<CAPTION>
Equity Multi- Inter- Equity Growth
Income Strategy national Index LT
Variable Variable Variable Variable Variable
Account Account Account Account Account
ASSETS -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Investments in Pacific Select Fund:
Money Market Portfolio (139 shares; cost $1,395).......
Managed Bond Portfolio (43 shares; cost $445)..........
Government Securities Portfolio (33 shares; cost $358).
High Yield Bond Portfolio (380 shares; cost $3,398)....
Growth Portfolio (429 shares; cost $6,741).............
Equity Income Portfolio (130 shares; cost $1,915)...... $ 2,362
Multi-Strategy Portfolio (61 shares; cost $713)........ $ 858
International Portfolio (122 shares; cost $1,458)...... $ 1,572
Equity Index Portfolio (15 shares; cost $189).......... $ 264
Growth LT Portfolio (65 shares; cost $803)............. $ 919
-------- -------- -------- -------- --------
TOTAL ASSETS.............................................. 2,362 858 1,572 264 919
-------- -------- -------- -------- --------
LIABILITIES
Payables:
Mortality and expense risk fee.......................... 1 1 1
-------- -------- -------- -------- --------
TOTAL LIABILITIES......................................... 1 1 1
-------- -------- -------- -------- --------
NET ASSETS................................................ $ 2,361 $ 858 $ 1,571 $ 264 $ 918
======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands)
<TABLE>
<CAPTION>
High
Money Managed Government Yield Equity
Market Bond Securities Bond Growth Income
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................................... $ 77 $ 26 $ 19 $ 278 $ 66 $ 36
EXPENSES
Mortality and expense risk fee.............................. 10 2 2 24 52 16
--------- --------- --------- --------- --------- ---------
NET INVESTMENT INCOME........................................ 67 24 17 254 14 20
--------- --------- --------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions......... (2) 1 (3) 15 155 136
Net unrealized appreciation on investments.................. 3 36 42 304 1,508 451
--------- --------- --------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS.............................................. 1 37 39 319 1,663 587
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................................... 68 61 56 573 1,677 607
========= ========= ========= ========= ========= =========
<CAPTION>
Multi- Inter- Equity Growth
Strategy national Index LT
Variable Variable Variable Variable
Account Account Account Account
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................................... $ 26 $ 30 $ 6 $ 63
--------- --------- --------- ---------
EXPENSES
Mortality and expense risk fee.............................. 5 10 2 4
--------- --------- --------- ---------
NET INVESTMENT INCOME........................................ 21 20 4 59
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions......... 32 25 24 15
Net unrealized appreciation on investments.................. 115 111 52 112
--------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS.............................................. 147 136 76 127
--------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................................... $ 168 $ 156 $ 80 $ 186
========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
39
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands)
<TABLE>
<CAPTION>
High
Money Managed Government Yield Equity
Market Bond Securities Bond Growth Income
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income..................................... $ 67 $ 24 $ 17 $ 254 $ 14 $ 20
Net realized gain (loss) from security transactions....... (2) 1 (3) 15 155 136
Net unrealized appreciation on investments................ 3 36 42 304 1,508 451
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................................. 68 61 56 573 1,677 607
--------- --------- --------- --------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfers--policy charges and deductions.................. (51) (8) (29) (68) (211) (162)
Transfers in (from other variable accounts)............... 35 330 25 47 1,201 498
Transfers out (to other variable accounts)................ (1,065) (22) (16) (34) (1,098) (927)
Transfers--other.......................................... (2) 1 (8) 7
--------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS.......................... (1,083) 301 (20) (55) (116) (584)
--------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS...................... (1,015) 362 36 518 1,561 23
NET ASSETS
Beginning of year......................................... 2,402 112 325 3,202 6,393 2,338
--------- --------- --------- --------- --------- ---------
End of year............................................... $ 1,387 $ 474 $ 361 $ 3,720 $ 7,954 $ 2,361
========= ========= ========= ========= ========= =========
<CAPTION>
Multi- Inter- Equity Growth
Strategy national Index LT
Variable Variable Variable Variable
Account Account Account Account
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income..................................... $ 21 $ 20 $ 4 $ 59
Net realized gain (loss) from security transactions....... 32 25 24 15
Net unrealized appreciation on investments................ 115 111 52 112
--------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................................. 168 156 80 186
--------- --------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfers--policy charges and deductions.................. (15) (131) (56) (19)
Transfers in (from other variable accounts)............... 15 473 688
Transfers out (to other variable accounts)................ (70) (9) (32)
Transfers--other.......................................... (2) 1 (1)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS.......................... 0 270 (64) 636
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS...................... 168 426 16 822
NET ASSETS
Beginning of year......................................... 690 1,145 248 96
--------- --------- --------- ---------
End of year............................................... $ 858 $ 1,571 $ 264 $ 918
========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In thousands)
<TABLE>
<CAPTION>
High
Money Managed Government Yield
Market Bond Securities Bond Growth
Variable Variable Variable Variable Variable
Account Account Account Account Account
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income......................................... $ 46 $ 46 $ 13 $ 252 $ 501
Net realized gain (loss) from security transactions........... 2 (50) (6) 6 118
Net unrealized appreciation (depreciation)
on investments............................................... (9) (86) (30) (268) (1,427)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS..................................... 39 (90) (23) (10) (808)
-------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums
Transfers--policy charges and deductions...................... (35) (24) (66) (13) (241)
Transfers in (from other variable accounts)................... 2,332 142 38 64 345
Transfers out (to other variable accounts).................... (460) (2,301) (38) (85) (225)
Transfers--other.............................................. (1) 1
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS.............................. 1,837 (2,184) (66) (34) (120)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS........................... 1,876 (2,274) (89) (44) (928)
NET ASSETS
Beginning of year............................................. 526 2,386 414 3,246 7,321
-------- -------- -------- -------- --------
End of year................................................... $ 2,402 $ 112 $ 325 $ 3,202 $ 6,393
======== ======== ======== ======== ========
<CAPTION>
Equity Multi- Inter- Equity Growth
Income Strategy national Index LT
Variable Variable Variable Variable Variable
Account Account Account Account Account
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income......................................... $ 201 $ 37 $ 39 $ 5 $ 1
Net realized gain (loss) from security transactions........... 50 24 52 9
Net unrealized appreciation (depreciation)
on investments............................................... (274) (76) (65) (13) 4
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS..................................... (23) (15) 26 1 5
-------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums...................................... 1
Transfers--policy charges and deductions...................... (158) (58) (129) (59) (1)
Transfers in (from other variable accounts)................... 384 32 328 8 92
Transfers out (to other variable accounts).................... (356) (116) (179) (2)
Transfers--other.............................................. (1)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS.............................. (129) (142) 19 (53) 91
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS........................... (152) (157) 45 (52) 96
NET ASSETS
Beginning of year............................................. 2,490 847 1,100 300
-------- -------- -------- -------- --------
End of year................................................... $ 2,338 $ 690 $ 1,145 $ 248 $ 96
======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Pacific Select Separate Account (the "Separate Account") is registered
as a unit investment trust under the Investment Company Act of 1940, as amended,
and is currently comprised of ten subaccounts ("Variable Accounts"): the Money
Market Variable Account, the Managed Bond Variable Account, the Government
Securities Variable Account, the High Yield Bond Variable Account, the Growth
Variable Account, the Equity Income Variable Account, the Multi-Strategy
Variable Account, the International Variable Account, the Equity Index Variable
Account, and the Growth LT Variable Account. The assets in each Variable Account
are invested in shares of the corresponding portfolios of Pacific Select Fund
(the "Fund"), each of which pursues different investment objectives and
policies.
The Separate Account was established by Pacific Mutual Life Insurance
Company ("Pacific Mutual") on November 20, 1986 and commenced operations on
January 7, 1988. Under applicable insurance law, the assets and liabilities of
the Separate Account are clearly identified and distinguished from the other
assets and liabilities of Pacific Mutual. The assets of the Separate Account
will not be charged with any liabilities arising out of any other business
conducted by Pacific Mutual, but the obligations of the Separate Account,
including benefits related to variable life insurance, are obligations of
Pacific Mutual.
The Separate Account held by Pacific Mutual represents funds from
individual flexible premium variable life policies. The assets of these accounts
are carried at market value.
The preparation of the accompanying financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual results could
differ from those estimates.
A. Valuation of Investments
Investments in shares of the Fund are valued at the reported net asset
values of the respective portfolios.
B. Security Transactions
Transactions are recorded on the trade date. Realized gains and losses on
sales of investments are determined on the identified cost basis.
C. Federal Income Taxes
The operations of the Separate Account will be reported on the Federal
income tax return of Pacific Mutual, which is taxed as a life insurance company
under the provisions of the Tax Reform Act of 1986. Under current tax law, no
Federal income taxes are expected to be paid by Pacific Mutual with respect to
the operations of the Separate Account.
2. DIVIDENDS
During 1995, the Fund has declared dividends for each portfolio. The
amounts accrued by the Separate Account for its share of the dividends were
reinvested in additional full and fractional shares of each related portfolio.
3. CHARGES AND EXPENSES
Pacific Mutual charges the Separate Account daily for mortality and expense
risks assumed with respect to variable life insurance policies funded by the
Separate Account at an annual rate of 0.70% of the average daily net assets of
each Variable Account. Under the policies, Pacific Mutual makes certain
deductions from the net assets of each Variable Account for sales load,
administrative expenses, state premium taxes, cost of insurance and charges for
optional benefits. The operating expenses of the Separate Account are paid by
Pacific Mutual.
4. RELATED PARTY AGREEMENT
Pacific Equities Network, a wholly-owned subsidiary of Pacific Mutual, is
the principal underwriter of variable life insurance policies funded by
interests in the Separate Account, and is compensated by Pacific Mutual.
42
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
5. SELECTED ACCUMULATION UNIT** INFORMATION
Selected accumulation unit information for the year ended December 31, 1995
were as follows:
<TABLE>
<CAPTION>
High
Money Managed Government Yield
Market Bond Securities Bond Growth
Variable Variable Variable Variable Variable
Account Account Account Account Account
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
ACCUMULATION UNIT
VALUE:
Beginning $ 13.79 $ 16.61 $ 16.00 $ 17.92 $ 22.10
======= ======= ======= ======= =======
Ending $ 14.45 $ 19.64 $ 18.89 $ 21.16 $ 27.60
======= ======= ======= ======= =======
Number of Units Outstanding at
End of Period 95,991 24,119 19,115 175,781 288,191
<CAPTION>
Equity Multi- Inter- Equity Growth
Income Strategy national Index LT
Variable Variable Variable Variable Variable
Account Account Account Account Account
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ACCUMULATION UNIT
VALUE:
Beginning $ 17.71 $ 16.93 $ 15.34 $ 13.42 $ 11.25
======= ======= ======= ======= =======
Ending $ 23.16 $ 21.06 $ 16.84 $ 18.26 $ 15.28
======= ======= ======= ======= =======
Number of Units Outstanding at
End of Period 101,952 40,731 93,332 14,450 60,068
</TABLE>
- ------------
**Accumulation Unit: unit of measure used to calculate the value of a Contract
Owner's interest in a Variable Account during the Accumulation Period.
43
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Pacific Mutual Life Insurance Company:
We have audited the accompanying statements of financial position of
Pacific Mutual Life Insurance Company as of December 31, 1995 and 1994,
and the related statements of operations and surplus, and of cash flow
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of Pacific Mutual Life
Insurance Company as of December 31, 1995 and 1994, and the results of
its operations and its cash flow for the years then ended, in conformity
with accounting practices prescribed or permitted by the Insurance
Department of the State of California and with generally accepted
accounting principles.
February 23, 1996
44
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1995 1994
- ------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ASSETS
Bonds $ 6,699,489 $ 6,669,853
Preferred stocks 156,097 132,604
Common stocks 54,504 57,874
Unconsolidated subsidiaries 182,040 196,401
Mortgage loans 1,388,743 1,421,182
Real estate 145,178 157,507
Home office properties 48,446 51,419
Policy loans 2,700,544 2,312,455
Cash and short-term investments 262,527 97,745
Investment income due and accrued 135,607 125,534
Premiums due and uncollected, and other assets 295,159 245,243
Separate account assets 5,520,478 3,260,374
- ------------------------------------------------------------------------
TOTAL ASSETS $17,588,812 $14,728,191
- ------------------------------------------------------------------------
LIABILITIES AND SURPLUS
Liabilities
Policy reserves $ 7,204,362 $ 6,476,634
Deposit funds 3,262,340 3,298,915
Other liabilities 686,989 885,638
Asset valuation reserve 191,392 179,006
Separate account liabilities 5,520,478 3,260,374
- ------------------------------------------------------------------------
Total Liabilities 16,865,561 14,100,567
Surplus 723,251 627,624
- ------------------------------------------------------------------------
TOTAL LIABILITIES AND SURPLUS $17,588,812 $14,728,191
- ------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
45
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF OPERATIONS AND SURPLUS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums, annuity considerations and deposit funds $ 2,919,920 $ 2,180,409
Net investment income 945,546 879,116
Other income 5,685 5,073
- ------------------------------------------------------------------------------
TOTAL REVENUES 3,871,151 3,064,598
- ------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 3,371,448 2,659,601
Operating expenses 309,588 249,018
Premium and other taxes (excluding tax on capital
gains) 35,168 28,705
Dividends to policyowners 16,639 17,162
- ------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 3,732,843 2,954,486
- ------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 138,308 110,112
Federal income taxes 59,470 41,510
- ------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 78,838 68,602
NET REALIZED CAPITAL GAINS 6,311 12,424
- ------------------------------------------------------------------------------
NET INCOME $ 85,149 $ 81,026
- ------------------------------------------------------------------------------
SURPLUS
Net income $ 85,149 $ 81,026
Other surplus transactions, net 10,478 (36,178)
- ------------------------------------------------------------------------------
Increase in surplus 95,627 44,848
Surplus, beginning of year 627,624 582,776
- ------------------------------------------------------------------------------
SURPLUS, END OF YEAR $ 723,251 $ 627,624
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
46
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Receipts
Premiums, annuity considerations and deposit
funds $ 2,687,698 $ 1,687,583
Net investment income 927,918 809,791
Allowances and reserve adjustments on reinsurance
ceded 187,380 491,363
Other 13,885 23,862
Payments
Policy benefit payments (1,677,788) (1,408,650)
Net policy loans (388,320) (352,358)
Operating expenses (278,138) (247,437)
Net transfer to separate accounts (1,178,622) (594,284)
Premium and other taxes (41,116) (34,795)
Dividends to policyowners (16,715) (17,319)
Federal income taxes (35,779) (23,995)
- -------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES $ 200,403 $ 333,761
- -------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds
Bonds $ 2,496,486 $ 2,937,210
Stocks 208,235 139,785
Mortgage loans 261,514 390,642
Real estate 21,419 20,163
Other investments 49,089 47,132
Payments for the purchase of
Bonds (2,431,687) (3,673,859)
Stocks (222,678) (126,823)
Mortgage loans (239,355) (230,859)
Real estate (4,716) (17,466)
Other investments (124,164) (114,106)
- -------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY (USED IN)
INVESTING ACTIVITIES $ 14,143 $ (628,181)
- -------------------------------------------------------------------------------
</TABLE>
(Continued)
See Notes to Financial Statements
47
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended December 31,
(Continued) 1995 1994
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Issuance (repayment) of short-term borrowings $ (49,764) $ 49,764
- ------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY (USED IN) FINANCING
ACTIVITIES (49,764) 49,764
- ------------------------------------------------------------------------------
Increase (decrease) in cash and short-term
investments 164,782 (244,656)
Cash and short-term investments, beginning of year 97,745 342,401
- ------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 262,527 $ 97,745
- ------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 18,376 $ 22,120
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
48
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Pacific Mutual Life Insurance Company ("Pacific Mutual") was established
in 1868 and is organized under the laws of the State of California as a
mutual life insurance company. Pacific Mutual conducts business in every
state except New York.
Pacific Mutual, including its subsidiaries and affiliates, has primary
business segments which consist of life insurance, annuities, pension
products, group employee benefits and investment management and advisory
services. These primary business segments provide products for
individuals and corporations and offer a range of investment products to
institutions and pension plans.
BASIS OF PRESENTATION
Pacific Mutual's financial statements are prepared in accordance with
accounting practices prescribed or permitted by the Insurance Department
of the State of California, which are currently considered generally
accepted accounting principles ("GAAP") for mutual life insurance
companies. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations, and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The financial statements of Pacific Mutual
are not consolidated with those of its subsidiaries.
The Financial Accounting Standards Board ("FASB") has issued certain
pronouncements effective for 1996 financial statements and thereafter
that will no longer allow statutory financial statements of mutual life
insurance companies to be described as being prepared in conformity with
GAAP.
Upon the effective date of these pronouncements, in order for their
financial statements to be described as being prepared in accordance with
GAAP, mutual life insurance companies and their insurance subsidiaries
will be required to adopt all applicable authoritative GAAP
pronouncements in any general purpose financial statements that they may
issue. Pacific Mutual intends to issue 1996 general purpose financial
statements reflecting the adoption of all applicable GAAP pronouncements.
INVESTMENTS
Bonds qualifying for amortization are carried at amortized cost; all
other bonds are carried at prescribed values. Preferred stocks are
principally stated at amortized cost. Unaffiliated common stocks are
carried at market value. Investments in unconsolidated subsidiaries are
reported on the equity method of accounting, except for Pacific
Corinthian Life Insurance Company ("PCL") (Note 2) which is carried at
cost.
Mortgage loans and policy loans are stated at unpaid principal balances.
Real estate is valued at the lower of depreciated cost or market, less
related mortgage debt. Real estate is depreciated using the straight-line
method over 30 years.
Short-term investments generally mature within a year and are carried at
amortized cost which approximates estimated fair value.
The Asset Valuation Reserve ("AVR") is computed in accordance with a
prescribed formula and is designed to stabilize surplus against valuation
and credit-related losses for certain invested assets. Changes to the AVR
are reported as direct additions or deductions from surplus. The Interest
Maintenance Reserve ("IMR"), included in other liabilities on the
accompanying statements of financial position, results in the deferral of
after-tax realized capital gains and losses attributable to interest rate
fluctuations on fixed income investments. These capital gains and losses
are amortized into investment income over the remaining life of the
investment sold. The IMR was $25.3 million and $13.1 million as of
December 31, 1995 and 1994, respectively.
49
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net realized capital gains and losses are determined on the specific
identification method and are presented net of federal capital gains tax
of $18.5 million and $(2.3) million and transfers to the IMR of $22.6
million and $(.4) million for the years ended December 31, 1995 and 1994,
respectively.
Derivatives which qualify for hedge accounting are valued consistently
with the hedged items. Realized hedged gains and losses on fixed income
contracts are deferred and amortized over the average life of the related
hedged assets or insurance liabilities. Realized gains and losses on
equity securities, which are marked to market, are recognized
immediately. Derivatives which do not qualify for hedge accounting are
valued at market value through surplus while still held and when realized
through income.
On November 15, 1994, Pacific Financial Asset Management Corporation
("PFAMCo"), a wholly-owned, subsidiary of Pacific Mutual, and five of its
subsidiaries (Pacific Investment Management Company and subsidiaries,
Parametric Portfolio Associates, Inc., Cadence Capital Management
Corporation, NFJ Investment Group, Inc. and Blairlogie Capital Management
Limited) entered into an agreement and plan of consolidation with Thomson
Advisory Group L.P., a Delaware limited partnership with publicly traded
units, to merge into a newly capitalized partnership named PIMCO Advisors
L.P. Collectively, PFAMCo and various of its subsidiaries beneficially
own approximately 42% of the outstanding general and limited partner
units of PIMCO Advisors L.P. as of December 31, 1995 and 1994. Net cash
distributions received on these units are recorded as income as permitted
by the Insurance Department of the State of California.
On December 21, 1995, Pacific Mutual completed a subsidiary
reorganization in which PFAMCo became a direct, wholly-owned subsidiary
of Pacific Mutual. Prior to that PFAMCo was a wholly-owned second-tier
subsidiary of Pacific Mutual. The intermediate company, Pacific Financial
Holding Company ("PFHC") and certain of its assets and liabilities were
merged into PFAMCo in connection with this reorganization. The remaining
assets were merged into Pacific Mutual which consisted of investments in
subsidiaries as follows: Pacific Equities Network, PM Group Life
Insurance Company and PFAMCo.
POLICY RESERVES AND DEPOSIT FUNDS
Life insurance reserves are valued using the net level premium method,
the Commissioners' Reserve Valuation Method, or other modified reserve
methods.
Reserves for individual annuities are maintained principally on the
Commissioners' Annuity Reserve Valuation Method. Group annuity contract
reserves are valued using the net single premium method.
The liability for deposit funds, including guaranteed interest contracts,
is based primarily upon and is not less than the policyowners' equity in
their deposit accounts, including credited interest.
REVENUES AND EXPENSES
Premiums are recognized as income over the premium paying period.
Deposits made in connection with annuity contracts are recognized as
revenue when received. Investment income is recorded as earned.
Expenses, including policy acquisition costs, such as commissions, and
Federal income taxes are charged to operations as incurred.
DIVIDENDS
Dividends are provided based on dividend formulas approved by the Board
of Directors and reviewed for reasonableness and equitable treatment of
policyowners by an independent consulting actuary.
50
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
Pacific Mutual is taxed as a life insurance company for Federal income
tax purposes. Pacific Mutual's income tax return is consolidated with all
its includable domestic subsidiaries except PCL. The amount of Federal
income tax expense includes an equity tax calculated by a prescribed
formula that incorporates a differential earnings rate between stock and
mutual life insurance companies. Under prescribed statutory accounting
practices, deferred tax assets and liabilities are not recorded. The
difference between the effective tax rate and the statutory tax rate of
35% for 1995 and 1994 is primarily due to certain policy acquisition
costs being deferred and amortized over a ten-year period for tax
purposes, reserve differences, non-taxable investment income and the
equity tax.
OTHER SURPLUS TRANSACTIONS
Other surplus transactions consist primarily of unrealized capital gains
and losses, changes in nonadmitted assets, and changes in the AVR.
SEPARATE ACCOUNTS
Separate account assets are recorded at market value and the related
liabilities represent segregated contract owner funds maintained in
accounts with individual investment objectives. The investment results of
separate account assets generally pass through to separate account policy
owners and contract owners.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments disclosed in Notes 3
and 4 have been determined using available market information and
appropriate valuation methodologies. However, considerable judgment is
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented may not be indicative of the amounts
Pacific Mutual could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies could have a
significant effect on the estimated fair value amounts.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
practices prescribed or permitted by regulatory authorities and generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1995
financial statement presentation.
2. REHABILITATION OF FIRST CAPITAL LIFE INSURANCE COMPANY
Pursuant to a five-year rehabilitation agreement approved by a California
Superior Court and the Insurance Department of the State of California in
July 1992, Pacific Mutual, through its wholly-owned subsidiary, PCL, will
facilitate the rehabilitation of First Capital Life Insurance Company
("FCL"). In accordance with the rehabilitation agreement, insurance
policies of FCL were restructured and assumed by PCL on December 31,
1992.
The rehabilitation agreement provides for the holders of restructured
policies to share in a substantial percentage of the unallocated surplus
of PCL at the end of the rehabilitation period. Policyholders have the
option to surrender their restructured policies with reduced benefits
during this five-year period. During the rehabilitation
51
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
2. REHABILITATION OF FIRST CAPITAL LIFE INSURANCE COMPANY (CONTINUED)
plan period, PCL is prohibited from issuing new insurance policies. At
the end of the rehabilitation period, PCL will merge into Pacific Mutual,
with Pacific Mutual as the surviving entity. Substantially all of the
assets and certain of the liabilities of FCL were assumed by PCL on
December 31, 1992, pursuant to an assumption reinsurance agreement and
asset purchase agreement.
In accordance with the rehabilitation agreement, PCL was capitalized by a
cash contribution of $8.3 million from Pacific Mutual and a $45 million
certificate of contribution provided by a wholly-owned subsidiary of
Pacific Mutual for a total of $53.3 million initial capitalization.
In the event PCL is unable to pay contract benefits, Pacific Mutual is
obligated to contribute funds to pay those benefits in accordance with
the rehabilitation agreement.
3. INVESTMENTS IN DEBT SECURITIES
The statement value, gross unrealized gains and losses and estimated fair
value of bonds and redeemable preferred stocks ("debt securities"),
including short-term investments, are shown below. The estimated fair
value of publicly traded securities was based on quoted market prices.
For securities not actively traded, estimated fair values were provided
by independent pricing services specializing in "matrix pricing" and
modeling techniques. Pacific Mutual also estimates certain fair values
based on interest rates, credit quality and average maturity or from
securities with comparable trading characteristics.
<TABLE>
<CAPTION>
Gross Unrealized Estimated
Statement ----------------- Fair
Value Gains Losses Value
---------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
December 31, 1995:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 147,436 $ 28,214 $ 175,650
Obligations of states, political
subdivisions and foreign
governments 452,273 66,960 $ 3,064 516,169
Corporate securities 3,901,979 442,497 46,539 4,297,937
Mortgage-backed securities 2,438,052 116,650 10,106 2,544,596
Redeemable preferred stock 89,191 2,840 2,472 89,559
---------------------------------------
Total $7,028,931 $657,161 $ 62,181 $7,623,911
---------------------------------------
December 31, 1994:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 216,201 $ 1,064 $ 37,113 $ 180,152
Obligations of states, political
subdivisions and foreign
governments 321,798 5,371 16,309 310,860
Corporate securities 3,771,271 104,311 160,712 3,714,870
Mortgage-backed securities 2,475,472 28,472 81,111 2,422,833
Redeemable preferred stock 81,026 343 5,031 76,338
---------------------------------------
Total $6,865,768 $139,561 $300,276 $6,705,053
---------------------------------------
</TABLE>
52
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS IN DEBT SECURITIES (CONTINUED)
The statement value and estimated fair value of debt securities as of
December 31, 1995 by contractual repayment date of principal are shown
below. Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Statement Fair
Value Value
-----------------------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 445,645 $ 449,283
Due after one year through five years 1,319,487 1,426,373
Due after five years through ten years 1,409,209 1,542,228
Due after ten years 1,416,538 1,661,431
-----------------------
4,590,879 5,079,315
Mortgage-backed securities 2,438,052 2,544,596
-----------------------
Total $ 7,028,931 $ 7,623,911
-----------------------
</TABLE>
Proceeds from sales of investments in debt securities were $1.4 billion
and $1.5 billion for the years ended December 31, 1995 and 1994,
respectively. In 1995 and 1994, gross gains of $36 million and $30
million and gross losses of $14 million and $43 million, respectively,
were realized on those sales.
4. FINANCIAL INSTRUMENTS
The estimated fair values of Pacific Mutual's financial instruments,
including debt securities, are as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
Statement Estimated Statement Estimated
Value Fair Value Value Fair Value
-----------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
Assets:
Debt securities
(Note 3) $ 7,028,931 $ 7,623,911 $ 6,865,768 $ 6,705,053
Preferred and common
stocks 121,420 139,613 109,458 116,993
Mortgage loans 1,388,743 1,500,000 1,421,182 1,452,596
Policy loans 2,700,544 2,700,544 2,312,455 2,312,455
Derivative financial
instruments:
Interest rate swaps 1,068 3,379 121 (24,809)
Other 18,008 30,649 2,672 (2,822)
Liabilities:
Guaranteed interest
contracts 2,375,898 2,459,323 2,635,356 2,614,961
Deposit liabilities 876,276 899,393 897,743 859,469
Annuity liabilities 308,742 311,441 220,026 223,423
Other derivative fi-
nancial instruments 2,373 1,490 2,270 2,128
Surplus:
Contribution certifi-
cates 149,596 157,688 149,593 124,313
</TABLE>
53
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
The following methods and assumptions were used to estimate the fair
values of these financial instruments as of December 31, 1995 and 1994:
PREFERRED AND COMMON STOCKS
The estimated fair values are based on quoted market prices or dealer
quotes.
MORTGAGE LOANS
The estimated fair value of the mortgage loan portfolio is determined by
discounting the estimated future cash flows, using a year-end market rate
which is applicable to the yield, credit quality and average maturity of
the composite portfolio.
POLICY LOANS
The statement value of policy loans is a reasonable estimate of their
fair value.
GUARANTEED INTEREST CONTRACTS AND DEPOSIT LIABILITIES
The estimated fair values of fixed-maturity guaranteed interest contracts
are estimated using the rates currently offered for deposits of similar
remaining maturities. The estimated fair values of deposit liabilities
with no defined maturities are the amounts payable on demand.
Pacific Mutual has issued PRO GIC and Diversifier GIC contracts to plan
sponsors totaling $914 million as of December 31, 1995, pursuant to the
terms of which the plan sponsor retains direct ownership and control of
the assets related to these contracts. Pacific Mutual agrees to provide
benefit responsiveness in the event that plan benefit requests exceed
plan cash flows. In return for this guarantee, Pacific Mutual receives a
fee which varies by contract. Pacific Mutual sets the investment
guidelines to provide for appropriate credit quality and cash flow
matching.
ANNUITY LIABILITIES
The fair value of annuity liabilities approximates statement value and
primarily includes policyholder deposits and accumulated credited
interest.
DERIVATIVE FINANCIAL INSTRUMENTS
Pacific Mutual utilizes certain derivative financial instruments to
diversify its business risk and to minimize its exposure to fluctuations
in market prices, interest rates, or basis risk. Pacific Mutual has also
set aside a corporate total return portfolio utilizing derivative
financial instruments. These instruments include interest rate and
currency swaps, asset swaps, credit derivatives, forwards, options held,
options written, and futures contracts, and involve elements of credit
risk and market risk in excess of amounts recognized in the accompanying
financial statements. The notional amounts of those instruments reflect
the extent of involvement in those various types of financial
instruments. The estimated fair values of these instruments are based on
market or dealer quotes. Pacific Mutual determines, on an individual
counterparty basis, the need for collateral or other security to support
financial instruments with off-balance sheet credit risks.
54
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
Options and Floors
------------------
Pacific Mutual uses options and floors to hedge against fluctuations in
interest rates and in its corporate total return portfolio. Cash
requirements on options held are limited to the premium paid by Pacific
Mutual at acquisition. Pacific Mutual uses written options on a limited
basis consisting primarily of covered calls. Gains and losses on covered
calls are offset by gains and losses on the underlying position. Options
and floors held are reported as assets and options written are reported
as liabilities. As of December 31, 1995, the notional amount of options
held and options written approximated $1.3 billion and $30 million,
respectively. As of December 31, 1994, the notional amount of options
held and options written approximated $1.5 billion and $42 million,
respectively. Option contracts mature during 1996 through 2007.
Interest Rate Swap Contracts
----------------------------
Pacific Mutual has entered into interest rate swap contracts to reduce
the impact of changes in interest rates on its variable short-term and
long-term investments. These contracts effectively change the interest
rate exposure on variable rate notes to fixed rates which range from 1.9%
to 8.9% as of December 31, 1995, and from 1.9% to 8.6% as of December 31,
1994. Interest rate swap contracts mature during 1996 through 2013. As of
December 31, 1995 and 1994, interest rate swap contracts outstanding with
financial institutions had a total notional amount of $656 million and
$411 million, respectively.
Asset Swap Contracts
--------------------
Pacific Mutual has entered into an asset swap contract to reduce interest
rate risk by shortening both the duration and maturity of one of its
fixed rate investments. The asset swap contract matures during 1998. As
of December 31, 1995, the asset swap contract had a notional amount of
$10 million.
Credit Derivatives
------------------
Pacific Mutual uses credit derivatives to take advantage of market
opportunities. As of December 31, 1995 and 1994, the notional amount of
credit derivatives outstanding approximated $90 million and $66 million,
respectively. Credit derivatives mature during 1996 through 2000.
Foreign Currency Exchange Contracts
-----------------------------------
Pacific Mutual enters into foreign currency exchange contracts that are
used to hedge against fluctuations in foreign currency-denominated assets
and related income. Gains and losses on such agreements offset currency
gains and losses on the related assets. As of December 31, 1995 and 1994,
the notional amount of foreign currency exchange contracts approximated
$15 million and $35 million, respectively. Foreign currency exchange
contracts expire during 1998 and 1999.
Future Contracts
----------------
Pacific Mutual uses exchange-traded futures contracts for asset and
liability management of fixed maturity securities and insurance
liabilities and for hedging market fluctuations on equity securities.
Price changes on futures are settled daily through the daily margin cash
flows. As of December 31, 1995 and 1994, the notional amounts of futures
contracts were $340 million and $163 million, respectively. The notional
amounts of the contracts do not represent future cash requirements, as
Pacific Mutual intends to close out open positions prior to expiration.
55
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
CONTRIBUTION CERTIFICATES
The estimated fair value of contribution certificates is based on market
quotes.
5. CONCENTRATION OF CREDIT RISK
Pacific Mutual manages its investments to limit credit risk by
diversifying its portfolio among various security types and industry
sectors. The credit risk of financial instruments is controlled through
credit approvals, limits and monitoring procedures. Real estate and
mortgage loan investments are diversified by geographic location and
property type. Management believes that significant concentrations of
credit risk do not exist.
Pacific Mutual is exposed to credit loss in the event of nonperformance
by the other parties to the interest rate swaps contracts and other
derivative securities. However, Pacific Mutual does not anticipate
nonperformance by the counterparties.
6. UNCONSOLIDATED SUBSIDIARIES
Pacific Mutual's subsidiary operations primarily include other life and
health insurance and investment management and advisory services. As of
December 31, 1995 and 1994, subsidiary assets were $4.5 billion and
liabilities were $4.3 billion as of December 31, 1995 and $4.2 billion as
of December 31, 1994.
Revenue and net income, including PCL, were $908 million and $63 million
for the year ended December 31, 1995, and $1.1 billion and $75 million
for the year ended December 31, 1994. Dividends from subsidiaries totaled
$64.7 million and $2 million for the years ended December 31, 1995 and
1994, respectively. Earnings of subsidiaries, excluding PCL, and
excluding capital gains, are included in net investment income.
7. BORROWINGS
Pacific Mutual borrows for short-term needs by issuing commercial paper.
Approximately $50 million was outstanding as of December 31, 1994,
bearing an interest rate of 5.86%, and was repaid in January, 1995. There
were no borrowings outstanding as of December 31, 1995.
In addition, Pacific Mutual had available a revolving credit facility
totaling approximately $250 million as of December 31, 1995 and 1994.
There were no borrowings outstanding as of December 31, 1995 and 1994.
8. CONTRIBUTION CERTIFICATES
Pacific Mutual has $150 million of Contribution Certificates (the
"Certificates"), also referred to as Surplus Notes, outstanding at an
interest rate of 7.9% maturing on December 30, 2023. Interest is payable
semiannually on June 30 and December 30. The Certificates may not be
redeemed at the option of Pacific Mutual or any holder of the
Certificates. The Certificates are unsecured and subordinated to all
present and future senior indebtedness and policy claims of Pacific
Mutual. Each payment of interest on and the payment of principal of the
Certificates may be made only out of Pacific Mutual's surplus and with
the prior approval of the Insurance Commissioner of the State of
California. In accordance with accounting practices prescribed or
permitted by the Insurance Department of the State of California, the
Certificates are not part of the liabilities of Pacific Mutual and are
included in surplus.
56
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
9. REINSURANCE
Pacific Mutual has reinsurance agreements with other insurance companies
for the purpose of diversifying risk and limiting exposure on larger
risks. For the years ended December 31, 1995 and 1994, individual life
and annuity premiums assumed were $16 million and $20 million and
premiums ceded were $339 million and $363 million, respectively. Amounts
recoverable from reinsurers for individual life and annuities include
reinsured and paid claims of $8 million and $13 million as of December
31, 1995 and 1994, respectively. Policy benefits payable are net of
reinsurance recoveries of $8 million and $4 million at December 31, 1995
and 1994, respectively.
Pacific Mutual also reinsures substantially all of its group life and
health business with a subsidiary insurance company. Premiums of $72
million and $90 million, and benefits of $53 million and $70 million were
ceded during the years ended December 31, 1995 and 1994, respectively.
Amounts payable to the subsidiary under this agreement were $6 million
and $8 million as of December 31, 1995 and 1994, respectively.
To the extent that the assuming companies become unable to meet their
obligations under these treaties, Pacific Mutual remains contingently
liable. However, Pacific Mutual does not anticipate nonperformance by
these assuming companies.
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
PENSION PLAN
Pacific Mutual maintains a defined benefit pension plan covering eligible
employees and agents. In 1995, Pacific Mutual accrued $2.5 million in
pension expense that will be funded in 1996 based on the latest actuarial
valuation report. No expense or contributions were made during 1994
because of the funded status of the plans and related income tax
considerations. Accumulated benefits and net assets available for
benefits as of the latest valuation dates (January 1, 1995 and April 1,
1994) are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------
(In Thousands)
<S> <C> <C>
Actuarial present value of accumulated
benefits:
Vested $ 92,966 $ 88,122
Nonvested 392 1,115
-------------------
Total $ 93,358 $ 89,237
-------------------
Net assets available for benefits $ 107,530 $ 111,089
-------------------
</TABLE>
The above present values were determined using an assumed discount rate
of 8.5% in 1995 and 1994.
POSTRETIREMENT HEALTHCARE AND LIFE INSURANCE PLANS
Pacific Mutual sponsors a defined benefit health care plan and a defined
benefit life insurance plan ("The Plans") that provide postretirement
benefits for all eligible retirees and their dependents. Generally,
qualified employees may become eligible for these benefits if they reach
normal retirement age, have been covered under Pacific Mutual's policy as
an active employee for a minimum continuous period prior to the date
retired, and have an employment date before January 1, 1990. The Plans
contain cost-sharing features such as deductibles and coinsurance and
require retirees to make contributions which can be adjusted annually.
Pacific Mutual's
57
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
commitment to qualified employees who retire after April 1, 1994 is
limited to specific dollar amounts. Pacific Mutual reserves the right to
modify or terminate The Plans at any time. As in the past, the general
policy is to fund these benefits on a pay-as-you-go basis. The amount of
benefits paid under The Plans for the years ended December 31, 1995 and
1994 was approximately $1.7 million for both years.
Pacific Mutual utilizes the accrual method of accounting for the costs of
The Plans as prescribed by the Insurance Department of the State of
California and amortizes its transition obligation of $26.7 million over
twenty years.
Components of net periodic postretirement benefit cost are as follows (In
Thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
---------------------------
<S> <C> <C>
Service cost $ 177 $ 186
Interest cost 1,921 1,790
Amortization (260) (260)
---------------------------
1,838 1,716
Recognized transition obligation-net 1,336 1,337
---------------------------
Net periodic postretirement benefit cost $ 3,174 $ 3,053
---------------------------
</TABLE>
The following table presents The Plans' funded status reconciled with
amounts recorded in other liabilities on Pacific Mutual's statement of
financial position (In Thousands):
<TABLE>
<CAPTION>
1995 1994
------------------
<S> <C> <C>
Accumulated postretirement obligation:
Retirees $ 20,936 $ 20,580
Fully eligible active plan participants 1,695 1,346
Other active plan participants 2,290 2,455
------------------
24,921 24,381
Fair value of plan assets 0 0
------------------
Unfunded accumulated postretirement obligation 24,921 24,381
Unrecognized net gain 878 942
Prior service cost 1,589 1,849
Unrecognized transition obligation-net (22,720) (24,056)
------------------
Accrued postretirement benefit liability $ 4,668 $ 3,116
------------------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
benefit obligation was 10% for 1995 and 11% for 1994, and is assumed to
decrease gradually to 5% in 2003 and remain at that level thereafter. The
amount reported is materially affected by the health care cost trend rate
assumptions. If the health care cost trend
58
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
rate assumptions were increased by 1%, the accumulated postretirement
benefit obligation as of December 31, 1995 and 1994 would be increased by
10.9% and 11.2%, respectively. The effect of this change would increase
the aggregate of the service, interest and amortization cost components
of the net periodic benefit cost by 11.4% and 13.6%, respectively.
The discount rate used in determining the accumulated postretirement
benefit obligation is 7% and 8% for 1995 and 1994, respectively.
11. INVESTMENT COMMITMENTS
Pacific Mutual has outstanding commitments to make investments in bonds
and other invested assets as follows (In Thousands):
<TABLE>
<CAPTION>
Year ended December 31:
-----------------------
<S> <C>
1996 $ 179,551
1997-2000 88,698
2001 and thereafter 32,091
---------
Total $ 300,340
---------
</TABLE>
12. LITIGATION
Pacific Mutual and its subsidiaries are respondents in a number of legal
proceedings, some of which involve extra-contractual damages. In the
opinion of management, the outcome of these proceedings is not likely to
have a material adverse effect on the financial position of Pacific
Mutual.
--------------------------------------------------------------------------
59
<PAGE>
APPENDIX
SPECIFIED PERCENTAGES
<TABLE>
<CAPTION>
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
---- ---------- --- ---------- --- ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
0-40 250% 50 185% 60 130% 70 115%
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75-90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 94 101
</TABLE>
60
<PAGE>
ILLUSTRATIONS
The following tables illustrate how the death benefits, Accumulated Values
and Net Cash Surrender Values of a hypothetical policy may vary over an
extended period of time assuming hypothetical rates of return equivalent to
constant gross annual rates of 0%, 6% and 12%.
The policies illustrated include the following:
1. Age 45, Single Premium of $10,000, and initial death benefit of
$36,268
2. Age 45, Single Premium of $50,000, and initial death benefit of
$198,748
3. Age 45, Single Premium of $100,000, and initial death benefit of
$400,221
4. Age 55, Single Premium of $50,000, and initial death benefit of
$134,670
5. Age 55, Single Premium of $100,000, and initial death benefit of
$271,084
The values would be different from those shown if the gross annual
investment rates of return averaged 0%, 6% or 12% over a period of years, but
also fluctuated above or below those averages for individual policy years.
It should be noted that the illustrated values are the same for both males
and females.
The second column of each table labeled "Total Premium Paid Plus Interest at
5%," shows the amount which would accumulate if an amount equal to the single
premium (after taxes) were invested to earn interest at 5% compounded
annually. All premium payments are illustrated as if they were made at the
beginning of the year. These illustrations assume that no Policy loans have
been made. The values were calculated using the guaranteed maximum Cost of
Insurance Charges.
The amounts shown for the death benefits, Accumulated Values and Net Cash
Surrender Values, reflect the fact that the net investment return on the
Variable Accounts is lower than the gross investment return on the assets as a
result of charges levied against the Variable Accounts. These values also take
into account the premium load and any administration charges. The daily
investment advisory fee is assumed to be equivalent to an annual weighted rate
of 0.64% of the aggregate average daily net assets of the Fund. This
hypothetical rate is representative of the weighted average investment
advisory fee applicable to the twelve Portfolios of the Fund available to the
Separate Account. The daily charge by Pacific Mutual for assuming mortality
and expense risk is equivalent to a charge at an annual rate of 0.70% of the
average net assets of the Variable Accounts.
The tables also reflect other expenses of the Fund at the weighted rate of
0.23% of the average daily net assets of a Portfolio, which amounts to 0.87%
of the average daily net assets of a Portfolio including the investment
advisory fee, and any foreign taxes. For the year ended December 31, 1995, the
total expenses of each Portfolio were the following percentages of the average
daily net assets of the Portfolios: 0.53% for the Money Market Portfolio;
0.83% for the Equity Income Portfolio; 0.84% for the Multi-Strategy Portfolio;
1.42% for the International Portfolio; 0.76% for the Managed Bond Portfolio;
0.82% for the Government Securities Portfolio; 0.77% for the High Yield Bond
Portfolio; 0.79% for the Growth Portfolio; 0.94% for the Growth LT Portfolio;
and 0.42% for the Equity Index Portfolio. For Aggressive Equity and Emerging
Markets Portfolios, which had not commenced operations as of December 31,
1995, it is estimated that operating expenses, including advisory fees and
foreign taxes, after the expense limitation described below, will be 1.04% and
1.58% of average daily net assets, respectively. We have agreed, until at
least December 31, 1997, to waive our fees or otherwise reimburse each
Portfolio for its operating expenses to the extent that such expenses,
exclusive of advisory fees, additional custodial charges associated with
holding foreign securities, foreign taxes on dividends, interest and gains,
and extraordinary expenses, exceed 0.25% of any Portfolio's average daily net
assets. We began this expense reimbursement policy in April 1989. Such
expenses of the Portfolios for the year ending December 31, 1995 did not
exceed the 0.25% expense caps. In the absence of this policy, it is estimated
that the Emerging Markets Portfolio's total expenses, including advisory fees
and foreign taxes for the Fund's current
61
<PAGE>
year ending December 31, 1996 will be 1.63%. There can be no assurance that
the expense reimbursement arrangement will continue after December 31, 1997,
and any unreimbursed expenses would be reflected in the Policy Owner's
Accumulated Value and in some instances, the death benefit.
After deduction of the charges and Fund expenses described above, the
illustrated gross annual investment rates of return of 0%, 6%, and 12%
correspond to approximate net annual rates of return of -1.59%, 4.31%, and
10.22%.
The hypothetical values shown in the tables do not reflect any charges
against the Variable Accounts for income taxes that may be attributable to the
Variable Accounts in the future, since we are not currently making these
charges.
We will furnish upon request a comparable illustration reflecting the
proposed Insured's Age, Face Amount and premium amounts requested. In
addition, upon request, illustrations will be furnished reflecting allocation
of premiums to specified Variable Accounts. Such illustrations will reflect
the expenses of the Portfolio of the Fund in which the Variable Account
invests. Illustrations that use a hypothetical gross rate of return in excess
of 12% are available to certain large institutional investors upon request.
62
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
ISSUE AGE: 45 SINGLE PREMIUM AMOUNT: $10,000
CLASS: MALE NONSMOKER GUIDELINE MINIMUM DEATH BENEFIT: $36,268
<TABLE>
<CAPTION>
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
1 $10,500 $36,268 $36,268 $ 36,268
2 $11,025 $36,268 $36,268 $ 36,268
3 $11,576 $36,268 $36,268 $ 36,268
4 $12,155 $36,268 $36,268 $ 36,268
5 $12,763 $36,268 $36,268 $ 36,268
6 $13,401 $36,268 $36,268 $ 36,268
7 $14,071 $36,268 $36,268 $ 36,268
8 $14,775 $36,268 $36,268 $ 36,268
9 $15,513 $36,268 $36,268 $ 36,268
10 $16,289 $36,268 $36,268 $ 36,268
15 $20,789 $36,268 $36,268 $ 43,785
20 $26,533 $ 0* $36,268 $ 62,495
25 $33,864 $ 0* $36,268 $ 93,153
30 $43,219 $ 0* $ 0* $135,281
35 $55,160 $ 0* $ 0* $210,964
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------ -------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $9,628 $10,213 $ 10,799 $8,678 $ 9,263 $ 9,849
2 $9,152 $10,327 $ 11,571 $8,297 $ 9,472 $ 10,716
3 $8,667 $10,432 $ 12,416 $7,907 $ 9,672 $ 11,656
4 $8,171 $10,530 $ 13,340 $7,506 $ 9,865 $ 12,675
5 $7,663 $10,616 $ 14,353 $7,093 $10,046 $ 13,783
6 $7,140 $10,690 $ 15,463 $6,665 $10,215 $ 14,988
7 $6,599 $10,748 $ 16,683 $6,219 $10,368 $ 16,303
8 $6,036 $10,787 $ 18,023 $5,751 $10,502 $ 17,738
9 $5,448 $10,804 $ 19,499 $5,258 $10,614 $ 19,309
10 $4,829 $10,794 $ 21,126 $4,734 $10,699 $ 21,031
15 $1,532 $10,640 $ 32,675 $1,532 $10,640 $ 32,675
20 $ 0* $ 9,293 $ 51,225 $ 0* $ 9,293 $ 51,225
25 $ 0* $ 5,023 $ 80,304 $ 0* $ 5,023 $ 80,304
30 $ 0* $ 0* $126,431 $ 0* $ 0* $126,431
35 $ 0* $ 0* $200,918 $ 0* $ 0* $200,918
</TABLE>
- -----------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE
INVESTMENT RESULTS. ACTUAL RATES MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE TO
VARIABLE ACCOUNTS AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION ONLY. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES, DIVIDENDS, AND VALUES SET FORTH IN THE ILLUSTRATION
ARE NOT GUARANTEED.
63
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
ISSUE AGE: 45 SINGLE PREMIUM AMOUNT: $50,000
CLASS: MALE NONSMOKER GUIDELINE MINIMUM DEATH BENEFIT: $198,748
<TABLE>
<CAPTION>
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
1 $ 52,500 $198,748 $198,748 $ 198,748
2 $ 55,125 $198,748 $198,748 $ 198,748
3 $ 57,881 $198,748 $198,748 $ 198,748
4 $ 60,775 $198,748 $198,748 $ 198,748
5 $ 63,814 $198,748 $198,748 $ 198,748
6 $ 67,005 $198,748 $198,748 $ 198,748
7 $ 70,355 $198,748 $198,748 $ 198,748
8 $ 73,873 $198,748 $198,748 $ 198,748
9 $ 77,566 $198,748 $198,748 $ 198,748
10 $ 81,445 $198,748 $198,748 $ 198,748
15 $103,946 $198,748 $198,748 $ 229,339
20 $132,665 $ 0* $198,748 $ 329,781
25 $169,318 $ 0* $198,748 $ 493,894
30 $216,097 $ 0* $ 0* $ 719,428
35 $275,801 $ 0* $ 0* $1,124,048
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------ -------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $48,334 $51,267 $ 54,201 $44,334 $47,267 $ 50,201
2 $46,215 $52,115 $ 58,365 $42,615 $48,515 $ 54,765
3 $44,037 $52,928 $ 62,911 $40,837 $49,728 $ 59,711
4 $41,798 $53,705 $ 67,884 $38,998 $50,905 $ 65,084
5 $39,482 $54,432 $ 73,327 $37,082 $52,032 $ 70,927
6 $37,080 $55,101 $ 79,292 $35,080 $53,101 $ 77,292
7 $34,575 $55,696 $ 85,834 $32,975 $54,096 $ 84,234
8 $31,949 $56,201 $ 93,021 $30,749 $55,001 $ 91,821
9 $29,178 $56,595 $ 100,923 $28,378 $55,795 $ 100,123
10 $26,238 $56,855 $ 109,629 $25,838 $56,455 $ 109,229
15 $ 9,936 $57,302 $ 171,148 $ 9,936 $57,302 $ 171,148
20 $ 0* $51,484 $ 270,312 $ 0* $51,484 $ 270,312
25 $ 0* $30,404 $ 425,771 $ 0* $30,404 $ 425,771
30 $ 0* $ 0* $ 672,362 $ 0* $ 0* $ 672,362
35 $ 0* $ 0* $1,070,522 $ 0* $ 0* $1,070,522
</TABLE>
- -----------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE
INVESTMENT RESULTS. ACTUAL RATES MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE TO
VARIABLE ACCOUNTS AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION ONLY. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES, DIVIDENDS, AND VALUES SET FORTH IN THE ILLUSTRATION
ARE NOT GUARANTEED.
64
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
ISSUE AGE: 45 SINGLE PREMIUM AMOUNT: $100,000
CLASS: MALE NONSMOKER GUIDELINE MINIMUM DEATH BENEFIT: $400,221
<TABLE>
<CAPTION>
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
1 $105,000 $400,221 $400,221 $ 400,221
2 $110,250 $400,221 $400,221 $ 400,221
3 $115,763 $400,221 $400,221 $ 400,221
4 $121,551 $400,221 $400,221 $ 400,221
5 $127,628 $400,221 $400,221 $ 400,221
6 $134,010 $400,221 $400,221 $ 400,221
7 $140,710 $400,221 $400,221 $ 400,221
8 $147,746 $400,221 $400,221 $ 400,221
9 $155,133 $400,221 $400,221 $ 400,221
10 $162,889 $400,221 $400,221 $ 400,221
15 $207,893 $400,221 $400,221 $ 461,196
20 $265,330 $ 0* $400,221 $ 663,182
25 $338,635 $ 0* $400,221 $ 993,212
30 $432,194 $ 0* $ 0* $1,446,755
35 $551,602 $ 0* $ 0* $2,260,440
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------ -------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $96,653 $102,518 $ 108,385 $89,653 $ 95,518 $ 101,385
2 $92,496 $104,297 $ 116,798 $86,196 $ 97,997 $ 110,498
3 $88,221 $106,010 $ 125,983 $82,621 $100,410 $ 120,383
4 $83,820 $107,654 $ 136,032 $78,920 $102,754 $ 131,132
5 $79,264 $109,200 $ 147,029 $75,064 $105,000 $ 142,829
6 $74,534 $110,634 $ 159,081 $71,034 $107,134 $ 155,581
7 $69,595 $111,923 $ 172,302 $66,795 $109,123 $ 169,502
8 $64,412 $113,036 $ 186,822 $62,312 $110,936 $ 184,722
9 $58,937 $113,930 $ 202,791 $57,537 $112,530 $ 201,391
10 $53,122 $114,561 $ 220,383 $52,422 $113,861 $ 219,683
15 $20,399 $115,622 $ 344,176 $20,399 $115,622 $ 344,176
20 $ 0* $104,000 $ 543,592 $ 0* $104,000 $ 543,592
25 $ 0* $ 61,713 $ 856,217 $ 0* $ 61,713 $ 856,217
30 $ 0* $ 0* $1,352,108 $ 0* $ 0* $1,352,108
35 $ 0* $ 0* $2,152,800 $ 0* $ 0* $2,152,800
</TABLE>
- -----------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE
INVESTMENT RESULTS. ACTUAL RATES MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE TO
VARIABLE ACCOUNTS AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION ONLY. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES, DIVIDENDS, AND VALUES SET FORTH IN THE ILLUSTRATION
ARE NOT GUARANTEED.
65
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
ISSUE AGE: 55 SINGLE PREMIUM AMOUNT: $50,000
CLASS: MALE NONSMOKER GUIDELINE MINIMUM DEATH BENEFIT: $134,670
<TABLE>
<CAPTION>
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
1 $ 52,500 $134,670 $134,670 $ 134,670
2 $ 55,125 $134,670 $134,670 $ 134,670
3 $ 57,881 $134,670 $134,670 $ 134,670
4 $ 60,775 $134,670 $134,670 $ 134,670
5 $ 63,814 $134,670 $134,670 $ 134,670
6 $ 67,005 $134,670 $134,670 $ 134,670
7 $ 70,355 $134,670 $134,670 $ 134,670
8 $ 73,873 $134,670 $134,670 $ 134,670
9 $ 77,566 $134,670 $134,670 $ 134,670
10 $ 81,445 $134,670 $134,670 $ 134,670
15 $103,946 $ 0* $134,670 $ 195,107
20 $132,665 $ 0* $134,670 $ 284,201
25 $169,318 $ 0* $ 0* $ 444,041
30 $216,097 $ 0* $ 0* $ 697,734
35 $275,801 $ 0* $ 0* $1,072,992
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------ -------- --------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $48,080 $51,015 $ 53,951 $ 44,080 $ 47,015 $ 49,951
2 $45,657 $51,570 $ 57,838 $ 42,057 $ 47,970 $ 54,238
3 $43,124 $52,052 $ 62,088 $ 39,924 $ 48,852 $ 58,888
4 $40,467 $52,449 $ 66,749 $ 37,667 $ 49,649 $ 63,949
5 $37,670 $52,751 $ 71,879 $ 35,270 $ 50,351 $ 69,479
6 $34,708 $52,937 $ 77,540 $ 32,708 $ 50,937 $ 75,540
7 $31,552 $52,986 $ 83,807 $ 29,952 $ 51,386 $ 82,207
8 $28,162 $52,865 $ 90,768 $ 26,962 $ 51,665 $ 89,568
9 $24,488 $52,537 $ 98,529 $ 23,688 $ 51,737 $ 97,729
10 $20,478 $51,961 $ 107,226 $ 20,078 $ 51,561 $ 106,826
15 $ 0* $45,636 $ 168,196 $ 0* $ 45,636 $ 168,196
20 $ 0* $23,479 $ 265,608 $ 0* $ 23,479 $ 265,608
25 $ 0* $ 0* $ 422,897 $ 0* $ 0* $ 422,897
30 $ 0* $ 0* $ 664,509 $ 0* $ 0* $ 664,509
35 $ 0* $ 0* $1,021,898 $ 0* $ 0* $1,021,898
</TABLE>
- -----------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE
INVESTMENT RESULTS. ACTUAL RATES MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE TO
VARIABLE ACCOUNTS AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION ONLY. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES, DIVIDENDS, AND VALUES SET FORTH IN THE ILLUSTRATION
ARE NOT GUARANTEED.
66
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
ISSUE AGE: 55 SINGLE PREMIUM AMOUNT: $100,000
CLASS: MALE NONSMOKER GUIDELINE MINIMUM DEATH BENEFIT: $271,084
<TABLE>
<CAPTION>
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
1 $105,000 $271,084 $271,084 $ 271,084
2 $110,250 $271,084 $271,084 $ 271,084
3 $115,763 $271,084 $271,084 $ 271,084
4 $121,551 $271,084 $271,084 $ 271,084
5 $127,628 $271,084 $271,084 $ 271,084
6 $134,010 $271,084 $271,084 $ 271,084
7 $140,710 $271,084 $271,084 $ 271,084
8 $147,746 $271,084 $271,084 $ 271,084
9 $155,133 $271,084 $271,084 $ 271,084
10 $162,889 $271,084 $271,084 $ 271,084
15 $207,893 $ 0* $271,084 $ 392,203
20 $265,330 $ 0* $271,084 $ 571,299
25 $338,635 $ 0* $ 0* $ 892,610
30 $432,194 $ 0* $ 0* $1,402,582
35 $551,602 $ 0* $ 0* $2,156,924
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
- ------ -------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $96,136 $102,005 $ 107,877 $89,136 $ 95,005 $ 100,877
2 $91,365 $103,192 $ 115,728 $85,065 $ 96,892 $ 109,428
3 $86,370 $104,232 $ 124,310 $80,770 $ 98,632 $ 118,710
4 $81,127 $105,107 $ 133,723 $76,227 $100,207 $ 128,823
5 $75,601 $105,793 $ 144,082 $71,401 $101,593 $ 139,882
6 $69,743 $106,251 $ 155,513 $66,243 $102,751 $ 152,013
7 $63,494 $106,437 $ 168,168 $60,694 $103,637 $ 165,368
8 $56,776 $106,288 $ 182,223 $54,676 $104,188 $ 180,123
9 $49,487 $105,728 $ 197,894 $48,087 $104,328 $ 196,494
10 $41,523 $104,675 $ 215,453 $40,823 $103,975 $ 214,753
15 $ 0* $ 92,136 $ 338,106 $ 0* $ 92,136 $ 338,106
20 $ 0* $ 47,719 $ 533,925 $ 0* $ 47,719 $ 533,925
25 $ 0* $ 0* $ 850,105 $ 0* $ 0* $ 850,105
30 $ 0* $ 0* $1,335,792 $ 0* $ 0* $1,335,792
35 $ 0* $ 0* $2,054,214 $ 0* $ 0* $2,054,214
</TABLE>
- -----------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE
INVESTMENT RESULTS. ACTUAL RATES MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE TO
VARIABLE ACCOUNTS AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION ONLY. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES, DIVIDENDS, AND VALUES SET FORTH IN THE ILLUSTRATION
ARE NOT GUARANTEED.
67
<PAGE>
[LOGO of PACIFIC SELECT]
Issued By: Principal Underwriter:
Pacific Mutual Life Insurance Company Pacific Mutual Distributors, Inc.
700 Newport Center Drive Member: NASD/SIPC
P.O. Box 9000 700 Newport Center Drive
Newport Beach, California 92660 P.O. Box 9000
Newport Beach, California 92660
<PAGE>
Sponsored by:
[LOGO of PACIFIC MUTUAL]
PACIFIC MUTUAL LIFE INSURANCE COMPANY
700 NEWPORT CENTER DRIVE
NEWPORT BEACH, CA 92660
Distributed by:
[LOGO of PACIFIC MUTUAL DISTRIBUTORS, INC.]
Pacific Mutual Distributors, Inc.
Member NASD & SIPC
700 NEWPORT CENTER DRIVE, NB-3
NEWPORT BEACH, CA 92660
1-800-800-7681
FORM NO. 15-15756-09
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
Contents of Registration Statement
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet.
The cross-reference sheet.
The Prospectus consisting of 70 pages (including illustrations).
Financial Statements of Pacific Select Separate Account
Financial Statements of Pacific Mutual Life Insurance Company
The Signatures.
Written consent of the following person (included in the exhibits shown below):
Deloitte & Touche LLP, Independent Public Accountant
The following exhibits:
1.(1) Resolution of the Board of Directors of the Depositor dated November 20,
1986
(2) Inapplicable
(3) (a) Distribution Agreement Between Pacific Mutual Life Insurance Company
and Pacific Equities Network
(b) Form of Sales Agreement Between Pacific Equities Network and Various
Broker-Dealers
(4) Inapplicable
(5) (a) Flexible Premium Variable Life Insurance Policy
(b) Endorsement Amending Suicide Exclusion Provision
(c) Accelerated Living Benefit Rider
(6) (a) Bylaws
(b) Articles of Incorporation of Pacific Mutual Life Insurance Company
<PAGE>
(7) Inapplicable
(8) Inapplicable
(9) Participation Agreement between Pacific Mutual Life Insurance Company
and Pacific Select Fund
(10) Application for Flexible Premium Variable Life Insurance Policy
2. See Exhibit 1.(5)
3. Form of Opinion and consent of legal officer of Pacific Mutual as to
legality of Policies being registered
4. Inapplicable
5. Inapplicable
6. (a) Consent of Deloitte & Touche LLP
(b) Consent of Dechert Price & Rhoads
7. Opinion of Actuary
8. Memorandum Describing Issuance, Transfer and Redemption Procedures
9. Power of Attorney
10. Inapplicable
11. Inapplicable
12. Inapplicable
13. Inapplicable
14. Inapplicable
15. Inapplicable
16. Inapplicable
17. Financial Data Schedules
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Pacific Select Separate Account of Pacific Mutual Life Insurance Company
certifies that it meets all of the requirements for effectiveness pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 13 to the Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, all in the City of Newport
Beach, and State of California, on this 22nd day of March, 1996.
PACIFIC SELECT SEPARATE ACCOUNT
(Registrant)
BY: PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Depositor)
BY:
---------------------------------------
Thomas C. Sutton*
Chairman & Chief Executive Officer
*BY: /s/ DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained in Exhibit 9 of this Post-Effective Amendment
No. 13 to the Registration Statement of Pacific Select Separate Account, File
No. 33-14032.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Pacific Mutual
Life Insurance Company certifies that it meets all of the requirements for
effectiveness pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment No. 13 to the Registration Statement
to be signed on its behalf by the undersigned thereunto duly authorized, all in
the City of Newport Beach, and State of California, on this 22nd day of March,
1996.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Registrant)
BY:
---------------------------------------
Thomas C. Sutton*
Chairman & Chief Executive Officer
*BY: /s/ DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained in Exhibit 9 of this Post-Effective Amendment
No. 13 to the Registration Statement of Pacific Select Separate Account, File
No. 33-14032.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 13 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
Signature Title Date
Director, Chairman of the Board March 22, 1996
- -------------------------- and Chief Executive Officer
Thomas C. Sutton*
Director and President March 22, 1996
- --------------------------
Glenn S. Schafer*
Controller March 22, 1996
- --------------------------
Edward Byrd*
Director and Chairman Emeritus March 22, 1996
- --------------------------
Harry G. Bubb*
Director March 22, 1996
- --------------------------
Richard M. Ferry*
Director March 22, 1996
- --------------------------
Donald E. Guinn*
Director March 22, 1996
- --------------------------
Ignacio E. Lozano, Jr.*
Director March 22, 1996
- --------------------------
Charles A. Lynch*
Director March 22, 1996
- --------------------------
Dr. Allen W. Mathies, Jr.*
<PAGE>
Director March 22, 1996
- --------------------------
Charles D. Miller*
Director March 22, 1996
- --------------------------
Donn B. Miller*
Director March 22, 1996
- --------------------------
Jacqueline C. Morby
Director March 22, 1996
- --------------------------
J. Fernando Niebla*
Director March 22, 1996
- --------------------------
Susan Westerberg Prager*
Director March 22, 1996
- --------------------------
Richard M. Rosenberg
Director March 22, 1996
- --------------------------
James R. Ukropina*
Director March 22, 1996
- --------------------------
Raymond L. Watson*
*BY: /s/ DAVID R. CARMICHAEL March 22, 1996
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained in Exhibit 9 of this Post-Effective Amendment
No. 13 to the Registration Statement of Pacific Select Separate Account, File
No. 33-14032.)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 94,486
<INVESTMENTS-AT-VALUE> 94,486
<RECEIVABLES> 1,533
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,019
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70
<TOTAL-LIABILITIES> 70
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95,975
<SHARES-COMMON-STOCK> 9,579
<SHARES-COMMON-PRIOR> 9,390
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (26)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 95,949
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,737
<OTHER-INCOME> 0
<EXPENSES-NET> 512
<NET-INVESTMENT-INCOME> 5,225
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,225
<EQUALIZATION> (34)
<DISTRIBUTIONS-OF-INCOME> (5,251)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,344
<NUMBER-OF-SHARES-REDEEMED> 25,679
<SHARES-REINVESTED> 524
<NET-CHANGE-IN-ASSETS> 1,799
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 386
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 512
<AVERAGE-NET-ASSETS> 96,579
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.55
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.02
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 2
<NAME> HIGH YIELD BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 80,122
<INVESTMENTS-AT-VALUE> 82,571
<RECEIVABLES> 1,896
<ASSETS-OTHER> 10
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,477
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52
<TOTAL-LIABILITIES> 52
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 80,958
<SHARES-COMMON-STOCK> 8,622
<SHARES-COMMON-PRIOR> 2,843
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 989
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,449
<NET-ASSETS> 84,425
<DIVIDEND-INCOME> 82
<INTEREST-INCOME> 4,868
<OTHER-INCOME> 0
<EXPENSES-NET> 413
<NET-INVESTMENT-INCOME> 4,537
<REALIZED-GAINS-CURRENT> 990
<APPREC-INCREASE-CURRENT> 3,249
<NET-CHANGE-FROM-OPS> 8,776
<EQUALIZATION> 795
<DISTRIBUTIONS-OF-INCOME> (4,508)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,807
<NUMBER-OF-SHARES-REDEEMED> 2,500
<SHARES-REINVESTED> 472
<NET-CHANGE-IN-ASSETS> 59,087
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 319
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 413
<AVERAGE-NET-ASSETS> 53,315
<PER-SHARE-NAV-BEGIN> 8.91
<PER-SHARE-NII> 0.76
<PER-SHARE-GAIN-APPREC> 0.88
<PER-SHARE-DIVIDEND> 0.76
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.79
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 3
<NAME> GOVERNMENT SECURITIES PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 65,905
<INVESTMENTS-AT-VALUE> 66,685
<RECEIVABLES> 4,523
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,208
<PAYABLE-FOR-SECURITIES> 11,369
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72
<TOTAL-LIABILITIES> 11,441
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,506
<SHARES-COMMON-STOCK> 5,511
<SHARES-COMMON-PRIOR> 2,229
<ACCUMULATED-NII-CURRENT> 56
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,107
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,098
<NET-ASSETS> 59,767
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,422
<OTHER-INCOME> 1
<EXPENSES-NET> 309
<NET-INVESTMENT-INCOME> 2,114
<REALIZED-GAINS-CURRENT> 2,863
<APPREC-INCREASE-CURRENT> 1,330
<NET-CHANGE-FROM-OPS> 6,307
<EQUALIZATION> 300
<DISTRIBUTIONS-OF-INCOME> (2,184)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,681
<NUMBER-OF-SHARES-REDEEMED> 608
<SHARES-REINVESTED> 209
<NET-CHANGE-IN-ASSETS> 38,278
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,630)
<GROSS-ADVISORY-FEES> 227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 309
<AVERAGE-NET-ASSETS> 37,860
<PER-SHARE-NAV-BEGIN> 9.64
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 4
<NAME> MANAGED BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 124,306
<INVESTMENTS-AT-VALUE> 126,608
<RECEIVABLES> 3,557
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130,179
<PAYABLE-FOR-SECURITIES> 3,021
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 166
<TOTAL-LIABILITIES> 3,187
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121,763
<SHARES-COMMON-STOCK> 11,440
<SHARES-COMMON-PRIOR> 5,376
<ACCUMULATED-NII-CURRENT> 127
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,377
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,725
<NET-ASSETS> 126,992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,892
<OTHER-INCOME> 4
<EXPENSES-NET> 655
<NET-INVESTMENT-INCOME> 5,241
<REALIZED-GAINS-CURRENT> 5,734
<APPREC-INCREASE-CURRENT> 3,716
<NET-CHANGE-FROM-OPS> 14,691
<EQUALIZATION> 1,230
<DISTRIBUTIONS-OF-INCOME> (5,400)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,715
<NUMBER-OF-SHARES-REDEEMED> 1,157
<SHARES-REINVESTED> 506
<NET-CHANGE-IN-ASSETS> 73,773
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,071)
<GROSS-ADVISORY-FEES> 519
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 655
<AVERAGE-NET-ASSETS> 86,713
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0.64
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.10
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 5
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 120,022
<INVESTMENTS-AT-VALUE> 129,567
<RECEIVABLES> 1,048
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130,616
<PAYABLE-FOR-SECURITIES> 494
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381
<TOTAL-LIABILITIES> 875
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,305
<SHARES-COMMON-STOCK> 6,988
<SHARES-COMMON-PRIOR> 5,468
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (20)
<ACCUMULATED-NET-GAINS> 8,911
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,545
<NET-ASSETS> 129,741
<DIVIDEND-INCOME> 1,309
<INTEREST-INCOME> 509
<OTHER-INCOME> 0
<EXPENSES-NET> 862
<NET-INVESTMENT-INCOME> 956
<REALIZED-GAINS-CURRENT> 8,911
<APPREC-INCREASE-CURRENT> 14,638
<NET-CHANGE-FROM-OPS> 24,505
<EQUALIZATION> 76
<DISTRIBUTIONS-OF-INCOME> (976)
<DISTRIBUTIONS-OF-GAINS> (13)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,533
<NUMBER-OF-SHARES-REDEEMED> 2,071
<SHARES-REINVESTED> 58
<NET-CHANGE-IN-ASSETS> 48,290
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 709
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 862
<AVERAGE-NET-ASSETS> 109,161
<PER-SHARE-NAV-BEGIN> 14.90
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 3.67
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.57
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 6
<NAME> EQUITY INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 187,217
<INVESTMENTS-AT-VALUE> 204,936
<RECEIVABLES> 1,636
<ASSETS-OTHER> 214
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 206,786
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 133
<TOTAL-LIABILITIES> 133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 177,898
<SHARES-COMMON-STOCK> 11,351
<SHARES-COMMON-PRIOR> 5,343
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (18)
<ACCUMULATED-NET-GAINS> 11,054
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,719
<NET-ASSETS> 206,653
<DIVIDEND-INCOME> 2,852
<INTEREST-INCOME> 281
<OTHER-INCOME> 0
<EXPENSES-NET> 1,070
<NET-INVESTMENT-INCOME> 2,063
<REALIZED-GAINS-CURRENT> 12,389
<APPREC-INCREASE-CURRENT> 19,133
<NET-CHANGE-FROM-OPS> 33,585
<EQUALIZATION> 430
<DISTRIBUTIONS-OF-INCOME> (2,080)
<DISTRIBUTIONS-OF-GAINS> (55)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,041
<NUMBER-OF-SHARES-REDEEMED> 1,161
<SHARES-REINVESTED> 128
<NET-CHANGE-IN-ASSETS> 131,570
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,280)
<GROSS-ADVISORY-FEES> 841
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,070
<AVERAGE-NET-ASSETS> 129,701
<PER-SHARE-NAV-BEGIN> 14.05
<PER-SHARE-NII> 0.26
<PER-SHARE-GAIN-APPREC> 4.16
<PER-SHARE-DIVIDEND> 0.26
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.21
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 7
<NAME> MULTI-STRATEGY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 128,088
<INVESTMENTS-AT-VALUE> 137,459
<RECEIVABLES> 1,790
<ASSETS-OTHER> 74
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 139,323
<PAYABLE-FOR-SECURITIES> 4,722
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 4,822
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 118,536
<SHARES-COMMON-STOCK> 9,471
<SHARES-COMMON-PRIOR> 6,747
<ACCUMULATED-NII-CURRENT> 30
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,564
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,371
<NET-ASSETS> 134,501
<DIVIDEND-INCOME> 1,237
<INTEREST-INCOME> 3,096
<OTHER-INCOME> 1
<EXPENSES-NET> 839
<NET-INVESTMENT-INCOME> 3,495
<REALIZED-GAINS-CURRENT> 7,345
<APPREC-INCREASE-CURRENT> 11,136
<NET-CHANGE-FROM-OPS> 21,976
<EQUALIZATION> 272
<DISTRIBUTIONS-OF-INCOME> (3,457)
<DISTRIBUTIONS-OF-GAINS> (12)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,300
<NUMBER-OF-SHARES-REDEEMED> 838
<SHARES-REINVESTED> 262
<NET-CHANGE-IN-ASSETS> 55,354
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (776)
<GROSS-ADVISORY-FEES> 650
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 839
<AVERAGE-NET-ASSETS> 100,215
<PER-SHARE-NAV-BEGIN> 11.73
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 2.47
<PER-SHARE-DIVIDEND> 0.45
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 8
<NAME> INTERNATIONAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 175,732
<INVESTMENTS-AT-VALUE> 184,405
<RECEIVABLES> 1,345
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185,750
<PAYABLE-FOR-SECURITIES> 3,343
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208
<TOTAL-LIABILITIES> 3,551
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,521
<SHARES-COMMON-STOCK> 14,090
<SHARES-COMMON-PRIOR> 6,360
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,286)
<ACCUMULATED-NET-GAINS> 3,299
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,665
<NET-ASSETS> 182,199
<DIVIDEND-INCOME> 2,889
<INTEREST-INCOME> 735
<OTHER-INCOME> 0
<EXPENSES-NET> 1,354
<NET-INVESTMENT-INCOME> 2,270
<REALIZED-GAINS-CURRENT> 3,100
<APPREC-INCREASE-CURRENT> 6,427
<NET-CHANGE-FROM-OPS> 11,797
<EQUALIZATION> 1,864
<DISTRIBUTIONS-OF-INCOME> (3,358)
<DISTRIBUTIONS-OF-GAINS> (58)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,290
<NUMBER-OF-SHARES-REDEEMED> 1,823
<SHARES-REINVESTED> 263
<NET-CHANGE-IN-ASSETS> 106,228
<ACCUMULATED-NII-PRIOR> 51
<ACCUMULATED-GAINS-PRIOR> 8
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,031
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,354
<AVERAGE-NET-ASSETS> 121,321
<PER-SHARE-NAV-BEGIN> 11.94
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 0.91
<PER-SHARE-DIVIDEND> 0.25
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.93
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 9
<NAME> EQUITY INDEX PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 115,791
<INVESTMENTS-AT-VALUE> 137,077
<RECEIVABLES> 648
<ASSETS-OTHER> 28
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,754
<PAYABLE-FOR-SECURITIES> 203
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32
<TOTAL-LIABILITIES> 235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,798
<SHARES-COMMON-STOCK> 7,880
<SHARES-COMMON-PRIOR> 3,119
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (9)
<ACCUMULATED-NET-GAINS> 4,558
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,172
<NET-ASSETS> 137,519
<DIVIDEND-INCOME> 1,861
<INTEREST-INCOME> 254
<OTHER-INCOME> 6
<EXPENSES-NET> 330
<NET-INVESTMENT-INCOME> 1,791
<REALIZED-GAINS-CURRENT> 4,554
<APPREC-INCREASE-CURRENT> 16,956
<NET-CHANGE-FROM-OPS> 23,301
<EQUALIZATION> 288
<DISTRIBUTIONS-OF-INCOME> (1,800)
<DISTRIBUTIONS-OF-GAINS> (6)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,687
<NUMBER-OF-SHARES-REDEEMED> 1,039
<SHARES-REINVESTED> 113
<NET-CHANGE-IN-ASSETS> 96,907
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 10
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 195
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 330
<AVERAGE-NET-ASSETS> 79,109
<PER-SHARE-NAV-BEGIN> 13.02
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 4.43
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.45
<EXPENSE-RATIO> 0.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 10
<NAME> GROWTH LT PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 177,754
<INVESTMENTS-AT-VALUE> 198,622
<RECEIVABLES> 3,005
<ASSETS-OTHER> 16
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 201,643
<PAYABLE-FOR-SECURITIES> 543
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 315
<TOTAL-LIABILITIES> 858
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 180,342
<SHARES-COMMON-STOCK> 14,221
<SHARES-COMMON-PRIOR> 4,443
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (427)
<ACCUMULATED-NET-GAINS> 164
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,706
<NET-ASSETS> 200,785
<DIVIDEND-INCOME> 634
<INTEREST-INCOME> 1,438
<OTHER-INCOME> 0
<EXPENSES-NET> 1,058
<NET-INVESTMENT-INCOME> 1,014
<REALIZED-GAINS-CURRENT> 12,228
<APPREC-INCREASE-CURRENT> 18,562
<NET-CHANGE-FROM-OPS> 31,804
<EQUALIZATION> 181
<DISTRIBUTIONS-OF-INCOME> (815)
<DISTRIBUTIONS-OF-GAINS> (12,566)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,137
<NUMBER-OF-SHARES-REDEEMED> 3,322
<SHARES-REINVESTED> 963
<NET-CHANGE-IN-ASSETS> 151,411
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (125)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 845
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,058
<AVERAGE-NET-ASSETS> 113,131
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 3.96
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 0.95
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.12
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 11
<NAME> EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 96,129
<INVESTMENTS-AT-VALUE> 107,853
<RECEIVABLES> 372
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 108,226
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90
<TOTAL-LIABILITIES> 90
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,141
<SHARES-COMMON-STOCK> 6,174
<SHARES-COMMON-PRIOR> 5,149
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (62)
<ACCUMULATED-NET-GAINS> 8,332
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,725
<NET-ASSETS> 108,136
<DIVIDEND-INCOME> 606
<INTEREST-INCOME> 326
<OTHER-INCOME> 0
<EXPENSES-NET> 697
<NET-INVESTMENT-INCOME> 235
<REALIZED-GAINS-CURRENT> 9,658
<APPREC-INCREASE-CURRENT> 7,633
<NET-CHANGE-FROM-OPS> 17,526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (296)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,728
<NUMBER-OF-SHARES-REDEEMED> 723
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> 35,011
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,326)
<GROSS-ADVISORY-FEES> 565
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 697
<AVERAGE-NET-ASSETS> 87,146
<PER-SHARE-NAV-BEGIN> 14.20
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 3.33
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.52
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000813936
<NAME> PACIFIC SELECT SEPARATE ACCOUNT
<SERIES>
<NUMBER> 12
<NAME> BOND AND INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 49,701
<INVESTMENTS-AT-VALUE> 55,907
<RECEIVABLES> 993
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,901
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48
<TOTAL-LIABILITIES> 48
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,130
<SHARES-COMMON-STOCK> 4,368
<SHARES-COMMON-PRIOR> 3,269
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (484)
<ACCUM-APPREC-OR-DEPREC> 6,207
<NET-ASSETS> 56,853
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,297
<OTHER-INCOME> 0
<EXPENSES-NET> 339
<NET-INVESTMENT-INCOME> 2,958
<REALIZED-GAINS-CURRENT> 294
<APPREC-INCREASE-CURRENT> 8,971
<NET-CHANGE-FROM-OPS> 12,223
<EQUALIZATION> 35
<DISTRIBUTIONS-OF-INCOME> (2,958)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,501
<NUMBER-OF-SHARES-REDEEMED> 650
<SHARES-REINVESTED> 248
<NET-CHANGE-IN-ASSETS> 22,775
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (778)
<GROSS-ADVISORY-FEES> 255
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 339
<AVERAGE-NET-ASSETS> 42,695
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> 0.82
<PER-SHARE-GAIN-APPREC> 2.59
<PER-SHARE-DIVIDEND> 0.81
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.02
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99.1(1)
Resolution of the Board of Directors
of the Depositor dated November 20, 1986
<PAGE>
CERTIFICATE OF SECRETARY
PACIFIC MUTUAL LIFE INSURANCE COMPANY
RESOLVED, that the Board of Directors of this Corporation hereby authorizes this
Corporation to obtain approval from the appropriate regulatory authorities of an
amendment to its Certificate of Authority to issue Variable Life Insurance
Policies ("Policies"); and
RESOLVED FURTHER, that the Board of Directors of this Corporation hereby
authorizes and directs the establishment of Separate Accounts ("Separate
Accounts") that may be required to which the amounts received by this
Corporation in connection with the sale of the Policies shall be allocated; and
RESOLVED FURTHER, that within the Separate Accounts there may be a number of
Variable Accounts with different investment policies and objectives into which a
policyowner may direct his interests in the Separate Accounts and the Variable
Accounts; and
RESOLVED FURTHER, that the Separate Accounts are to be established and
maintained in accordance with the provisions of Section 10506 of the California
Insurance Codes and the regulations promulgated under that Section; and
RESOLVED FURTHER, that any Officer of this Corporation is authorized and
directed to take whatever action may be necessary or advisable to establish and
maintain such Separate Accounts and to register, file, or qualify the Policies
for sale, including, but not limited to, determining the states or other
jurisdictions in which necessary or advisable action shall be taken to qualify,
file, or register the Policies for sale, performing any and all acts as such
Officer deems necessary or advisable to comply with the applicable laws of any
such state or jurisdiction including making any required filings with the
California Insurance Department or any other regulatory authority in California
or any other regulatory authority in any state or jurisdiction having
jurisdiction over the insurance activities of the Company or over the Policies;
performing any and all acts as such Officer deems necessary or advisable to
comply with the applicable laws of the United States including, but not limited
to, preparing and filing registration statements with the Securities and
Exchange Commission to register the Policies or interests therein under the
Securities Act of 1933 and the Investment Company Act of 1940 and to register
the Separate Account under the Investment Company Act of 1940, and to file an
exemptive application if necessary or advisable under the Investment Company Act
of 1940 and to make such other filings or seek any interpretations that are
necessary or advisable from the Securities and Exchange Commission or any other
agency of the United States Government; or making any filings, seek any
interpretations, or make other submissions that such Officer deems necessary or
advisable with other regulatory authorities having jurisdiction over the offer
and sale of the Policies; and to execute and file all requisite papers and
documents, including, but not limited to, applications, reports, surety bonds,
irrevocable consents, powers of attorneys, and appointments of agents for
service of process, and the paying of all necessary fees and expenses as in such
officer's judgment may be necessary or advisable.
<PAGE>
I, AUDREY L. MILFS, do hereby certify that I am the duly elected, qualified and
acting Secretary of Pacific Mutual Life Insurance Company, a California
corporation, and I do hereby further certify that the foregoing is a true and
correct copy of a resolution adopted at a meeting of the Executive Committee of
the Board of Directors of said corporation duly and regularly held on November
20, 1986, at which a quorum was present and voting, and that said resolution has
not been revoked or amended.
Dated this 19th day of December, 1986.
/s/ AUDREY L. MILFS
Audrey L. Milfs, Secretary
<PAGE>
EXHIBIT 99.1(3)(A)
Distribution Agreement Between
Pacific Mutual Life Insurance Company and
Pacific Equities Network
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of December, 1987, by and between Pacific Mutual
Life Insurance Company, a California company, ("Pacific Mutual") on its own
behalf and on behalf of the Pacific Select Separate Account ("Separate
Account"), and Pacific Equities Network, a California corporation ("PEN").
WHEREAS, Pacific Mutual has established and maintains the Separate Account, a
separate investment account, for the purpose of selling variable life contracts
("Contracts") to commence after the effectiveness of the Registration Statement
relating thereto filed with the Securities and Exchange Commission on Form S-6
pursuant to the Securities Act of 1933, as amended (the "1933 Act"), through
PEN, acting as general agent of Pacific Mutual;
WHEREAS, the Separate Account is registered as a unit investment trust under the
Investment Company Act of 1940 ("the 1940 Act");
WHEREAS, PEN is registered as a broker-dealer under the Securities Exchange Act
of 1934 (the "Securities Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, Pacific Mutual desires to retain PEN as the Distributor and Principal
Underwriter to provide for the sale and distribution to the public of the
Contracts issued by Pacific Mutual and funded by interests in the General
Account of Pacific Mutual and in the Separate Account and PEN is willing to
render such services:
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
1. Principal Underwriter. Pacific Mutual hereby appoints PEN, during the term
of this Agreement, subject to the registration requirements of the 1933 Act and
the 1940 Act and the provisions of the Securities Exchange Act, to be the
Distributor and Principal Underwriter for the sale of Contracts to the public in
each state and other jurisdictions in which the Contracts may be lawfully sold.
Pacific Mutual also appoints PEN as its independent General Agent for sale of
its Contracts (including any riders which Pacific Mutual may make available in
connection therewith or any contracts for which the Contracts may be exchanged
or converted) and for sale of such other insurance contracts or annuity
contracts as Pacific Mutual may, from time to time, authorize in writing by
amendment thereto. PEN shall offer the Contracts for sale and distribution at
premium rates set by Pacific Mutual.
2. Selling Agreements. PEN is hereby authorized to enter into separate written
agreements, on such terms and conditions as PEN determines are not inconsistent
with this Agreement, with such organizations which agree to participate as a
general agent and/or broker-dealer in the distribution of the Contracts and to
use their best efforts to solicit applications for Contracts. Any such broker-
dealer (hereinafter "Broker"), shall be both registered as a broker-dealer under
the Securities
<PAGE>
Exchange Act and a member of the NASD. PEN shall be responsible for ensuring
that Broker and its agents or representatives and general agent and its sub-
agents soliciting applications for Contracts shall be duly and appropriately
licensed, registered and otherwise qualified for the sale of the Contracts (and
the riders and other contracts offered in connection therewith) under the
insurance laws and any applicable blue sky laws of each state or other
jurisdiction in which such policies may be lawfully sold and in which Pacific
Mutual is licensed to sell such Contracts. Pacific Mutual shall undertake to
appoint Broker's qualified agents or representatives and general agent's sub-
agents as life insurance agents of Pacific Mutual, provided that Pacific Mutual
reserves the right to refuse to appoint any proposed representative, agent, or
sub-agent, or once appointed, to terminate such appointment. PEN shall be
responsible for ensuring that Broker and general agent supervise its agents,
representatives, or sub-agents.
PEN is also authorized to enter into separate written agreements, on such terms
and conditions as PEN determines are not inconsistent with this Agreement, with
such organizations ("wholesalers") that agree to participate in the distribution
of the Contracts and to use their best efforts to solicit Brokers and general
agents that, in turn, will solicit applications of the Contracts.
3. Life Insurance Agents. Pacific Mutual shall be responsible for ensuring
that Broker and its agents or representatives and general agent and its sub-
agents meet all qualifications and hold any licenses or authorizations that may
be required for the solicitation or sale of the Contracts under the insurance
laws of the applicable jurisdictions.
4. Suitability. Pacific Mutual desires to ensure that Contracts will be sold
to purchasers for whom the Contract will be suitable. PEN shall take reasonable
steps to ensure that the various representatives of Broker and sub-agents of
general agents shall not make recommendations to an applicant to purchase a
Contract in the absence of reasonable grounds to believe the purchase of the
Contract is suitable for such applicant. While not limited to the following, a
determination of suitability shall be based on information furnished to a
representative or sub-agent after reasonable inquiry of such applicant
concerning the applicant's other security holdings, insurance and investment
objectives, financial situation and needs, and the likelihood that the applicant
will continue to make any premium payments contemplated by the Contracts and
will keep the Policy in force for a sufficient period of time so that Pacific
Mutual's acquisition costs are amortized over a reasonable period of time.
5. Conformity with Registration Statement and Approved Sales Materials. In
performing its duties as Distributor, PEN will act in conformity with the
Prospectus and with the instructions and directions of Pacific Mutual, the
requirements of the 1933 Act, the 1940 Act, the Securities Exchange Act, and all
other applicable federal and state laws and regulations. PEN shall not give any
information nor make any representations, concerning any aspect of the Contract
or of Pacific Mutual's operations to any persons or entity unless such
information or representations are contained in the Registration Statement and
the pertinent prospectus filed with the Securities and Exchange Commission, or
are contained in sales or promotional literature approved by Pacific Mutual.
PEN will not use and will take reasonable steps to ensure Broker will not use
any sales promotion material and advertising which has not been previously
approved by Pacific Mutual.
<PAGE>
6. Expenses. During the term of this Agreement, PEN will bear all of its
expenses in complying with this Agreement, including the following expenses:
(a) costs of sales presentations, mailings, sales promotion materials,
advertising, and any other marketing efforts by PEN in connection with the
distribution or sale of the Contracts; and
(b) any compensation paid to employees of PEN and to wholesalers, Brokers and
general agents in connection with the distribution or sale of the Contracts.
Notwithstanding any other provision of this Agreement, it is understood and
agreed that Pacific Mutual shall at all times retain the ultimate responsibility
for and control of all functions performed pursuant to this Agreement, and for
marketing the Contract, and reserves the right to direct, approve or disapprove
any action hereunder taken on its behalf by PEN.
7. Applications. Completed applications for Contracts solicited by such Broker
through its agents or representatives or by general agent through its sub-agents
shall be transmitted directly to Pacific Mutual. All payments under the
Contracts shall be made by check to Pacific Mutual or by other method acceptable
to Pacific Mutual, and if received by PEN, shall be held at all times in a
fiduciary capacity and remitted promptly to Pacific Mutual. All such payments
will be the property of Pacific Mutual. Pacific Mutual has the sole authority
to approve or reject such applications or payments and maintains ultimate
responsibility for underwriting. Anything in this Agreement to the contrary
notwithstanding, Pacific Mutual retains the ultimate right to control the sale
of the Contracts and to appoint and discharge life insurance agents of Pacific
Mutual.
8. Standard of Care. PEN shall be responsible for exercising reasonable care
in carrying out the provisions of this Agreement.
9. Reports. PEN shall be responsible for maintaining the records of Broker and
general agent and their agents, representatives or sub-agents who are licensed,
registered and otherwise qualified to sell the Contracts; calculating and
furnishing the fees payable to Brokers or general agents; and for furnishing
periodic reports to Pacific Mutual as to the sale of Contracts made pursuant to
this Agreement.
10. Records. PEN shall maintain and preserve such records as are required of
it by applicable laws and regulations. The books, accounts and records of
Pacific Mutual, the Separate Account and PEN shall be maintained so as to
clearly and accurately disclose the nature and details of the transactions,
including such accounting information as necessary to support the reasonableness
of the amounts to be paid by Pacific Mutual hereunder.
11. Compensation. For the services rendered and product development in the
initial sales efforts and continuing obligations under this Agreement, Pacific
Mutual shall pay PEN in the amounts set forth in Schedule A, which schedule is
incorporated herein. Pacific Mutual shall arrange for the payment of
commissions, through PEN, to those Brokers and general agents that sell
Contracts under agreements entered into pursuant to Section 2, hereof, and to
wholesalers that solicit brokers and general agents to sell Contracts under
agreements entered into pursuant to Section 2, hereof, in
<PAGE>
amounts as may be agreed to by Pacific Mutual and PEN specified in such written
agreements.
12. Investigation and Proceedings. PEN and Pacific Mutual agree to cooperate
fully in any insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts distributed under this
Agreement. PEN further agrees to furnish regulatory authorities with any
information or reports in connection with such services which may be requested
in order to ascertain whether the operations of Pacific Mutual and the Separate
Account are being conducted in a manner consistent with applicable laws and
regulations. PEN and Pacific Mutual further agree to cooperate fully in any
securities regulatory investigation or proceeding with respect to Pacific
Mutual, PEN, their affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) PEN will be notified promptly of any customer complaint or notice of any
regulatory investigation or proceeding or judicial proceeding received by
Pacific Mutual with respect to PEN or any agent, representative, or sub-agent of
a Broker or general agent or which may affect Pacific Mutual's issuance of any
Contract sold under this Agreement; and
(b) PEN will promptly notify Pacific Mutual of any customer complaint or notice
of any regulatory investigation or proceeding received by PEN or its affiliates
with respect to PEN or any agent, representative, or sub-agent of a Broker or
general agent in connection with any Contract distributed under this Agreement
or any activity in connection with any such Contract.
In the case of a meritorious customer complaint, PEN and Pacific Mutual will
cooperate in investigating such complaint and any response will be sent to the
other party to this Agreement for approval not less than five business days
prior to its being sent to the customer or regulatory authority, except that if
a more prompt response is required, the proposed response shall be communicated
by telephone or telegraph.
13. Indemnification. Pacific Mutual hereby agrees to indemnify and hold
harmless PEN and its officers and directors, and employees for any expenses
(including legal expenses), losses, claims, damages, or liabilities incurred by
reason of any untrue or alleged untrue statement or representation of a material
fact or any omission or alleged omission to state a material fact required to be
stated to make other statements not misleading, if made in reliance on any
prospectus, registration statement, post-effective amendment thereof, or sales
materials supplied or approved by Pacific Mutual or the Separate Account.
Pacific Mutual shall reimburse each such person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
liability, damage, or claim. However, in no case shall Pacific Mutual be
required to indemnify for any expenses, losses, claims, damages, or liabilities
which have resulted from the willful misfeasance, bad faith, negligence,
misconduct, or wrongful act of PEN.
PEN hereby agrees to indemnify and hold harmless Pacific Mutual, its officers,
directors, and employees, and the Separate Account for any expenses, losses,
claims, damages, or liabilities arising out of or based upon any of the
following in connection with the offer or sale of the contracts: 1) except for
such statements made in reliance on any prospectus, registration statement or
sales
<PAGE>
material supplied or approved by Pacific Mutual or the Separate Account, any
untrue or alleged untrue statement or representation made; 2) any failure to
deliver a currently effective prospectus; 3) the use of any unauthorized sales
literature by any officer, employee, agent, or sub-agent of PEN, Broker or
general agent; or 4) any willful misfeasance, bad faith, negligence, misconduct
or wrongful act. PEN shall reimburse each such person for any legal or other
expenses reasonably incurred in connection with investigating or defending any
such loss, liability, damage, or claim.
Promptly after receipt by a party entitled to indemnification ("indemnified
party") of notice of the commencement of any action, if a claim for
indemnification in respect thereof is to be made against Pacific Mutual or PEN
("indemnifying party") such indemnified party will notify indemnifying party in
writing of the commencement thereof, but failure to notify the indemnifying
party of any claim shall not relieve it from any liability which it may have to
the person against whom such action is brought otherwise than on account of this
agreement contained in this Section 13. The indemnifying party will be entitled
to participate in the defense of the indemnified party and such participation
will not relieve such indemnifying party of the obligation to reimburse the
indemnified party for reasonable legal and other expenses incurred by such
indemnified party in defending himself.
14. Agent of Pacific Mutual or Separate Account. Any person, even though also
an officer, director, employee, or agent of PEN, who may be or become an
officer, director, employee, or agent of Pacific Mutual or the Separate Account
shall be deemed, when rendering services to Pacific Mutual or the Separate
Account or acting in any business of Pacific Mutual or the Separate Account, to
be rendering such services to or acting solely for Pacific Mutual or the
Separate Account and not as an officer, director, employee, or agent or one
under the control or direction of PEN even though paid by PEN. Likewise, any
person, even though also an officer, director, employee, or agent of Pacific
Mutual or the Separate Account, who may be or become an officer, director,
employee, or agent of PEN shall be deemed, when rendering services to PEN or
acting in any business of PEN, to be rendering such services to or acting solely
for PEN and not as an officer, director, employee, or agent or one under the
control or direction of Pacific Mutual or the Separate Account even though paid
by Pacific Mutual or the Separate Account.
15. Books and Records. It is expressly understood and agreed that all
documents, reports, records, books, files and other materials relating to this
Agreement and the services to be performed hereunder shall be the sole property
of Pacific Mutual and the Separate Account and that such property shall be held
by PEN as agent, during the effective term of this Agreement. This material
shall be delivered to Pacific Mutual upon the termination of this Agreement free
from any claim or retention of rights by PEN. During the term of this Agreement
and for a period of three years from the date of termination of this Agreement,
PEN will not disclose or use any records or information and will regard and
preserve as confidential all information related to the business of Pacific
Mutual or the Separate Account that may be obtained by PEN from any source as a
result of this Agreement and will disclose such information only if Pacific
Mutual or the Separate Account has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or state regulatory
authorities. PEN further acknowledges and agrees that, in the event of a breach
or threatened breach by it of the provisions of this article, Pacific Mutual
will have no adequate remedy in moneys or damages and, accordingly, Pacific
Mutual shall be entitled in its discretion to seek an injunction against such
breach. However, no specification in this Agreement of a specific legal or
equitable
<PAGE>
remedy shall be construed as a waiver or prohibition against any other legal or
equitable remedy in the event of a breach of a provision of this Agreement.
16. Employees. PEN will not employ, except with the prior written approval of
the Commissioner of Insurance of the state of California, in any material
connection with the handling of the Separate Account's assets any person who, to
the knowledge of PEN:
(a) in the last 10 years has been convicted of any felony or misdemeanor arising
out of conduct involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, or involving violations of Sections
1341, 1342, or 1343 of Title 18, United States Code; or
(b) within the last 10 years has been found by any state regulatory authority to
have violated or has acknowledged violation of any provision of any state
insurance law involving fraud, deceit, or knowing misrepresentation; or
(c) within the last 10 years has been found by any federal or state regulatory
authorities to have violated or have acknowledged violation of any provision of
federal or state securities laws involving fraud, deceit, or knowing
misrepresentation.
17. Termination. This Agreement shall terminate automatically upon its
assignment without the prior written consent of both parties. This Agreement
may be terminated at any time, for any reason, by either party on 60 days'
written notice to the other party, without the payment of any penalty. Upon
termination of this Agreement, all authorizations, rights and obligations shall
cease except the obligation to settle accounts hereunder, including commissions
on premiums subsequently received for Contracts in effect at time of
termination, and the agreements contained in Sections 12 and 13 hereof.
18. Regulation. This Agreement shall be subject to the provisions of the 1940
Act and the Securities Exchange Act and the rules, regulations and rulings
thereunder, and of the applicable rules and regulations of the NASD, and
applicable state insurance law and other applicable law, from time to time in
effect, and the terms hereof shall be interpreted and construed in accordance
therewith.
19. Independent Contractor. PEN shall act as an independent contractor and
nothing herein contained shall constitute PEN or its agent, officers or
employees as agents, officers, or employees of Pacific Mutual in connection with
the sale of the Contracts.
20. Notices. Notices of any kind to be given to PEN by Pacific Mutual or the
Separate Account shall be in writing and shall be duly given if mailed, first
class postage prepaid, or delivered to PEN at 800 Newport Center Drive, Suite
450, Newport Beach, California 92660, or at such other address or to such
individual as shall be specified by PEN. Notices of any kind to be given to
Pacific Mutual or the Separate Account shall be in writing and shall be duly
given if mailed, first class postage prepaid, or delivered to them at 700
Newport Center Drive, Post Office Box 9000, Newport Beach, California 92660, or
at such other address or to such individual as shall be specified by Pacific
Mutual.
<PAGE>
If any provisions of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
21. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: TC Sutton
PRESIDENT
ATTEST:
Audrey L. Milfs
SECRETARY
PACIFIC EQUITIES NETWORK
By: Richard Hanly
PRESIDENT
WITNESS:
Diane N. Ledger
ASSISTANT VICE PRESIDENT
<PAGE>
SCHEDULE A
COMMISSION SCHEDULE FOR PACIFIC SELECT FLEXIBLE PREMIUM VARIABLE LIFE POLICY
FORM 87-51
A. PREMIUM PAYMENTS ACCEPTED BY PACIFIC COMMISSIONS AS A PERCENT
MUTUAL ON POLICIES ISSUED FOR WHICH OF PREMIUM PAYMENTS
APPLICATIONS WERE SOLICITED BY:
1. PEN Broker/Dealers 6.0%
2. FSM Retail Broker/Dealers
a) On total Premiums up to $100 Million 6.75%
b) On total Premiums in excess 7.00%
of $100 Million
B. In the event that a policy for which a commission has been paid is lapsed or
surrendered by the Policy Owner during the first policy year, or is returned to
PEN or PACIFIC MUTUAL for refund of Premium within the later of 10 days after
the purchaser receives it or 45 days after the application for the policy is
completed, or a premium for which commission has been paid is refunded by
PACIFIC MUTUAL, PACIFIC MUTUAL will require reimbursement to PACIFIC MUTUAL, as
follows:
1. 100% of the commission if the event that causes the chargeback occurs within
six months of the policy issue date; or
2. 50% of the commission if the event that causes the chargeback occurs during
the seventh through twelfth months after the policy issue date. If the amount
to be deducted exceeds compensation otherwise due, PEN shall promptly pay back
the amount of excess following a written demand by PACIFIC MUTUAL.
C. An additional commission shall be payable to PEN annually on each policy
anniversary provided the policy is in force on such date as follows:
1. On policies solicited by PEN Broker/Dealers:
A gross trail commission equal to .22% on an annualized basis is computed at
each policy month end on the policy's excess of the accumulated value, less any
outstanding policy indebtedness, over
<PAGE>
$50,000.
2. On policies solicited by FSM Retail Broker/Dealers a gross trail commission
equal to:
.10% on an annualized basis computed at each policy month end on the policy's
Accumulated Value less any outstanding policy indebtedness, and
.22% on an annualized basis computed at each policy month end on the excess of
the policy's Accumulated Value, less any outstanding policy indebtedness, over
$50,000.
<PAGE>
EXHIBIT 99.1(3)(b)
Form of Selling Agreement Between Pacific Equities Network
and Various Broker-Dealers
<PAGE>
SELLING AGREEMENT
AGREEMENT by and between PACIFIC MUTUAL LIFE INSURANCE COMPANY ("Pacific
Mutual"), a California corporation; PACIFIC EQUITIES NETWORK ("PEN"), a
California corporation, a broker-dealer registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (the "1934 Act"),
and a member of the National Association of Securities Dealers, Inc. ("NASD");
_______________________________________________________________________________
_______________________________________________________________________________
("Selling Broker-Dealer"), also a broker-dealer registered under the 1934 Act
and a member of the NASD; and each of the undersigned General Agents jointly and
severally referred to herein as "General Agent".
W I T N E S S E T H:
WHEREAS, Pacific Mutual issues certain insurance and annuity contracts listed
in Schedule B (the "Contracts"), some of which are registered ("Securities
Registered Contracts") under the Securities Act of 1933 (the "1933 Act");
WHEREAS, Pacific Mutual has authorized PEN, as principal underwriter of the
Contracts, to enter into agreements, subject to the consent of Pacific Mutual,
with broker-dealers and general agents for the distribution of the Contracts;
WHEREAS, PEN has agreed to secure duly qualified broker-dealers and general
agents to contract with Pacific Mutual and PEN for the distribution of the
Contracts, assist these broker-dealers and general agents in obtaining licenses,
registrations and appointments to enable their registered representatives and
sub-agents to sell the Contracts, and provide educational meetings to
familiarize these broker-dealers and general agents and their registered
representatives and sub-agents with the provisions and features of the
Contracts; and
WHEREAS, Selling Broker-Dealer and General Agent have been selected by PEN to
distribute the Contracts and Selling Broker-Dealer and General Agent wish to
participate in the distribution of the Contracts.
NOW THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
I.
APPOINTMENT
Subject to the terms and conditions of this Agreement, Pacific Mutual and PEN
hereby appoint Selling Broker-Dealer and General Agent for the solicitation of
applications for the purchase of the Contracts.
Selling Broker-Dealer and General Agent accept such appointment and each
agrees to use its best efforts to find purchasers for the Contracts acceptable
to Pacific Mutual. Selling Broker-Dealer and General Agent will seek purchasers
of Securities Related Contracts only while the registration statement relating
to such contracts is effective under the 1933 Act.
<PAGE>
II.
AUTHORITY AND DUTIES OF GENERAL AGENT
A. LICENSING AND APPOINTMENT OF SUB-AGENTS
General Agent is authorized to appoint sub-agents ("Sub-agents") to solicit
sales of the Contracts. General Agent agrees to fulfill all requirements set
forth in the General Letter of Recommendation attached as Schedule A hereto in
conjunction with its submission of licensing and appointment papers for all Sub-
agents.
General Agent warrants that it and all of its Sub-agents appointed pursuant to
this Agreement shall not solicit nor aid, directly or indirectly, in the
solicitation of any application for any Contract until they are fully licensed
by the proper authorities under the applicable insurance laws within the
applicable jurisdictions where General Agent and Sub-agents propose to offer the
Contracts, where Pacific Mutual is authorized to conduct business and where the
Contracts may be lawfully sold.
General Agent shall periodically provide Pacific Mutual with a list of all
Sub-agents appointed by General Agent and the jurisdictions where such Sub-
agents are licensed to solicit sales of the Contracts. Pacific Mutual shall
periodically provide General Agent with a list which shows; (i) the
jurisdictions where Pacific Mutual is authorized to do business; and (ii) any
limitations on the availability of the Contracts in any of such jurisdictions.
General Agent shall prepare and transmit the appropriate appointment forms to
Pacific Mutual. General Agent shall pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and authorizations
for Sub-agents to solicit and sell the Contracts. Pacific Mutual will pay
appointment fees for General Agent and resident appointment fees for Sub-agents.
Non-resident appointment fees for Sub-agents will be paid by the General Agent.
All renewal appointment fees will be paid by the General Agent for Sub-agents
who have generated less than $20,000 target premium within the prior 12 months.
Pacific Mutual may refuse for any reason to apply for the appointment of a Sub-
agent and may cancel any existing appointment at any time.
B. REJECTION OF SUB-AGENT
Pacific Mutual or PEN may refuse for any reason, by written notice to General
Agent, to permit any Sub-agent the right to solicit applications for the sale of
any of the Contracts. Upon receipt of such notice, General Agent immediately
shall cause such Sub-agent to cease such solicitations of sales and cancel the
appointment of any Sub-agent under this agreement.
C. SUPERVISION OF SUB-AGENTS
General Agent shall supervise all Sub-agents appointed pursuant to this
Agreement to solicit sales of the Contracts and bear responsibility for all acts
and omissions of each Sub-agent. General Agent shall comply with and exercise
all responsibilities required by applicable federal and state law and
regulations. General Agent shall train and supervise its Sub-agents to ensure
that purchase of a Contract is not recommended to an applicant in the absence of
reasonable grounds to believe the purchase of the Contract is suitable for that
applicant. While not limited to the following, a determination of suitability
shall be based on information furnished to a Sub-agent after reasonable inquiry
of such applicant concerning the applicant's insurance and investment
objectives, financial situation and needs, and the likelihood that the applicant
will continue to make any premium payments contemplated by the Contracts and
will keep the Contract in force for a sufficient period of time so that Pacific
Mutual's acquisition costs are amortized over a reasonable period of time.
Nothing contained in this Agreement or otherwise shall be deemed to make any
Sub-agent appointed by General Agent an employee or agent of Pacific Mutual or
PEN. Pacific Mutual and PEN shall not have any responsibility for the training
and supervision of any Sub-agent or any other employee of General Agent. If the
act or omission of a Sub-agent or any other employee of General Agent is the
proximate cause of claim, damage or liability (including reasonable attorneys'
fees) to Pacific Mutual or PEN, General Agent shall be responsible and liable
therefor.
2
<PAGE>
III.
AUTHORITY AND DUTIES OF SELLING BROKER-DEALER
Selling Broker-Dealer agrees that it has full responsibility for the training
and supervision of all persons, including Sub-agents of General Agent,
associated with Selling Broker-Dealer who are engaged directly or indirectly in
the offer or sale of Securities Regulated Contracts. All such persons shall be
registered representatives of Selling Broker-Dealer and shall be subject to the
control of Selling Broker-Dealer with respect to their securities regulated
activities. Broker-Dealer shall: (i) train and supervise Sub-agents, in their
capacity as registered representatives, in the sale of Securities Regulated
Contracts; (ii) use its best efforts to cause such Sub-agents to qualify under
applicable federal and state laws to engage in the sale of Securities Regulated
Contracts; (iii) provide Pacific Mutual and PEN to their satisfaction with
evidence of Sub-agents' qualifications to sell Securities Regulated Contracts;
(iv) notify Pacific Mutual if any of such Sub-agents ceases to be a registered
representative of Selling Broker-Dealer; and (v) train and supervise Sub-agents
to ensure compliance with applicable federal and state securities laws, rules,
regulations, statements of policy thereunder and with NASD rules. Selling
Broker-Dealer shall train and supervise Sub-agents to ensure that purchase of a
Contract is not recommended to an applicant in the absence of reasonable grounds
to believe the purchase of the Contract is suitable for that applicant. While
not limited to the following, a determination of suitability shall be based on
information furnished to a Sub-agent after reasonable inquiry of such applicant
concerning the applicant's other security holdings, financial situation and
needs. Selling Broker-Dealer shall ensure that any offer of a Securities
Regulated Contract made by a Sub-agent will be made by means of a currently
effective prospectus.
Pacific Mutual and PEN shall not have any responsibility for the supervision
of any registered representative or any other employee or affiliate of Selling
Broker-Dealer. If the act or omission of a registered representative or any
other employee or affiliate of Selling Broker-Dealer is the proximate cause of
any claim, damage or liability (including reasonable attorney's fees) to Pacific
Mutual or PEN, Selling Broker-Dealer shall be responsible and liable therefor.
Selling Broker-Dealer at all times shall be duly registered as a broker-dealer
under the 1934 Act, a member in good standing of the NASD and duly licensed in
all states and jurisdictions where required to perform pursuant to this
agreement. Selling Broker-Dealer shall fully comply with the requirements of
the 1934 Act and all other applicable federal or state laws and with the rules
of the NASD. Selling Broker-Dealer shall establish such rules and procedures as
may be necessary to cause diligent supervision of the securities activities of
the Sub-agents including ensuring compliance with the prospectus delivery
requirements of the 1933 Act.
IV.
AUTHORITY AND DUTIES OF
GENERAL AGENT AND SELLING BROKER-DEALER
A. CONTRACTS
The securities and insurance regulated Contracts issued by Pacific Mutual to
which this Agreement applies are listed in Schedule B, which may be amended from
time to time by Pacific Mutual. Pacific Mutual, in its sole discretion, with
prior or concurrent written notice to Selling Broker-Dealer and General Agent,
may suspend distribution of any Contract. Pacific Mutual also has the right to
amend any Contract at any time.
B. SECURING APPLICATIONS
Each application for a Contract shall be made on an application form provided
by Pacific Mutual, and all payments collected by Selling Broker-Dealer, General
Agent or any registered representative and Sub-agent shall be remitted promptly
in full, together with such application form and any other required
documentation, directly to Pacific Mutual at the address indicated on such
application or to such other address as may be designated by Pacific Mutual.
All such payments and documents shall be the property of Pacific Mutual.
Selling Broker-Dealer and
3
<PAGE>
General Agent shall review all such applications for completeness and for
compliance with the conditions herein, including the suitability and prospectus
delivery requirements set forth above under Sections II.C and III. Check or
money order in payment of such Contracts should be made payable to the order of
"Pacific Mutual". All applications are subject to acceptance or rejection by
Pacific Mutual in its sole discretion.
C. RECEIPT OF MONEY
All money payable in connection with any of the Contracts, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any contract
owner or anyone else having an interest in the Contracts, is the property of
Pacific Mutual and shall be transmitted immediately in accordance with the
administrative procedures of Pacific Mutual without any deduction or offset for
any reason including, but not limited to, any deduction or offset for
compensation claimed by Selling Broker-Dealer or General Agent, unless there has
been a prior arrangement for net wire transmissions between Pacific Mutual and
Selling Broker-Dealer or General Agent.
D. NOTICE OF SUB-AGENT'S NONCOMPLIANCE
Selling Broker-Dealer shall immediately notify PEN and General Agent in the
event a Sub-agent fails or refuses to submit to the supervision of Selling
Broker-Dealer or General Agent in accordance with this Agreement, the agreement
between Selling Broker-Dealer, General Agent and Sub-agent referred to in
Section IV.H, below, or otherwise fails to meet the rules and standards imposed
by Selling Broker-Dealer or its registered representatives or General Agent or
its Sub-agents. Selling Broker-Dealer or General Agent shall also immediately
notify such Sub-agent that he or she is no longer authorized to sell the
Contracts, and both Selling Broker-Dealer and General Agent shall take whatever
additional action may be necessary to terminate the sale activities of such Sub-
agent relating to the Contracts.
E. SALES PROMOTION, ADVERTISING AND PROSPECTUSES
No sales promotion materials, circulars, documents or any advertising relating
to any of the Contracts shall be used by Selling Broker-Dealer, General Agent or
any Sub-agents unless the specific item has been approved in writing by PEN and
Pacific Mutual prior to use. Selling Broker-Dealer shall be provided, without
any expense to Selling Broker-Dealer, with prospectuses relating to Securities
Regulated Contracts. Selling Broker-Dealer and General Agent shall be provided
with such other material as PEN determines necessary or desirable for use in
connection with sales of the Contracts. Nothing in these provisions shall
prohibit Selling Broker-Dealer or General Agent from advertising life insurance
and annuities on a generic basis.
Selling Broker-Dealer, General Agent and Sub-agents shall make no material
representations relating to the Securities Regulated Contracts, other than those
contained in the relevant registration statement, as may be amended, or in sales
promotion or other materials approved by Pacific Mutual and PEN as provided in
this section.
F. CONFIDENTIALITY
Selling Broker-Dealer and General Agent shall keep confidential all
information obtained pursuant to this Agreement, including, without limitation,
names of the purchasers of the Policies, and shall disclose such information,
only if Pacific Mutual or PEN have authorized such disclosure in writing, or if
such disclosure is expressly required by applicable federal or state regulatory
authorities.
G. RECORDS
Selling Broker-Dealer and General Agent shall have the responsibility for
maintaining the records of its Sub-agents and representatives licensed,
registered and otherwise qualified to sell the Contracts. Selling Broker-Dealer
and General Agent shall maintain such other records as are required of them by
applicable laws and regulations. The books, accounts and records of Selling
Broker-Dealer and General Agent relating to the sale of the Contracts shall be
maintained so as to clearly and accurately disclose the nature and details of
the transactions. Selling Broker-Dealer and General Agent each agree to make
the books and records relating to the sale of the Contracts available to Pacific
Mutual or PEN upon their written request.
4
<PAGE>
H. SUB-AGENT AGREEMENTS
Before a Sub-agent is permitted to sell the Contracts, General Agent, Selling
Broker-Dealer and Sub-agent shall have entered into a written agreement pursuant
to which: (i) Sub-agent is appointed a Sub-agent of General Agent and a
registered representative of Selling Broker-Dealer; (ii) Sub-agent agrees that
his or her selling activities relating to Securities Regulated Contracts shall
be under the supervision and control of Selling Broker-Dealer; and (iii) that
Sub-agent's right to continue to sell such Contracts is subject to his or her
continued compliance with such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer or General Agent.
V.
COMPENSATION
A. COMMISSIONS AND FEES
Commissions and fees payable to General Agent or any Sub-agent in connection
with the Contracts shall be paid by Pacific Mutual through PEN to General Agent,
or as otherwise permitted by law or regulation. General Agent shall pay Sub-
agents. PEN will provide Selling Broker-Dealer and General Agent with a copy of
its current Compensation Schedule(s), attached hereto as Schedule B. Unless
otherwise provided in Schedule B, compensation will be paid as a percentage of
premiums or purchase payments (collectively, "Payments") received in cash or
other legal tender and accepted by Pacific Mutual on applications obtained by
the various Sub-agents appointed by General Agent hereunder. Upon termination
of this Agreement, all compensation to General Agent hereunder shall cease.
However, General Agent shall be entitled to receive compensation for all new and
additional premium payments which are in process at the time of termination, and
shall continue to be liable for any charge-backs pursuant to the provisions of
said Schedule B, or for any other amount advanced by or otherwise due Pacific
Mutual or PEN hereunder. Pacific Mutual reserves the right not to pay
compensation on a policy or contract for which the premium is paid in whole or
in part by the loan or surrender value of any other life insurance policy or
annuity contract issued by Pacific Mutual.
PEN shall deduct any chargebacks from compensation otherwise due General Agent
or Selling Broker-Dealer. If any amount to be deducted exceeds compensation
otherwise due, General Agent and/or Selling Broker-Dealer shall promptly pay
back the amount of the excess following a written demand by PEN or Pacific
Mutual. General Agent and Selling Broker-Dealer are jointly and severally
liable for such chargebacks.
Pacific Mutual reserves the right to reduce first year commissions and renewal
commissions, if necessary, on any life policies sold to residents of the State
of Kentucky and paid for after May 1, 1991. Such reduction shall be in an
amount sufficient to cover any premium tax levied by cities and counties within
the State of Kentucky which is over and above the premium tax paid by Pacific
Mutual to the State of Kentucky.
Pacific Mutual recognizes the Contract owners' right on issued Contracts to
terminate Selling Broker-Dealer and/or change a Selling Broker-Dealer, provided
that the Contract owner notifies PEN in writing. When a Contract owner
terminates Selling Broker-Dealer, no further compensation on any payments due or
received, or on any increases in face amount in the existing policy after
termination, shall be payable to that Selling Broker-Dealer in accordance with
Schedule B after the notice of termination is received and accepted by PEN.
However, when a Contract owner designates a Selling Broker-Dealer other than the
Selling Broker-Dealer of record, compensation on any payments due or received,
or on any increases in face amount in the existing Contract after the change,
shall be payable to the new Selling Broker-Dealer in accordance with Schedule B
in effect at the time of issuance of the Contract.
5
<PAGE>
A change of Selling Broker-Dealer request shall be honored only if there
exists a valid Selling Agreement between Pacific Mutual, PEN and the new
Selling Broker-Dealer and (1) the Contract owner(s) requests in writing that the
Sub-agent remains as representative of record, or (2) both the former and future
Selling Broker-Dealers direct Pacific Mutual and PEN in a joint writing to
transfer all policies and future compensation to the new Selling Broker-Dealer,
or (3) the NASD approves and effects a bulk transfer of all representatives to a
new Selling Broker-Dealer.
B. TIME OF PAYMENT
PEN will pay any commissions due General Agent at least twice monthly in
accordance with Schedule B of this Agreement, as it may be amended from time to
time.
C. AMENDMENT OF SCHEDULES
PEN may amend Schedule B upon at least ten (10) days' prior written notice to
Selling Broker-Dealer and General Agent. The submission of an application for
the Contracts by Selling Broker-Dealer or General Agent after the effective date
of any such amendment shall constitute agreement to such amendment. Any such
amendment shall apply to compensation due on applications received by Pacific
Mutual after the effective date of such notice.
D. Prohibition Against Rebates
Pacific Mutual or PEN may terminate this Agreement if Selling Broker-Dealer,
General Agent or any Sub-agent rebates, offers to rebate or withholds any part
of any Payment on the Contracts. If Selling Broker-Dealer, General Agent or any
Sub-agent of General Agent shall at any time induce or endeavor to induce any
owner of any Contract issued hereunder to discontinue payments or to relinquish
any such Contract, except under circumstances where there is reasonable grounds
for believing the Contract is not suitable for such person, any and all
compensation due General Agent hereunder shall cease and terminate.
E. INDEBTEDNESS AND RIGHT OF SET OFF
Nothing contained in this Agreement shall be construed as giving Selling
Broker-Dealer or General Agent the right to incur any indebtedness on behalf of
Pacific Mutual or PEN. Selling Broker-Dealer and General Agent hereby authorize
PEN and Pacific Mutual to set off liabilities of Selling Broker-Dealer and
General Agent to Pacific Mutual and PEN against any and all amounts otherwise
payable to Selling Broker-Dealer or General Agent.
VI.
GENERAL PROVISIONS
A. Waiver
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed to be, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver.
6
<PAGE>
B. LIMITATIONS
The Selling Broker-Dealer and General Agent are independent contractors with
respect to Pacific Mutual and PEN. No party other than Pacific Mutual and or
PEN, as the case may be, shall have the authority to: (i) make, alter or
discharge any Contract issued by Pacific Mutual; (ii) waive any forfeiture or
extend the time of making any payments; (iii) enter into any proceeding in a
court of law or before a regulatory agency in the name of or on behalf of
Pacific Mutual or PEN; (iv) contract for the expenditure of funds of Pacific
Mutual or PEN; (v) alter the forms which PEN prescribes, or substitute other
forms in place of those prescribed by PEN.
C. FIDELITY BOND AND OTHER LIABILITY COVERAGE
Selling Broker-Dealer and General Agent each represent that all directors,
officers, agents, employees and Sub-agents who are licensed pursuant to this
Agreement as Pacific Mutual agents for state insurance law purposes or who have
access to funds of Pacific Mutual, including but not limited to, funds submitted
with applications for the Contracts are and shall be covered by a blanket
fidelity bond, including coverage for larceny and embezzlement, issued by a
reputable bonding company. This bond shall be maintained by Selling Broker-
Dealer or General Agent at their expense. Such bond shall be, at a minimum, of
the form, type, and amount required under NASD Rules, endorsed to extend
coverage to transactions relating to the Contracts. Pacific Mutual may require
evidence, satisfactory to it, that such coverage is in force and Selling Broker-
Dealer or General Agent, as the case may be, shall give prompt written notice to
Pacific Mutual of any notice of cancellation of the bond or change of coverage.
Selling Broker-Dealer and General Agent hereby assign any proceeds received
from a fidelity bonding company, error and omissions or other liability
coverage, to Pacific Mutual or PEN as their interest may appear, to the extent
of their loss due to activities covered by the bond, policy or other liability
coverage. If there is any deficiency amount, whether due to a deductible or
otherwise, Selling Broker-Dealer or General Agent shall promptly pay such
amounts on demand. Selling Broker-Dealer and General Agent hereby indemnify and
hold harmless Pacific Mutual and PEN from any such deficiency and from the costs
of collection thereof (including reasonable attorneys' fees).
D. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that neither
Selling Broker-Dealer nor General Agent may assign this Agreement or any rights
or obligations hereunder without the prior written consent of Pacific Mutual.
E. REGULATIONS
All parties agree to observe and comply with the existing laws and rules or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
F. INDEMNIFICATION
Pacific Mutual and PEN agree to indemnify and hold harmless Selling Broker-
Dealer and General Agent, their officers, directors, agents and employees,
against any and all losses, claims, damages or liabilities to which they may
become subject under the 1933 Act, the 1934 Act, or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in the
registration statement for the Contracts or for the shares of Pacific Select
Fund (the "Fund") filed pursuant to the 1933 Act, or any prospectus included as
a part thereof, as from time to time amended and supplemented, or in any
advertisement or sales literature approved in writing by Pacific Mutual and PEN
pursuant to Section IV.E. of this Agreement
7
<PAGE>
Selling Broker-Dealer and General Agent agree to indemnify and hold harmless
Pacific Mutual, the Fund and PEN, their officers, directors, agents and
employees, against any and all losses, claims, damages or liabilities to which
they may become subject under the 1933 Act, the 1934 Act, or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon; (a) any oral or written misrepresentation by Selling
Broker-Dealer or General Agent or their officers, directors, employees or agents
unless such misrepresentation is contained in the registration statement for the
Contracts or Fund shares, any prospectus included as a part thereof, as from
time to time amended and supplemented, or any advertisement or sales literature
approved in writing by Pacific Mutual and PEN pursuant to Section IV.E. of this
Agreement, (b) the failure of Selling Broker-Dealer or General Agent or their
officers, directors, employees or agents to comply with any applicable
provisions of this Agreement or (c) claims by Sub-agents or employees of General
Agent or Selling Broker-Dealer for payments of compensation or remuneration of
any type. Selling Broker-Dealer and General Agent will reimburse Pacific Mutual
or PEN or any director, officer, agent or employee of either entity for any
legal or other expenses reasonably incurred by Pacific Mutual, PEN, or such
officer, director, agent or employee in connection with investigating or
defending any such loss, claims, damages, liability or action. This indemnity
agreement will be in addition to any liability which Broker-Dealer may otherwise
have.
G. NOTICES
All notices or communications shall be sent to the following address for
Pacific Mutual or PEN, or to such other address as Pacific Mutual or PEN may
request by giving written notice to the other parties:
Pacific Mutual Life Insurance Company Pacific Equities Network
700 Newport Center Drive 700 Newport Center Drive
Newport Beach, CA 92660 Newport Beach, CA 92660
All notices or communications to the Selling Broker-Dealer or General Agent
shall be sent to the last address known to Pacific Mutual or PEN for that party,
or to such other address as Selling Broker-Dealer or General Agent may request
by giving written notice to the other parties.
H. Governing Law
This Agreement shall be construed in accordance with and governed by the laws
of California.
I. AMENDMENT OF AGREEMENT
PEN may amend this Agreement upon at least ten (10) days' prior written notice
to Selling Broker-Dealer and General Agent. The submission of an application
for the Contracts by Selling Broker-Dealer or General Agent after the effective
date of any such amendment shall constitute agreement to such amendment.
Additional General Agents may be added as parties to this Agreement at any
time by a written amendment signed by Pacific Mutual, PEN, Selling Broker-Dealer
and such additional General Agents. All General Agents which are parties to
this Agreement at the time of such amendment hereby consent and agree in advance
to the addition of such additional General Agents.
J. GENERAL AGENT AS BROKER-DEALER
Selling Broker-Dealer and General Agent shall not have the other entity's
authority and shall not be responsible for the other entity's duties hereunder
unless Selling Broker-Dealer and General Agent are the same entity. If Selling
Broker-Dealer and General Agent are the same person or legal entity, such person
or legal entity shall have the rights and obligations hereunder of both Selling
Broker-Dealer and General Agent and this Agreement shall be binding and
enforceable by and against such person or legal entity in both capacities.
8
<PAGE>
K. COMPLAINTS AND INVESTIGATIONS
Pacific Mutual, PEN, Selling Broker-Dealer and General Agent agree to
cooperate fully in any insurance regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts distributed under
this Agreement. Pacific Mutual, PEN, Selling Broker-Dealer and General Agent
further agree to cooperate fully in any securities regulatory investigation or
proceeding with respect to Pacific Mutual, PEN, Selling Broker-Dealer and
General Agent, their affiliates and their agents or representatives to the
extent that such investigation or proceeding is in connection with the Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) Selling Broker-Dealer or General Agent will be notified promptly of any
customer complaint or notice of any regulatory investigation or proceeding or
judicial proceeding received by Pacific Mutual or PEN with respect to Selling
Broker-Dealer or General Agent or any Sub-agent or which may affect Pacific
Mutual's issuance of any contracts sold under this Agreement; and
(b) Selling Broker-Dealer and General Agent will promptly notify Pacific
Mutual and PEN of any customer complaint or notice of any regulatory
investigation or proceeding received by Selling Broker-Dealer, General Agent
or their affiliates with respect to Selling Broker-Dealer, General Agent or
any Sub-agent in connection with any Contracts distributed under this
Agreement or any activity in connection with any such policies.
In the case of a substantive customer complaint, Pacific Mutual, PEN, Selling
Broker-Dealer and General Agent will cooperate in investigating such complaint
and any response will be sent to the other party to this Agreement for approval
not less than five business days prior to its being sent to the customer or
regulatory authority, except that if a more prompt response is required, the
proposed response shall be communicated by telephone or telegraph.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days' prior written notice. This Agreement also may be terminated, for cause,
by any party immediately. This Agreement shall be terminated immediately if PEN
or Selling Broker-Dealer shall cease to be a registered Broker-Dealer under the
1934 Act or a member in good standing of the NASD, or if there occurs the
dissolution, bankruptcy or insolvency of Selling Broker-Dealer or General Agent.
Sections VI F and K shall survive termination of this Agreement.
Upon termination of this Agreement, Selling Broker-Dealer and General Agent
shall each use their best efforts to have all property of Pacific Mutual and PEN
in Selling Broker-Dealer, General Agent or Sub-agents' possession promptly
returned to Pacific Mutual or PEN, as the case may be. Such property includes
prospectuses, applications and other literature supplied by Pacific Mutual or
PEN.
THIS SPACE INTENTIONALLY LEFT BLANK
9
<PAGE>
M. EXCLUSIVITY
Selling Broker-Dealer and General Agent each agree that no territory is
assigned exclusively hereunder and that Pacific Mutual and PEN reserve the right
in their discretion to establish one or more agencies in any jurisdiction in
which Selling Broker-Dealer and General Agent transact business hereunder.
This Agreement shall be effective as of __________________________________.
PACIFIC EQUITIES NETWORK -------------------------------------
(SELLING BROKER-DEALER)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
PACIFIC MUTUAL LIFE INSURANCE COMPANY -------------------------------------
(GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
10
<PAGE>
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
11
<PAGE>
SCHEDULE A
----------
GENERAL LETTER OF RECOMMENDATION
General Agent hereby certifies to Pacific Mutual that all of the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as Sub-agents ("applicant")
submitted by General Agent. General Agent will, upon request, forward proof of
compliance with same to Pacific Mutual in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare that
each applicant is personally known to us, has been examined by us, is known to
be of good moral character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each individual is
trustworthy, competent, and qualified to act as an agent for Pacific Mutual, and
to hold himself out in good faith to the general public. We vouch for each
applicant.
2. We have on file a B-300, B-301 or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements for
the registration of each applicant as a registered representative through our
NASD member firm, and each applicant is presently registered as an NASD
registered representative.
The above information in our files indicates no fact or condition which would
disqualify the applicant from receiving a license, and all the findings of all
investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state in which each applicant is requesting a license, and that all such persons
have fulfilled the appropriate examination, education and training requirements.
4. If the applicant is required to submit his or her picture, signature, and
securities registration in the state in which he or she is applying for a
license, we certify that those items forwarded to Pacific Mutual are those of
the applicant and the securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a license with
Pacific Mutual in order to place insurance chiefly or solely on his or her life
or property, lives or property of his or her relatives, or property or liability
of his or her associates.
6. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will be
properly protected.
7. We will not permit any applicant to transact insurance as an agent until
duly licensed therefor. No applicants have been given a contract or furnished
supplies, nor have any applicants have permitted to write, solicit business or
act as an agent in any capacity, and they will not be so permitted until the
certificate of authority or license applied for is received.
8. We certify that General Agent, Selling Broker-Dealer and applicant shall
have entered into a written agreement pursuant to which: (i) applicant is
appointed a Sub-agent of General Agent and a registered representative of
Selling Broker-Dealer; (ii) applicant agrees that his or her selling activities
relating to securities regulated Contracts shall be under the supervision and
control of Selling Broker-Dealer and his or her selling activities relating to
all Contracts shall be under the supervision and control of General Agent; and
(iii) that applicant's right to continue to sell such Contracts is subject to
his or her continued compliance with such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer or General Agent.
12
<PAGE>
SCHEDULE B
COMPENSATION SCHEDULE
TO SELLING AGREEMENT FOR
PACIFIC SELECT
VARIABLE LIFE POLICY FORM 87-51
This Schedule to the Pacific Select Selling Agreement by and between the
undersigned is entered into on the dates appearing next to their signatures
below. The provisions of this schedule shall apply only to Pacific Select
Flexible Premium Variable Universal Life policies solicited and issued while
this schedule is in effect. All compensation payable under this schedule shall
be subject to the terms and conditions contained herein when premium payments
are accepted by Pacific Mutual Life Insurance Company ("PM").
1. Commission Rate: General Agent and/or Selling Broker-Dealer shall be paid a
commission equal to 5% of premium received and accepted by PM on issued policies
solicited by Selling Broker-Dealer.
2. Trail Commission: A trail commission of 0.20% on an annualized basis shall
be computed monthly as of the end of each policy month on the policy's excess of
the Accumulated Value, less any outstanding policy indebtedness, over $50,000
and payable annually on each policy anniversary date, provided the policy is in
force on such date.
3. Commission Calculation: Commissions shall only be calculated on premium
actually received and accepted by Pacific Mutual. Commissions shall only be
paid on an earned basis.
4. Commission Payments: Compensation on initial premium shall be due to the
General Agent and/or Selling Broker/Dealer at the time of the issuance of the
policy and for all other premium payments at the time of the receipt and
acceptance of premium by PM. After a change of Compensation Schedule or a
change of Broker/Dealer compensation due on existing policies shall be payable
to the General Agent and/or Selling Broker/Dealer in accordance with the
Schedule B in effect at the time of solicitation of the policy. Moreover, when
a Contract Owner terminates a Broker/Dealer, no further commissions or
compensation due on existing policies after termination shall be payable to the
General Agent and/or Selling Broker/Dealer after the notice of termination is
received and accepted by PM.
The amount, if any, and the time of payment of compensation on
replacements, changes, conversions, exchanges, term renewals, premiums paid in
advance, policies issued on a "guaranteed issue" basis, life policies issued
over age 70, policies in excess of PM's retention or policies requiring
reinsurance, and other special cases and programs shall be governed by PM's
underwriting and administrative rules then in effect.
5. Commission Chargeback: In the event that a policy for which a commission
has been paid is lapsed or surrendered by the Policy Owner during the first
policy year, or is returned to PEN or
<PAGE>
PM for refund of Premium within the later of 10 days after the purchaser
receives it or 45 days after the application for the policy is completed, or a
premium for which commission has been paid is refunded by PM PEN will require
reimbursement from General Agent and/or Selling Broker-Dealer as follows:
. 100% of the commission if the event that causes the Chargeback occurs within
six months of the policy issue date; or
. 50% of the commission if the event that causes the Chargeback occurs during
the seventh through twelfth months after the policy issue date.
If the amount to be deducted exceeds compensation otherwise due, General Agent
and/or Selling Broker-Dealer shall reimburse PEN before the next commission
cycle or within 10 business days from the date of mailing of a written demand
for reimbursement, whichever is later.
PM reserves the right to terminate or amend this Schedule B by providing written
notification to the Broker-Dealer. With the exception of the terms amended by
this amendment, all other terms and conditions of the original Selling Agreement
remain in full force and effect.
PM and PEN reserve the right to terminate or amend this schedule by providing
written notification to the other parties in accordance with Section VI.G of the
Selling Agreement.
Pacific Equities Network ____________________________________
(Selling Broker-Dealer)
By: /s/GERALD W. ROBINSON By: ___________________________
(Signature) (Signature)
Title: President & C.E.O. Title: ___________________________
Date: ______________________________ Date: ___________________________
Pacific Mutual Life Insurance Company ____________________________________
(Selling General Agent)
By: ______________________________ By: ___________________________
(Signature) (Signature)
Title: ______________________________ Title: ___________________________
Date: ______________________________ Date: ___________________________
_______________________________________ ____________________________________
(General Agent) (General Agent)
By: ______________________________ By: ___________________________
(Signature) (Signature)
Title: ______________________________ Title: ___________________________
Date: ______________________________ Date: ___________________________
_______________________________________ ____________________________________
(General Agent) (General Agent)
<PAGE>
By: ______________________________ By: ___________________________
(Signature) (Signature)
Title: ______________________________ Title: ___________________________
Date: ______________________________ Date: ___________________________
<PAGE>
Exhibit 99.1(5)(a)
Flexible Premium Variable Life Insurance Policy
<PAGE>
POLICY SPECIFICATIONS
BASIC POLICY: FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE
PREMIUMS: INITIAL PREMIUM PAYMENT - $10,000.00
GUIDELINE SINGLE PREMIUM - $10,000.00
GUIDELINE LEVEL PREMIUM - $ 961.14
ACCOUNT ALLOCATIONS AVAILABLE:
MONEY MARKET MULTI-STRATEGY GROWTH
MANAGED BOND INTERNATIONAL EQUITY INCOME
HIGH YIELD BOND GOVERNMENT SECURITIES EQUITY INDEX
EMERGING MARKETS GROWTH LT FIXED
AGGRESSIVE EQUITY
INTEREST ON THE FIXED ACCOUNT IS GUARANTEED TO BE NOT LESS THAN 4.00% ANNUALLY.
IN ADDITION, ANY EXCESS INTEREST DECLARED BY US WILL BE GUARANTEED FOR ONE YEAR.
PREMIUM TAX RATE: 2.35%
ADMINISTRATIVE CHARGE: $5.00 PER MONTH BEGINNING ON THE POLICY
DATE.
DEFERRED LOAD: $7.92 PER MONTH BEGINNING ON THE FIRST
POLICY ANNIVERSARY AND CONTINUING UNTIL
THE 11TH POLICY ANNIVERSARY.
UNRECOVERED
DEFERRED LOAD: ON THE POLICY DATE, THE UNRECOVERED
DEFERRED LOAD WILL BE $950.00 AND WILL BE
DECREASED BY THE AMOUNT OF EACH DEFERRED
LOAD WHEN PAID.
PAGE 3.0
POLICY NUMBER: 001234567-0 OWNER(S): LELAND STANFORD DOE
POLICY DATE: MAY 01, 1996
MATURITY DATE: MAY 01, 2056 INSURED: LELAND STANFORD DOE
RISK CLASSIFICATION: SMOKER AGE ON POLICY DATE: 35
<PAGE>
MONTHLY PAYMENT DATE IS THE 1ST INITIAL FACE AMOUNT: $60,510.00
DAY OF EACH POLICY MONTH.
NOTE: IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE SHOWN
IF THE ACCUMULATED VALUE IS INSUFFICIENT TO PAY THE CHARGES ASSESSED ON A
MONTHLY PAYMENT DATE. ACCUMULATED VALUE MAY BE BASED ON THE INVESTMENT RESULTS
OF THE SEPARATE ACCOUNT. THE PAYMENT OF INITIAL AND SUBSEQUENT PREMIUMS WILL NOT
GUARANTEE THAT THE POLICY WILL REMAIN IN FORCE OR THAT THERE WILL BE ACCUMULATED
VALUE AT MATURITY.
<PAGE>
Policy Number 001234567-0
POLICY SPECIFICATIONS
TABLE OF INSURANCE CHARGES
Guaranteed Maximum Monthly Cost of Insurance Rates per $1.00 applicable to basic
policy covering the primary insured Leland Stanford Doe.
<TABLE>
<CAPTION>
Monthly Monthly Monthly Monthly
Age Rate Age Rate Age Rate Age Rate
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.00044998 25 0.00018921 50 0.00073088 75 0.0068099
1 0.00011922 26 0.00018691 51 0.00079314 76 0.0075150
2 0.00010890 27 0.00018462 52 0.00086234 77 0.0082535
3 0.00010775 28 0.00018462 53 0.00094198 78 0.0090211
4 0.00010431 29 0.00018691 54 0.00103091 79 0.0098393
5 0.00009973 30 0.00018921 55 0.00112568 80 0.0107428
6 0.00009514 31 0.00019494 56 0.00122862 81 0.0117600
7 0.00009055 32 0.00020068 57 0.00133397 82 0.0129291
8 0.00008597 33 0.00020986 58 0.00144520 83 0.0142674
9 0.00008367 34 0.00021905 59 0.00156465 84 0.0157477
10 0.00008253 35 0.00023167 60 0.00169815 85 0.0173553
11 0.00008597 36 0.00024545 61 0.00184692 86 0.0190522
12 0.00009514 37 0.00026382 62 0.00201798 87 0.0208446
13 0.00010775 38 0.00028334 63 0.00221494 88 0.0227227
14 0.00012381 39 0.00030746 64 0.00243557 89 0.0247068
15 0.00014216 40 0.00033273 65 0.00267649 90 0.0268216
16 0.00015937 41 0.00036261 66 0.00293195 91 0.0291171
17 0.00017543 42 0.00039249 67 0.00320440 92 0.0316991
18 0.00018576 43 0.00042698 68 0.00348923 93 0.0346839
19 0.00019380 44 0.00046033 69 0.00379951 94 0.0385886
20 0.00019953 45 0.00049943 70 0.00414609
21 0.00020068 46 0.00053971 71 0.00454474
22 0.00019839 47 0.00058229 72 0.00500786
23 0.00019609 48 0.00062604 73 0.00554456
24 0.00019380 49 0.00067672 74 0.00614977
</TABLE>
<PAGE>
DEFINITIONS
PM, WE, OUR, and US - refers to Pacific Mutual Life Insurance Company.
MONTHLY PAYMENT DATE - is the day each month on which certain policy charges are
deducted from the Accumulated Value. This day is shown on page 3. The first
monthly payment date is the Policy Date.
HOME OFFICE - means the company's office located at 700 Newport Center Drive,
P.O. Box 7500, Newport Beach, California 92660.
YOU, YOUR or OWNER - refers to the owner of this policy.
POLICY DATE - is shown on page 3. Policy months, years and anniversaries are
measured from this date.
AGE - means age nearest birthday as of the policy date, increased by the number
of complete policy years elapsed. With respect to any increases in face amount,
riders, or other policy benefits which have an effective date not falling on a
policy date anniversary, "age" means age nearest birthday as of the effective
date increased by the number of complete years elapsed since the effective date.
EVIDENCE OF INSURABILITY - is information, including medical information,
satisfactory to us that is used to determine insurability and the insured's
class of risk.
INDEBTEDNESS - means all unpaid policy loans plus accrued interest on such
loans.
WRITTEN REQUEST - is a request in writing satisfactory to PM and filed at its
Home Office.
MATURITY DATE - is the policy anniversary nearest the insured's 95th birthday.
GENERAL PROVISIONS
ENTIRE CONTRACT - This policy is a contract between owner and PM. This policy,
the attached copy of the initial application, all subsequent applications to
change the policy, any endorsements, and all additional Policy information
sections added to this policy are the entire contract.
Only an authorized officer is permitted to change this contract or extend the
time for paying premiums.
All statements in the application are considered representations and not
warranties. PM will not use any statement to contest this policy or defend a
claim on grounds of misrepresentation unless the statement is in the
application.
INCONTESTABILITY - Except for failure to pay premiums, this policy cannot be
contested after the expiration of the following time periods:
<PAGE>
- - The initial face amount cannot be contested after the policy has been in force
during the insured's lifetime for two years from the policy date; and
- - an increase in the face amount cannot be contested after the increased amount
has been in force during the insured's lifetime for two years from its effective
date.
PARTICIPATING - This policy is participating and will share in the surplus
earnings of PM. However, the current dividend scale is zero and it is not
expected that dividends will be paid. Any dividends that do become payable will
be paid in cash.
SUICIDE EXCLUSION - If the insured dies by suicide, while sane or insane, within
two years of the policy date, no death benefit proceeds will be paid. Instead,
we will return the sum of the premiums paid, less the sum of any indebtedness or
preferred withdrawal amounts.
If the insured dies by suicide, while sane or insane, within two years of the
effective date of any increase in the face amount, no benefit will be paid with
respect to such increase. Instead, we will refund the Cost of Insurance Charges
made with respect to that increase.
MISSTATEMENT OF AGE - If the insured's age is misstated in the application, the
amount of the death benefit shall be the greater of that which would be
purchased by the most recent Cost of Insurance Charge at the correct age, or the
Guideline Minimum Death Benefit for the correct age.
REPORTS - A report will be mailed to you at the end or each policy quarter to
your last known address. This report will include the following information for
the policy quarter:
- - the Accumulated Value;
- - the Cash Surrender Value;
- - the current death benefit;
- - transactions that occurred during the policy quarter;
- - existing indebtedness;
- - changes in the Guideline Premiums; and
- - any information required by law.
In addition to the above reports, a semi-annual and an annual report will also
be mailed to you. These reports will contain financial statements for the
Separate Account and the designated investment company or companies in which the
Separate Account invests, the latter of which will include a list of the
portfolio securities of the investment company, as required by the Investment
Company Act of 1940. We will also send any other reports as required by federal
securities law.
<PAGE>
POLICY ILLUSTRATIONS - Upon request we will give you an illustration of the
future benefits under this policy based upon both guaranteed and current cost
factor assumptions. However, if you ask us to do this more than once in any
policy year, we reserve the right to charge you a fee for this service.
BASIS OF VALUES - A detailed statement showing how values are determined has
been filed with the state insurance department. All values are not less than
the minimums required by the law in the state in which this policy is delivered.
OWNERSHIP OF ASSETS - We have the exclusive and absolute control of our assets,
including all assets in the Separate Account.
COMPLIANCE - We reserve the right to make any change to the provisions of this
policy to comply with, or give you the benefit of, any federal or state statute,
rule or regulation, including but not limited to requirements for life insurance
contracts under the Internal Revenue Code or any state.
OWNER AND BENEFICIARY
OWNER - The Owner of this policy is as shown on the policy specifications pages
or in a later written change. If there are two or more owners, they will own
this policy as joint tenants with right of survivorship, unless otherwise
stated.
ASSIGNMENT - You may assign this policy by written request. An assignment will
take place only when recorded at our Home Office. When recorded, the assignment
will take effect as of the date the written request was signed. Any rights
created by the assignment will be subject to any payments made or actions taken
by PM before the change is recorded. PM will not be responsible for the
validity of any assignment.
BENEFICIARY - The beneficiary is named by you in the application to receive the
death benefit proceeds. The interest of any beneficiary will be subject to any
assignment.
You may make a change of beneficiary by written request on forms provided by PM
while the insured is living. The change will take place as of the date the
request is signed. Any rights created by the change will be subject to any
payments made or actions taken by PM before the written request is received.
You may designate a permanent beneficiary, whose rights under the policy cannot
be changed without his or her consent.
The interest of a beneficiary who does not survive to receive payment will pass
to the surviving beneficiaries in proportion to their share in the proceeds,
unless otherwise provided. If no beneficiaries survive to receive payment, the
death benefit proceeds will pass to the owner, or the owner's estate if the
owner does not survive to receive payment.
PREMIUMS
PREMIUMS - This policy will not be in force until the first premium is paid.
The initial premium
<PAGE>
may not be less than $10,0000. No additional premium may be less than $5,000,
except that a smaller premium may be paid to keep the contract in force if the
policy is in the grace period, or upon reinstatement. Premiums may be paid at
any time prior to the maturity date, subject to the premium limitations shown on
the following page. On written request a premium receipt signed by an officer
of PM will be given after payment.
PREMIUM ALLOCATION - The initial premium will be allocated to the Money Market
Variable Account on the policy date. On the date which is the later of 15 days
after the policy is issued or 45 days after the date the application is signed,
the Accumulated Value in the Money Market Variable Account will be allocated to
the Fixed and Variable Accounts according to the premium allocation specified in
the application. Any additional premiums received by us prior to such date,
less the premium load, will be allocated to the Money Market Variable Account.
Upon written request, you may change the premium allocation. Subsequent
premiums received by us, less the premium load, will be allocated to the Fixed
and Variable Accounts according to your most recent instructions, subject to the
following. Accumulated Value may be allocated to no more than five of the Fixed
and Variable Accounts. If we receive a premium and your most recent allocation
instructions would violate this requirement, we will allocate the premium, less
the premium load, to the Fixed and Variable Accounts in the same proportion as
the Accumulated Value in those accounts.
PREMIUM LIMITATION - In order for this policy to be treated as life insurance
under the Internal Revenue Code, the sum of the premiums paid less a portion of
any partial withdrawals may not exceed the greater of:
- - the Guideline Single Premium; or
- - the sum of the Guideline Level Premiums to the date of payment.
The amounts of the Guideline Premiums are shown in the Policy Specifications
pages. The Guideline Premiums will change whenever there is a change in the
face amount of insurance or in other policy benefits. Such change will be shown
in the supplemental schedule of benefits and premiums.
The Guideline Premiums are determined according to the rules applicable to this
policy set forth in Section 7702 of the Internal Revenue Code. The Guideline
Premiums will be adjusted to conform to any changes in the Internal Revenue
Code.
In the event that a premium payment would exceed these limits, we reserve the
right to refund the excess payment to the owner. Further, we reserve the right
to make distributions from the policy to the extent we deem it necessary to
continue to qualify this policy as life insurance under the Internal Revenue
Code.
We reserve the right to require evidence of insurability, satisfactory to us,
for any premium payment that would result in an immediate increase in the
difference between the death benefit and the
<PAGE>
Accumulated Value.
GRACE PERIOD AND LAPSE - If the Net Cash Surrender Value is not sufficient to
cover the current monthly deduction, a grace period of 61 days will be allowed
for the payment of sufficient premium to keep your policy in force. At the
start of the grace period, we will transfer, with no charge, the portion of the
Accumulated Value in all Variable Accounts into the Money Market Variable
Account.
We will send you a notice at the start of the grace period to your last known
address. The grace period will end 61 days after we mail you the notice. The
notice will state the due date and the amount of premium required to keep your
policy in force. In addition to sufficient premium to cover the excess, if any,
of the Unrecovered Deferred Load over the result of the Accumulated Value less
indebtedness, a minimum of three times the monthly deduction due when the
insufficiency occurred must be paid. Upon receipt of payment, we will allocate
the Accumulated Value in the Money Market Account and the premium payment to the
Variable Accounts and Fixed Account according to your most recent premium
allocation instructions. Your policy will remain in force during the grace
period. If sufficient premium is not paid by the end of the grace period, a
lapse will occur. Upon lapse, the policy will terminate with no value.
REINSTATEMENT - If it has not been surrendered, this policy may be reinstated
not more than five years after the end of the grace period. To reinstate this
policy you must provide us with:
- - evidence of insurability satisfactory to us;
- - payment of sufficient premium to cover all monthly deductions that were due
and unpaid during the grace period;
- - payment of sufficient premium to cover the excess, if any, of the Unrecovered
Deferred Load over the result of the Accumulated Value less indebtedness; and
- - in addition to the above, payment of a premium at least equal to three times
the most recent monthly deduction.
When this policy is reinstated, the Accumulated Value will be equal to the
Accumulated Value on the date of lapse subject to the following. We will
allocate the Accumulated Value and your premium payment, less the Premium Load,
to the Variable Accounts and Fixed Account according to your most recent premium
allocation instructions. If the policy is reinstated after the first monthly
payment date following lapse, the Accumulated Value will be reduced by the
amount of any indebtedness on the date of lapse and no policy indebtedness will
exist on the date of reinstatement. If the policy is reinstated on the first
monthly payment date following lapse, any indebtedness on the date of lapse will
also be reinstated, with the corresponding portion of the Accumulated Value
allocated to the Loan Account as described in the Policy Loans provision.
The effective date of the reinstated policy will be the first monthly payment
date on or following the date we approve your reinstatement application.
<PAGE>
POLICY BENEFITS
DEATH BENEFIT - If the insured dies while your policy is in force, your policy
will provide a death benefit. The death benefit for your policy will be the
greater of:
- - the face amount; or
- - the Guideline Minimum Death Benefit.
The Guideline Minimum Death Benefit at any time is the Accumulated Value
multiplied by the Death Benefit Percentage shown below:
<TABLE>
<CAPTION>
Death Benefit Death Benefit
Age Percentage Age Percentage
<S> <C> <C> <C>
0-40 250% 60 130%
41 243 61 128
42 236 62 126
43 229 63 124
44 222 64 122
45 215 65 120
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75-90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 >93 101
</TABLE>
DEATH BENEFIT PROCEEDS - The actual amount payable to the Beneficiary if the
insured dies while your policy is in force is called the death benefit proceeds.
The death benefit proceeds equal the death benefit provided by your policy, as
of the date of death, less any indebtedness and less any due and unpaid monthly
deductions occurring during a grace period.
We will pay the death benefit proceeds to the Beneficiary after we receive, at
our Home Office, proof of the insured's death satisfactory to us and such other
information as we may reasonably require. The actual death benefit proceeds paid
are subject to the conditions and adjustments defined in other policy
provisions, such as General Policy Provisions, Withdrawals and Policy Loans.
<PAGE>
CHANGE PROVISION - Subject to PM's approval, the owner may change the face
amount of insurance if such request is made:
- - during the lifetime of the insured;
- - after the first policy year;
- - no more often than once in any policy year; and
- - on written request while this policy is in force.
INCREASE - All of the following must occur before the effective date of any
increase in the face amount:
- - evidence of insurability must be provided to us;
- - consent of the insured, if the owner is not the insured; and
- - the insured must be no older than age 80 and insurable according to our
underwriting rules.
The effective date of the increased face amount will be the first monthly
payment date on or following the date all the conditions are met. A
supplemental schedule of benefits and premiums will be issued. This schedule
will include the following information for the additional face amount of
insurance:
- - the effective date of the increased face amount;
- - the amount of increase in the face amount;
- - the class of risk; and
- - the new Guideline Premiums.
No increase in face amount shall be for an amount less than $10,000. A charge
of $100 will be deducted from the Accumulated Value in the Fixed Account and the
Variable Accounts in the proportion that each bears to your Accumulated Value
less indebtedness on the effective date of the increase.
DECREASE - A request to decrease the face amount will be effective on the
monthly payment date on or following the date of the written request. Existing
insurance will be decreased or eliminated in the following order:
- - first, the most recent increase;
- - second, the next most recent increases successively; and
<PAGE>
- - finally, the original face amount.
A supplemental schedule of benefits and premiums will be issued. This schedule
will include the following information:
- - the effective date of the decrease in the face amount;
- - the amount of the decrease in the face amount and the benefit remaining in
force; and
- - the new Guideline Premiums.
The request for a decrease in the face amount will be subject to the Guideline
Premiums as determined under Section 7702 in the Internal Revenue Code. Such
request will not be allowed if the resulting Guideline Premiums could cause an
amount in excess of the Net Cash Surrender Value to be distributed from the
policy.
ACCUMULATED VALUE
ACCUMULATED VALUE - The Accumulated Value on any date is the sum of your
policy's Accumulated Value in the Fixed and Variable Accounts plus the amount
set aside in the Loan Account to secure any policy indebtedness.
The Accumulated Value on the policy date is equal to the initial premium less
the first monthly deduction.
The amount set aside to secure indebtedness in the Loan Account on each policy
anniversary is equal to the amount of indebtedness. During each policy year,
the amount in the Loan Account on any date is:
- - the amount in the Loan Account on the prior anniversary increased by interest;
- - plus any loan taken since the prior anniversary increased by interest; and
- - minus any loan amount repaid since the prior anniversary increased by
interest.
FIXED ACCOUNT - The Accumulated Value in the Fixed Account on any date
subsequent to the policy date is:
- - the Accumulated Value in the Fixed Account on the prior monthly payment date
increased by interest;
- - plus the portion of any premiums less premium load received and allocated to
the Fixed Account since the last monthly payment date, increased by interest;
- - minus the monthly deduction and other charges due, if any, and assessed
against the Fixed
<PAGE>
Account:
- - minus the amount of any withdrawals or transfer from the Fixed Account,
including transfers to the Loan Account, since the last monthly payment date,
increased by interest; and
- - plus the amount of any transfer to the Fixed Account, including transfers from
the Loan Account, since the last monthly payment date, increased by interest.
VARIABLE ACCOUNTS - Assets in the Variable Accounts are divided into
Accumulation units, which are a measure of value used for bookkeeping purposes.
We credit your policy with Accumulation units in each Variable Account as a
result of:
- - the amount of any premium payment allocated to the Variable Account; and
- - transfers of Accumulated Value to the Variable Account, including transfers
from the Loan Account;
We debit Accumulation units in each Variable Account as a result of:
- - transfers from the Variable Account, including transfers to the Loan Account;
- - surrenders and Preferred or Partial Withdrawals from the Variable Account; and
- - monthly deduction and other charges due, if any, and assessed against the
Variable Account.
To determine the number of Accumulation units debited or credited in connection
with a transaction, we divide the dollar amount of the transaction by the unit
value of the affected Variable Account.
The unit value of each Variable Account is determined on each Valuation Date.
The number of units in each Variable Account will not change because of
subsequent changes in unit value.
The Accumulation unit value of each Variable Account initially was $10. To
calculate the unit value of a Variable Account on any Valuation Date, we adjust
the unit value from the previous Valuation Date, for:
- - the investment performance of the Variable Account;
- - any dividends or distributions paid to the Variable Account;
- - the daily charge, equal to .00001924533 (.70% annually) multiplied by the net
assets in the Variable Account, for each calendar day between Valuation Dates
for the Mortality and Expense Risk charge; and
- - charges, if any, that may be assessed by us for income taxes attributable to
the operation of the Variable Account.
<PAGE>
A Valuation Date is each day required by applicable law and currently includes
each day the New York Stock Exchange is open.
To determine your Accumulated Value in each Variable Account, we multiply the
number of units in the Variable Account by the unit value of such account.
INTEREST - We will credit interest on the Accumulated Value in the Fixed Account
at a rate not less than .32737% per month, compounded monthly. This is
equivalent 4% annually. At our discretion, we may credit a higher rate of
interest from time to time. We will credit interest on the amount in the Loan
Account at a rate of .32737% per month, compounded monthly.
TRANSFERS - After the Free Look Right period and while your policy is in force,
you may, upon written request, transfer Accumulated Value among the Fixed and
Variable Accounts subject to the following. No transfer may be made if the
policy is in a grace period and the required premium has not been paid. Only
one transfer from the Fixed Account may be made in each policy year. If the
Accumulated Value in the Fixed Account is at least $1000, transfers from the
Fixed Account will be limited to 20% of the Accumulated Value in the Fixed
Account. Transfers from the Variable Accounts to the Fixed Account may be made
only during the policy month preceding each policy anniversary. After each
transfer, Accumulated Value may be allocated to no more than five of the Fixed
and Variable Accounts.
No charges are currently imposed upon a transfer. We reserve the right at a
future date to limit the size of transfers and remaining balances, to assess
transfer charges, and to limit the number and frequency of transfers.
MONTHLY DEDUCTION - A monthly deduction for a policy month is due on each
monthly payment date and is equal to the sum of the following items:
- - the monthly Cost of Insurance Charge;
- - the Administrative Charge, if any; and
- - the Deferred Load, if any.
The monthly deduction will be charged proportionately to the Accumulated Value
in each Account on the monthly payment date.
COST OF INSURANCE CHARGE - Beginning on the policy date and monthly thereafter,
there will be a deduction from the Accumulated Value equal to the Cost of
Insurance applicable to the following:
- - the initial face amount; plus
- - each increase in the face amount.
<PAGE>
The monthly Cost of Insurance Charge for the death benefit payable under this
policy, is (1) multiplied by the result of (2) minus (3), where: (1) is the
applicable monthly Cost of Insurance Rate; (2) is the death benefit at the
beginning of the policy month divided by 1.004074; and (3) is the Accumulated
Value at the beginning of the policy month before the monthly deduction due.
If there have been increases in the face amount, then, for purposes of
calculating the Cost of Insurance Charge, the Accumulated Value will first be
considered applicable to the initial face amount. If the Accumulated Value
exceeds the initial face amount divided by 1.004074, the excess will then be
considered applicable to any additional face amount resulting from increases in
the order of the increases.
COST OF INSURANCE RATES - The Cost of Insurance Rates are based on the insured's
age and risk classification. The current monthly Cost of Insurance Rates will
be determined by us. These rates will not exceed the Guaranteed Maximum Monthly
Cost of Insurance Rates shown on the Policy Specifications pages.
If the death benefit equals a percentage of the Accumulated Value, any increase
in Accumulated Value will cause an automatic increase in the death benefit. The
risk classification for such increase will be the same as that used for the most
recent increase in face amount that has not been eliminated through the Decrease
provision.
ADMINISTRATIVE CHARGE - Beginning on the policy date and monthly thereafter,
there may be an Administrative Charge withdrawn from the Accumulated Value. The
amount of this charge, if any, is shown in the Policy Specifications pages.
PREMIUM LOAD AND DEFERRED LOAD - A premium load will be charged each time a
premium is paid to cover premium tax and our sales and administrative expenses.
The premium load will equal a certain percentage of the corresponding premium
and consists of the following:
- - a sales load equal to 4.15%;
- - an administrative load equal to 3.0% if the premium is less than $50,000; 1.5%
if the premium is at least $50,000 but less than $100,000; and .5% if the
premium is $100,000 or greater;
- - a percentage for state and local premium taxes as shown on the Policy
Specifications pages.
The premium load associated with the initial premium will be due in 120 equal
installments. The first installment will be due on the first policy anniversary
and an additional installment will thereafter be due each monthly payment date
until 120 installments have been paid. The amount of each installment, or
Deferred Load, is shown on the Policy Specifications pages. The Deferred Load
that has not been deducted from the policy Accumulated Value is called the
Unrecovered Deferred Load. The initial Unrecovered Deferred Load is shown on
the Policy Specifications pages.
The premium load associated with each premium after the initial premium will be
immediately deducted from the premium paid.
<PAGE>
MORTALITY AND EXPENSE RISK CHARGE - We deduct daily from the net assets of each
Variable Account a Mortality and Expense Risk Charge equal to .70% annually.
The Mortality and Expense Risk Charge is to compensate us for the risk we assume
that mortality and expenses will be greater than estimated.
OTHER DEDUCTIONS - On the effective date of any increase in face amount, we will
deduct $100 from your Accumulated Value in the Fixed and Variable Accounts in
the proportion that each bears to your Accumulated Value less indebtedness.
However, if the face amount is increased strictly as a result of a preferred
withdrawal, the charge for an increase will be waived.
MATURITY, SURRENDER AND WITHDRAWAL OF VALUES
MATURITY - If the insured is living on the maturity date, this policy will then
terminate. We will pay to you the Net Cash Surrender Value as a final
settlement.
SURRENDER - Upon written request while the insured is living you may surrender
this policy for its Net Cash Surrender Value. The policy will terminate on the
date the request is received.
CASH SURRENDER VALUE - The Cash Surrender Value is the Accumulated Value less
any Unrecovered Deferred Load.
NET CASH SURRENDER VALUE - The Net Cash Surrender Value is the Cash Surrender
Value less any policy indebtedness.
PREFERRED AND PARTIAL WITHDRAWALS - Upon written request on or after the first
policy anniversary and before the 15th policy anniversary, while the insured is
living, you may withdraw a portion of the Net Cash Surrender Value of this
policy as a Preferred Withdrawal. A maximum of one Preferred Withdrawal may be
taken each policy year. The amount of each Preferred Withdrawal may not exceed
10% of the sum of all premiums paid to the date of the withdrawal. Preferred
Withdrawals will not be allowed on or after the 15th policy anniversary.
When a Preferred Withdrawal is taken, if the death benefit immediately before
the Preferred Withdrawal is greater than the face amount, the face amount will
be increased by the amount of such excess.
Upon request on or after the 15th policy anniversary while the insured is
living, you may withdraw a portion of the Net Cash Surrender Value of this
policy as a Partial Withdrawal. Partial Withdrawals will not be allowed prior
to the 15th policy anniversary.
When a Partial Withdrawal is taken, the face amount will be reduced by the
lesser of:
(1) the amount of the Partial Withdrawal; or
(2) the excess, if any, of the face amount over the result of (a) minus (b)
where: (a) is the Guideline Minimum Death Benefit immediately prior to the
Partial Withdrawal; and (b) is the amount of the
<PAGE>
Partial Withdrawal.
Preferred and Partial Withdrawals will be subject to the following conditions:
The amount of each withdrawal must be at least $1000 and the Accumulated Value
remaining after each withdrawal must be at least $5000. Also, if there is any
policy indebtedness at the time of each withdrawal, the amount of the withdrawal
is limited to the excess, if any, of the Cash Surrender Value immediately prior
to the withdrawal over the result of the indebtedness divided by 90%. The
amount of each withdrawal will be allocated proportionately to the Accumulated
Value in the Fixed and Variable Accounts unless otherwise requested by you. If
the insured dies after the request for a withdrawal is sent to us and prior to
the withdrawal being effected, the amount of the withdrawal will be deducted
from the death benefit proceeds, which will be determined without taking the
withdrawal into account.
INCOME BENEFITS
INCOME BENEFITS - Maturity, surrender or withdrawal benefits may be used to buy
a monthly income for the lifetime of the insured. Death benefits may be used to
buy a monthly income for the lifetime of the beneficiary. After it starts the
income will last for at least ten years. The purchase rates for the monthly
income will be set from time to time. However, the income bought by each $1,000
will always be at least as large as that shown below.
Age Monthly Income Age Monthly Income
30 $3.82 54 $4.92
32 $3.88 56 $5.08
34 $3.92 58 $5.26
36 $3.98 60 $5.46
38 $4.06 62 $5.68
40 $4.12 64 $5.94
42 $4.20 66 $6.22
44 $4.30 68 $6.54
46 $4.40 70 $6.90
48 $4.50 72 $7.28
50 $4.62 74 $7.68
52 $4.76 75 $7.89
Monthly income amounts for ages not shown are halfway between the two amounts
for the nearest two ages which are shown.
Guaranteed amounts for ages under 30 are the same as those for age 30;
guaranteed amounts for ages over 75 are the same as those for age 75. Amounts
shown are based on the 1971 Individual Annuity Mortality Table with interest at
4%.
This benefit is not available if the income would be less than $25 a month. We
may require evidence of survival for incomes which last more than ten years.
<PAGE>
OTHER OPTIONS - Maturity, surrender, withdrawal or death benefits may be used
under any other payment plans that we make available at that time.
POLICY LOANS
POLICY LOANS - You may obtain loans by written request while this policy is in
force on the sole security of this policy.
AMOUNT AVAILABLE - The amount available for a loan is 90% of the Cash Surrender
Value, less any policy indebtedness. The amount of a loan must be at least
$1000.
LOAN INTEREST - Interest will accrue daily and is payable in arrears at the
annual rate of 4.75%. Interest not paid when due will be added to the loan
principal and bear interest at the same rate of interest.
LOAN ACCOUNT - When a loan is taken, an amount equal to the loan is transferred
out of the Accumulated Value in the Fixed and Variable Accounts into the Loan
Account to secure the loan. Unless you request otherwise, loan amounts will be
deducted from the Variable Accounts and the Fixed Account on a proportionate
basis. We will credit interest monthly on amounts in the Loan Account at a rate
equivalent to an annual rate of 4%.
On each policy anniversary, if the amount in the Loan Account exceeds policy
indebtedness, the excess will be transferred from the Loan Account to the Fixed
and Variable Accounts according to your most recent instructions. If policy
indebtedness exceeds the amount in the Loan Account, an amount equal to such
excess will be transferred from the Fixed and Variable Accounts on a
proportionate basis to the Loan Account.
REPAYMENT - Loans may be repaid at any time prior to lapse of this policy. An
amount equal to the portion of any loan repaid, but not more than the amount in
the Loan Account, will be transferred from the Loan Account to the Fixed and
Variable Accounts according to your most recent instructions.
Any payment we receive from you while you have a loan will be first considered a
loan repayment, unless you tell us in writing it is a premium payment.
EXCHANGE OF INSURED
BENEFIT - After the first policy year, you may exchange the named insured on
this policy for a new insured, subject to the following provisions.
EXCHANGE CONDITIONS - Exercise of this exchange will be subject to the following
conditions:
- - the new insured must submit evidence of insurability satisfactory to us;
- - you must make written application for the exchange and return this policy for
reissue; and
<PAGE>
- - you must pay $100 to cover the administrative costs for processing the
exchange.
A request for an exchange of insured will be subject to the Guideline Premiums
as determined under Section 7702 of the Internal Revenue Code. Such request
will not be allowed if the resulting Guideline Premiums could cause an amount in
excess of the Net Cash Surrender Value to be distributed from the policy.
The charge of $100 will not be credited to or deducted from your Accumulated
Value. This amount will be paid directly to PM.
EXCHANGE DATE - The exchange date is the first monthly payment date on or after
the date the exchange conditions are met.
COVERAGE ON NEW INSURED - Coverage on the new insured will become effective on
the exchange date. Coverage on the current insured will terminate on the day
before the exchange date.
The policy date will not be changed unless the new insured was born after the
policy date. In that case, the new policy date will be the policy anniversary
on or next following the birth date of the new insured.
The cost of insurance rates for the new insured will be those applicable for the
new insured's age and risk classification. Riders on the new insured will be
added only with our consent and subject to our requirements.
The face amount will not be affected by the exchange. If a different face
amount is desired on the new insured, the Increase or Decrease provision of the
policy can be exercised.
SUICIDE EXCLUSION - If the new insured dies by suicide, while sane or insane,
within two years of the exchange date, no death benefit will be paid. Instead,
we will return the Net Cash Surrender Value as of the exchange date, plus the
premiums paid since the exchange date, less the sum of any indebtedness,
withdrawal amounts, and any dividends paid in cash since the exchange date.
INCONTESTABILITY - Except for failure to pay premiums, this policy cannot be
contested after it has been in force during the new insured's lifetime for two
years from the exchange date, subject to the incontestability provision for
increases in Face Amounts.
GENERAL CONDITIONS - Any indebtedness or assignment outstanding against this
policy will not be affected by the exchange.
PAYMENTS
VARIABLE ACCOUNTS - We will pay death benefit proceeds, Net Cash Surrender Value
on surrender, Preferred Withdrawals, Partial Withdrawals, and loans based on
allocations made to the Variable Accounts, and will effect a transfer between
Variable Accounts or from a Variable Account to the Fixed Account within seven
days after we receive all the information needed to process a
<PAGE>
payment.
However, we may postpone the calculation or payment of such a payment or
transfer of amounts based on investment performance of the Variable Accounts if:
The New York Stock Exchange is closed on other than customary weekend and
holiday closings or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission (SEC); or
An emergency exists, as determined by the SEC, as a result of which disposal of
securities is not reasonably practicable to determine the value of the Account
net assets; or
The SEC by order permits postponement for the protection of policy owners.
FIXED ACCOUNT - As to amounts allocated to the Fixed Account, we may defer
payment of any Net Cash Surrender Value on surrender, Preferred Withdrawal,
Partial Withdrawal, or loan amount or defer transfers from the Fixed Account for
up to six months after we receive a request for it. We will allow interest, at
a rate of at least 4% annually, on any Net Cash Surrender Value or withdrawal
benefit derived from the Fixed Account that we defer for 30 days or more.
SEPARATE ACCOUNT PROVISIONS
SEPARATE ACCOUNT - We established the Separate Account and maintain it under the
laws of California. The Separate Account is divided into subaccounts, called
Variable Accounts. Realized and unrealized gains and losses from the assets of
each Variable Account are credited or charged against it without regard to our
other income, gains, or losses. Assets may be put in our Separate Account to
support this policy and other variable life insurance policies. Assets may be
put in our Separate Account for other purposes, but not to support contracts or
policies other than variable life contracts of policies.
The assets of our Separate Account are our property. The portion of its assets
equal to the reserves and other policy liabilities with respect to our Separate
Account will not be chargeable with liabilities arising out of any other
business we conduct. We may transfer assets of a Variable Account in excess of
the reserves and other liabilities with respect to that account to another
Variable Account or to our general account. All obligations arising under the
policy are general corporate obligations of Pacific Mutual. We do not hold
ourselves out to be trustees of the Separate Account assets.
VARIABLE ACCOUNTS - Each Variable Account may invest its assets in a separate
class of shares of a designated investment company or companies. The Variable
Accounts of our Separate Account that were available for your initial
allocations, are shown on the Policy Specifications pages. The allocations that
you initially chose are shown on the copy of the application attached to this
Policy. From time to time we may make other Variable Accounts available to you.
We will provide you with written notice of all material details including
investment objectives and all charges.
<PAGE>
We reserve the right, subject to compliance with the law then in effect, to:
- - change or add designated investment companies;
- - add, remove or combine Variable Accounts;
- - add, delete or make substitutions for the securities that are held or
purchased by the Separate Account or any Variable Account;
- - register or deregister the Separate Account under the Investment Company Act
of 1940;
- - operate the Separate Account as a managed investment company;
- - combine the assets of the Separate Account with other separate accounts of PM
or an affiliate thereof;
- - run the Separate Account under the direction of a committee, board, or other
group;
- - restrict or eliminate any voting rights of policy owners with respect to the
Separate Account, or other persons who have voting rights as to the Separate
Account. Also, unless required by law or regulation, an investment policy may
not be changed without our consent; and
- - comply with law.
If any of these changes result in a material change in the underlying
investments of a Variable Account of our Separate Account, we will notify you of
such change.
We will not change the investment policy of the Separate Account without
following the filing and other procedures established by any applicable state
insurance regulators.
P13-8751
<PAGE>
INDEX
<TABLE>
<CAPTION>
SUBJECT PAGE
<S> <C>
Accumulated Value 9
Administrative Charge 11
Age 5
Assignment 6
Beneficiary 6
Cash Surrender Value 11
Change Provision 8
Compliance 6
Cost of Insurance Rates 11
Death Benefit 8
Definitions 5
Exchange of Insured 13
Face Amount 3
General Provisions 5
Grace Period and Lapse 7
Income Benefits 12
Incontestability 5
Interest 10
Maturity 11
Misstatement of Age 5
Monthly Deduction 10
Mortality and Expense Risk Charge 11
Other Deductions 11
Owner 3, 6
Participating 5
Payments 13
Policy Benefits 8
Policy Date 3
Policy Loans 12
Policy Specifications 3, 4
Premium Limitation 7
Premium Load and Deferred Load 11
Premiums 6
Reinstatement 7
Reports 6
Separate Account 14
Suicide Exclusion 5
Surrender 11
Transfers 10
Withdrawals 11
</TABLE>
<PAGE>
ENDORSEMENT
This endorsement is part of the policy to which it is attached and contains a
modification required by the laws and regulations of the state in which the
policy is issued.
The provision of this policy entitled "Premiums" is modified to include the
following sentence:
Premium payments may be made to the home office of PM or to any licensed agent
of PM.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
E-8409
<PAGE>
ENDORSEMENT
This endorsement is part of the policy to which it is attached and contains a
modification required by the laws and regulations of the state in which the
policy is issued.
The "Entire Contract" provision will be modified as follows:
This policy is a contract between the owner and Pacific Mutual. This policy,
with a copy of the application and any applications for reinstatement is the
entire contract. All statements contained in the application, shall in the
absence of fraud, be deemed representations and not warranties.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
E-8728
<PAGE>
ENDORSEMENT
This endorsement is part of the policy to which it is attached and contains a
modification required by the laws and regulations of the state in which the
policy is issued.
The provision entitled "Suicide Exception" or "Suicide Exclusion" in this policy
is replaced by the following:
Suicide - Suicide is no defense to payment under this contract unless PM can
show that suicide was intended when the insured applied for the policy.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
E-8103
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY
This policy is a legal contract between the policyowner and Pacific Mutual Life
Insurance Company
READ YOUR POLICY CAREFULLY
E-8357
<PAGE>
EXHIBIT 99.1(5)(b)
Endorsement Amending Suicide Exclusion Provision
<PAGE>
ENDORSEMENT AMENDING SUICIDE EXCLUSION PROVISION
THIS POLICY IS HEREBY AMENDED TO PROVIDE THAT:
The Suicide Exclusion provision of your policy will be waived for the amount of
Death Benefit that is a replacement of group life insurance.
The Suicide Exclusion provision of your policy will be in effect and will be
applicable to any Death Benefit in excess of the Death Benefit that is a
replacement of group life insurance.
The portion of Death Benefit equal to the group life insurance Death Benefit
will be considered a replacement of group life insurance if all of the following
conditions are met:
1. The group life insurance Death Benefit being replaced is a component of a
group life plan facilitated by the insured's current employer at the issuance of
this policy; and
2. The group life insurance Death Benefit being replaced is terminated within 90
days of the policy date of this policy; and
3. The group life insurance Death Benefit being replaced is not inforce on the
date of the death of the insured of this policy.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Thomas C. Sutton
Chairman and Chief Executive Officer
E-9104
<PAGE>
EXHIBIT 99.1(5)(c)
Accelerated Living Benefit Rider
<PAGE>
THIS RIDER IS ATTACHED TO AND MADE PART OF YOUR POLICY.
ISSUE DATE: ___________________
POLICY NUMBER: ___________________
AN ACCELERATED BENEFIT RECEIVED UNDER THIS RIDER MAY BE TAXABLE. YOU SHOULD
CONSULT YOUR PERSONAL TAX ADVISOR PRIOR TO REQUESTING THIS BENEFIT.
ANY BENEFIT RECEIVED UNDER THIS RIDER MAY IMPACT YOUR ELIGIBILITY FOR MEDICAID
OR OTHER GOVERNMENT BENEFITS.
This rider is not meant to cause involuntary access to proceeds ultimately
payable to the beneficiary. Therefore, this benefit is not available:
a) if either the owner or insured is required by law to use this benefit to meet
the claims of creditors, whether in bankruptcy or otherwise; or
b) if either the owner or insured is required by a government agency to use this
benefit in order to apply for, obtain or otherwise keep a government benefit or
entitlement.
Accelerated Benefit
The owner may elect to receive, while the insured is living, a portion of the
policy's proceeds. We will pay an Accelerated Benefit if an insured has been
diagnosed with a noncorrectable terminal illness and has a life expectancy of 6
months or less.
Definitions
Accelerated Benefit Payment is the actual dollar amount of benefit you will
receive under this rider.
Requested Portion is the amount of the policy proceeds the owner requests. The
Requested Portion divided by the Eligible Coverage will be called the Requested
Percentage. The Requested Portion cannot exceed the lesser of a) 50% of the
Eligible Coverage, or b) $250,000 for all policies in force with us.
Eligible Coverage is the portion of the policy proceeds which will qualify for
determining the Accelerated Benefit under this rider.
The Eligible Coverage includes:
- - the base policy death benefit;
- - any paid-up additions; and
<PAGE>
- -any term rider, term policy, or term coverage on the primary insured that has
at least two years of coverage remaining. For coverage amounts that vary by
year, the lowest coverage amount during the remaining two year period will be
used.
- -Survivor Life policies will be eligible for acceleration only after the death
of the first insured and the surviving insured has been diagnosed as terminally
ill. Any term rider, term policy or term coverage on the surviving insured that
has at least two years of coverage remaining, will be eligible for acceleration.
For coverage amounts that vary by year, the lowest coverage amount during the
remaining two year period will be used.
Eligible Coverage does not include:
- -any insurance provided under the policy on the life of someone other than the
insured;
- -the face amount of any scheduled increase(s) in insurance as provided by an
additional benefit rider during the 12 month period after the date the
accelerated payment is requested;
- -the amount of any accidental death benefit.
The minimum Accelerated Benefit Payment amount is $500. The Accelerated Benefit
will be paid either in a lump sum or any other payment plan available at the
time of payment. WE WILL PAY THE ACCELERATED BENEFIT AMOUNT ONLY ONCE PER
INSURED. If a settlement option is selected and the insured dies before all
payments are made, the remaining amount will be paid to the beneficiary.
Accelerated Benefit Payment
The Accelerated Benefit Payment will be determined as of the date we approve
your written request. Your Accelerated Benefit Payment will equal the Requested
Portion less the following adjustments:
1. An actuarial discount will apply to the Requested Portion. This discount
reflects the early payment of the Requested Portion of your policy. The discount
will be based on an annual interest rate declared by us and which is in effect
as of the date we approve your written request.
2. If there is a policy loan outstanding on your policy as of the date we
approve your written request, we will reduce the Requested Portion in order to
repay a portion of the outstanding policy loan equal to the Requested Percentage
times the outstanding loan.
3. A reduction to the Requested Portion will be applied to any premiums due and
unpaid if the policy has entered the Grace Period at the time we approve your
request.
4. An administrative charge not to exceed $150.
We will refund the amounts discussed in 1. and 4. above should the death of the
Insured occur within 30 days of the Accelerated Benefit Payment.
<PAGE>
Impact on Policy
After an Accelerated Benefit Payment is made, the policy and all riders will
remain in force subject to the following adjustments. The policy death benefit,
any cash value, any paid-up additions, Accumulated Value, if any, and any term
insurance eligible to be accelerated under this rider, and any required premium
payments will be reduced by the Requested Percentage. Any outstanding policy
loan will be reduced as specified in the Accelerated Benefit Payment Section.
Any adjustment in Accumulated Value will be allocated to the Fixed Account and
Variable Accounts on a prorata basis. Cost of Insurance Charges will be adjusted
to reflect the reduction in the death benefit.
Eligibility
The following conditions must be met prior to any Accelerated Benefit Payment:
- -The policy must be in force on the date the Accelerated Benefit Payment is
approved. If you have a term insurance policy or your policy is on Extended
Term, a minimum period of two years of coverage must be remaining in order to
qualify for an Accelerated Benefit Payment.
- -We must receive written proof satisfactory to us that the insured's or for
Survivor Life policies the surviving insured's life expectancy is 6 months or
less from the date of the written request. Proof will include the certification
by a licensed physician, who is not yourself or a member of your family. Such
proof should include documentation supported by clinical, radiological or
laboratory evidence of the condition. We reserve the right to obtain a second
medical opinion from a physician of our choice at our expense.
- -Owner or legal guardian must apply in writing for this benefit on a form
supplied by us.
- -Written consent from any irrevocable beneficiary is required in order to apply
for accelerated benefits.
- -Written consent from any assignee must be obtained.
Incontestability
This rider is subject to the Incontestability provision of the base policy to
which it is attached.
Effective Date
This rider is effective on the issue date specified.
General Provisions. There will be an administrative charge, not to exceed $150,
which will be deducted from the Accelerated Benefit.
<PAGE>
This rider will terminate:
- -on your written request;
- -on lapse or termination of the policy; or
- -when an Accelerated Benefit is paid under this rider.
Pacific Mutual Life Insurance Company
Thomas C Sutton Audrey L. Milfs
Chairman and Chief Executive Officer Secretary
R92-ABR
<PAGE>
EXHIBIT 99.1(6)(a)
BYLAWS
OF
PACIFIC MUTUAL LIFE INSURANCE COMPANY
AS AMENDED NOVEMBER 27, 1991
<PAGE>
BYLAWS
For the Regulation, Except As
Otherwise Provided by Statute
Or Its Articles of Incorporation,
of
Pacific Mutual Life Insurance Company
Article I. - OFFICES
SECTION 1. Principal Office. - The principal office for the transaction
of business of the corporation is hereby fixed and located at 700 Newport Center
Drive, City of Newport Beach, County of Orange, State of California.
SEC. 2. Other Offices. - Branch or subordinate offices may at any time
be established by the board of directors at any place or places where the
corporation is qualified to do business.
Article II. - MEETINGS OF MEMBERS
SECTION 1. - Place of Meetings. - The annual meeting of members shall be
held at 700 Newport Center Drive, Newport Beach, California. All other meetings
of members shall be held at any place within or without the State of California
designed by the board of directors pursuant to authority hereinafter granted to
said board. In the absence of any such designation, such meetings shall be held
at 700 Newport Center Drive, Newport Beach, California.
1
<PAGE>
SEC. 2. Annual Meetings. - The annual meetings of members shall be held
on the fourth Wednesday of March of each year at 9:00 a.m. of said day.
Written notice of each annual meeting may be given to each member
entitled to vote thereat either personally or by mail or other means of written
communication, charges prepaid, addressed to such member at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. At the option of the corporation such notice may be
imprinted on premium notices or receipts or on both. If a member gives no
address, notice shall be deemed to have been given if sent by mail or other
means of written communication addressed to the place where the principal office
of the corporation is situated, or if published at least once in some newspaper
of general circulation in the county in which said office is located. All such
notices shall be sent to each member entitled thereto not less than seven (7)
days before each annual meeting and shall specify the place, the day and the
hour of such meeting and the general nature of the business to be transacted;
provided that, notwithstanding anything to the contrary contained in these
bylaws, notice of an annual meeting to be held at the time and place specified
in Section 11532.1 of the California Insurance Code shall be sufficiently given
if published at least once in each of four successive weeks in a newspaper of
general circulation in the county in which the principal office of the
corporation is located, and if so published no other notice of such meeting
shall be required.
2
<PAGE>
SEC. 3. Special Meetings. - Special meetings of members, for any
purpose or purposes whatsoever, may be called at any time by the chairman of the
board, the president or by the board of directors or by any two or more members
thereof or by one or more members holding not less than one-fifth of the voting
power of the corporation. Notices of special meetings shall be sent to each
member entitled thereto not less than seven (7) days before each such special
meeting and shall specify, in addition to the place, day and hour of the
meeting, the general nature of the business to be transacted.
SEC. 4. Adjourned Meetings and Notice Thereof. - Any members' meeting,
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of a majority of the members who are either present in
person or represented by proxy thereat, but in the absence of a quorum no other
business may be transacted at any such meeting.
When any members' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary
to give any notice of the time and place of the adjourned meeting or of the
business to be transacted at an adjourned meeting, other than by announcement at
the meeting at which said adjournment is taken.
SEC. 5. Entry of Notice. - Whenever any member entitled to vote has
been absent from any meeting of members, whether annual or special, an entry in
the minutes to the effect that notice has been duly given shall be conclusive
and incontrovertible evidence that due
3
<PAGE>
notice of such meeting was given to such member as required by law and the
bylaws of the corporation.
SEC. 6. Voting. - At all meetings of members each member entitled to
vote, and either present in person or by proxy thereat, shall have only one vote
regardless of the number of policies or the amount of insurance that each such
member holds. Such vote may be viva voce or by ballot; provided, however, that
all elections for directors shall be by ballot upon demand made by a member at
any election and before the voting begins.
SEC. 7. Quorum. - The presence in person or by proxy of the holders of
five percent (5%) of the members entitled to vote at any meeting shall
constitute a quorum for the transaction of business. The members present at a
duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough members to
leave less than a quorum.
SEC. 8. Proxies. - Each member entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such member or his duly authorized
agent and filed with the secretary of the corporation; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution unless the member executing it specifies therein the length of
time for which such proxy is to continue in force, which in no case shall exceed
seven (7) years from the date of its execution. Any proxy duly executed is not
revoked, and continues in full force
4
<PAGE>
and effect, until an instrument revoking it, or a duly executed proxy bearing a
later date, is filed with the secretary.
SEC. 9. Inspectors of Election. - In advance of any meeting of members,
the board of directors shall appoint one or three inspectors of election to act
at such meeting or any adjournment or adjournments thereof. The inspector or
inspectors of election shall determine the number of members present or
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes, ballots or consents, hear and
determine all challenges and questions in any way arising in connection with the
right to vote, count and tabulate all votes or consents, determine the result of
and do such acts as may be proper to conduct the election or vote with fairness
to all members. The inspector or inspectors of elections shall perform their
duties impartially, in good faith, to the best of their ability and as
expeditiously as is practical. On request of the chairman of the meeting or of
any member or his proxy, the inspector or inspectors shall make a report in
writing of any challenge or question or matter determined by them and execute a
certificate of any fact found by them. If there be three inspectors of
election, the decision, act or certificate of a majority shall be effective in
all aspects as the decision, act or certificate of all, an shall be final and
conclusive as to all matters passed upon and determined. If there be one
inspector of election, his decision, act or certificate shall be final and
conclusive as to all matters passed upon and determined. In case any person
appointed as inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment made by the board of directors in advance of the
convening of the meeting, or at the meeting by the person or officer acting as
chairman.
5
<PAGE>
Article III. - BOARD OF DIRECTORS
SECTION 1. Powers. - Subject to limitations of the articles of
incorporation and of the bylaws, and of any statutory provisions as to action to
be authorized or approved by the members, all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to-wit:
First. Corporate Business. - To conduct, manage and control all the
business and affairs of the corporation, and to make such rules and regulations
therefor not inconsistent with law, the articles of incorporation or the bylaws,
as they may deem best.
Second. Select and Remove Officers, Agents and Employees. - To select
and remove all officers of the corporation, as more fully provided for in
Article V hereof, and to select and remove all agents and employees of the
corporation, and to prescribe such duties and powers for its officers, agents
and employees as may not be inconsistent with law, the articles of incorporation
or the bylaws, fix or change their salaries, compensation and emoluments, and if
the board of directors deem it necessary, require of them security for faithful
service, including surety bonds, and from time to time thereafter require of
them other and different security for faithful service, including surety bonds
in different amounts and with different
6
<PAGE>
sureties. The board of directors may delegate to the executive committee or
other committee and/or to any officer or officers its power hereunder to select
or remove officers appointed under the provisions of Section 3 of Article V and
agents or employees, and to fix or change their respective salaries,
compensation or emoluments.
Third. Appoint Committees. - To appoint an executive committee and other
committees, and to delegate, by resolution or resolutions, to such committee any
of the powers and authority of the board of directors in the management of the
business and affairs of the corporation, except the power to declare dividends
on policies of insurance and adopt, amend or repeal bylaws; to fix and
prescribe, by resolution or resolutions, the powers and duties of committees
appointed by it; and to fix, by resolution or resolutions, the quorum for the
transaction of business of committees, other than the executive committee, which
may be less than a majority, but not less than one-third of the authorized
number of committee members.
Fourth. Incur Indebtedness. - To borrow money and incur indebtedness for
the purposes of the corporation and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, pledges, hypothecations, or other evidences of debt and securities
therefor.
Fifth. Participating and Non-Participating Insurance. - To determine
which agreements and policies of insurance made by the corporation shall be upon
the basis of full or partial participation in the profits or without any
participation therein.
7
<PAGE>
Sixth. Dividends. - To declare dividends or to provide other
participation in the profits in the case of policies of insurance entitled to
such dividends or participation at such times and in such amounts as in its
opinion the condition of the affairs of the corporation shall render it
advisable.
Seventh. Miscellaneous. - To designate any place within or without the
State of California for the holding of any members' meeting or meetings, other
than the annual meeting.
SEC. 2. Number of Directors.
(a) Authorized Number of Directors. - The authorized number of directors
of the corporation shall be not less than fifteen (15) nor more than eighteen
(18).
(b) Exact Number of Directors. - The exact number of directors is hereby
fixed at Sixteen (16).
SEC. 3. Term of Office and Election. - The directors shall be divided into
three classes, as nearly equal in number as possible, and the terms of office of
the respective classes shall expire at annual intervals and at the times fixed
for successive annual meetings of members. The directors in office at the time
this bylaw becomes effective shall be divided by lot into one
8
<PAGE>
class of six directors and two classes of five directors each, and the terms of
office of the class composed of six directors shall expire at the time fixed for
the first annual meeting of members to be held after the annual meeting of
members in 1990 and the terms of office of the classes composed of five
directors each shall expire at the time of the second and third annual meeting
of members to be held after the annual meeting of members in 1990. Each director
thereafter elected at annual or special meetings of members shall hold office
for a term expiring at the time fixed for the third annual meeting of members to
be held after the meeting of members at which he was elected provided that if
any election would put more than six directors in the class whose terms expire
at such annual meeting, then the excess shall be chosen serially by lot and
allocated serially to the class or classes next in order whose terms expire at
the second and first annual meetings respectively and whose membership shall be
less than six to bring the membership of such class or classes up to six.
At each annual meeting of members, directors in number equal to the
number of directors whose terms expire at the time fixed for such meeting, shall
be elected, but if any such annual meeting of members is not held, or if
directors are not elected thereat, directors may be elected at any special
meeting of members held for the purpose of electing directors.
All directors shall hold office for the term for which they are elected
and until their respective successors are elected and qualified, except that
each director who attains age 72 during the term for which elected shall hold
office only until the next annual meeting of members following attainment of age
72 at which time a person may be elected as director to
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complete the unexpired term of office, if any, for which the director attaining
age 72 had been elected.
SEC. 4. Resignation. - Any director may resign at any time by giving written
notice to the board of directors or to the chairman of the board or to the
secretary of the corporation. Any such resignation shall take effect at the
date of receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SEC 5. Vacancies. - Each director elected to fill a vacancy caused by the
death, resignation or removal of a director shall hold office for a term which
will complete the unexpired term of office of such deceased, resigned or removed
director. Each director elected to fill a vacancy created by an increase in the
authorized number of directors or by failure of the members to elect the full
authorized number of directors shall hold office for a term expiring at the time
fixed for the third annual meeting of members to be held after the election
which fills the vacancy provided that if any election would put more than six
directors in the class whose terms expire at such annual meeting, then the
excess shall be chosen serially by lot and allocated serially to the class or
classes next in order whose terms expire at the second and first meetings,
respectively, and whose membership shall be less than six to bring the
membership of such class or classes up to six.
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SEC 6. Place of Meetings. - Regular meetings of the board of directors shall be
held at any place within or without the State of California which has been
designated from time to time by resolution of the board of directors or by
written consent of all members of the board. In the absence of such
designation, regular meetings, other than the annual meeting, shall be held at
700 Newport Center Drive, Newport Beach, California, unless not less than ten
(10) days prior to said meeting, a written notice designating another location
is mailed to each director at the address as shown upon the records of the
corporation. Special meetings of the board may be held either at a place so
designated or at 700 Newport Center Drive, Newport Beach, California.
SEC. 7 Regular Annual Meetings. - Immediately following each annual meeting of
members, the board of directors shall hold a regular annual meeting for the
purpose of organization, election of officers, and the transaction of other
business. The regular annual meeting shall be held at 700 Newport Center Drive,
Newport Beach, California. Notice of such meeting is hereby dispensed with.
SEC 8. Other Regular Meetings. - Other regular meetings of the board of
directors shall be held without call, on the fourth Wednesday of February, May,
August, October and November. All meeting shall be held at the hour of 9:00
o'clock A.M., except in the month in which the regular annual meeting of the
board of directors is held. Should any meeting day for a meeting of the board
of directors fall upon a legal holiday, then said meeting shall be
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held at the same time on the next day thereafter ensuing which is not a legal
holiday. Notice of all such regular meetings of the board of directors is hereby
dispensed with.
SEC 9. Special Meetings. - Special meetings of the board of directors for any
purpose or purposes shall be called at any time by the chairman of the board, or
if he is absent or unable or refuses to act, by the president, or, if he is
absent or unable or refuses to act, by any three (3) directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director or sent to each director by mail or other
form of written communication, charges prepaid, addressed to him at his address
as it is shown upon the records of the corporation, or, if it is not so shown on
such records and is not readily ascertainable, at the place in which the
meetings of the directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail or delivered to the
telegraph company at least twenty-four (24) hours prior to the time of the
holding of the meeting. In case such notice is delivered as above provided, it
shall be so delivered at least twelve (12) hours prior to the time of the
holding of the meeting. Such mailing, telegraphing or delivery as above
provided shall be due, legal and personal notice to such director.
SEC. 10. Adjournment. - A quorum of the directors may adjourn any directors'
meeting to meet again at a stated day and hour; provided, however, that in the
absence of a quorum, a
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majority of the directors present at any directors' meeting, either regular or
special, may adjourn from time to time or until the time fixed for the next
regular meeting of the board.
SEC. 11. Notice of Adjournment. - Notice of the time and place of holding an
adjourned meeting need not be given to absent directors if the time and place be
fixed at the meeting adjourned.
SEC. 12. Entry of Notice. - Whenever any director has been absent from any
special meeting of the board of directors, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was given to such director as
required by law and the bylaws of the corporation.
SEC. 13. Waiver of Notice. - The transactions of any meeting of the board of
directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice if a quorum be
present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice of or consent to holding such meeting
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
SEC. 14. Quorum. - Eight directors shall be necessary to constitute a quorum
for the transaction of business, except to adjourn, as provided in Section 10 of
this article. Every act
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or decision done or made by a majority of the directors at a meeting duly held,
at which a quorum is present, shall be regarded as an act of the board of
directors, unless a greater number be required by law or by the articles of
incorporation.
SEC. 15. Fees and Compensation. - The directors shall, by resolution of the
board, determine from time to time the manner and amount of compensation payable
for their services as directors, with or without expenses of attendance at
meetings. Directors who are salaried officers of the corporation shall not
receive additional fees or compensation for their services as directors.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation therefor.
Article IV. - EXECUTIVE COMMITTEE
SECTION 1. Powers and Duties. - The executive committee shall have and
exercise, to the extent provided in a resolution or resolutions of the board of
directors, such powers and authority of the board of directors in the management
of the business and affairs of the corporation, except the power to declare
dividends on policies of insurance or adopt, amend or repeal bylaws, as the
board of directors may delegate to it.
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SEC. 2. Number of Members. - The authorized number of members of the
executive committee shall be seven (7), in addition to ex officio members, until
changed by a resolution of the board of directors.
SEC. 3. Qualifications. - Each member of the executive committee shall
be a member of the board of directors.
SEC 4. Appointment and Term of Office. - The members of the executive
committee shall be appointed at each annual meeting of the board of directors,
but if any such annual meeting is not held or the members are not appointed
thereat, the members may be appointed at any subsequent meeting of the board of
directors. All members of the executive committee shall hold office until their
respective successors are appointed.
SEC. 5. Resignation. - Any member of the executive committee may resign
at any time by giving written notice to the board of directors or to the
chairman of the board or to the secretary of the corporation. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time, specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SEC. 6. Vacancies. - Vacancies in the executive committee shall be
filled by appointment by the board of directors and each member so appointed
shall hold office until his successor is appointed.
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SEC. 7. Organization, etc. - The chairman of the executive committee
shall be as designated, the chairman of the board shall be vice chairman of the
executive committee, and the secretary of the corporation, or in his absence
such other officer or employee as the chairman of the executive committee may
designate, shall act as secretary. The executive committee shall keep a record
of its acts and proceedings and report the same from time to time to the board
of directors.
SEC. 8. Regular Meetings. - A regular meeting of the executive committee
shall be held without call or notice upon the day and at such hours and place as
the committee shall from time to time determine or at such other place as
designated by the chairman of the executive committee in a written notice to the
members thereof. Should the day so selected by the committee fall upon a legal
holiday, then the meeting shall be held at the same time on the next day which
is not a legal holiday.
SEC. 9. Special Meetings. - Special meetings of the executive committee
for any purpose or purposes shall be held at such place as shall be called by
the chairman of the executive committee, the chairman of the board, the
president, or secretary or any three (3) members of the executive committee.
Notice of each special meeting of the executive committee shall be sent by mail,
telegraph or telephone, or be delivered personally to each member of said
committee not later than twelve (12) hours before the day on which such meeting
is to be held.
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SEC. 10. Waiver of Notice. - The transactions at any meeting of the
executive committee, however called and noticed or whenever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum be present and if, either before or after the meeting, each of the
members not present sign a written waiver of notice of or consent to holding
such meeting or an approval of the minutes thereof. All such waivers, consents,
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
SEC. 11. Quorum. - Any three (3) members of the executive committee,
either regular or ex officio, shall constitute a quorum for the transaction of
business. Every act or decision done or made by a majority of the members at a
meeting duly held, at which a quorum is present, shall be regarded as an act of
the executive committee.
SEC 12. Adjournment. - A quorum of the members may adjourn any executive
committee meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum the majority of members present at any executive
committee meeting, either regular or special, may adjourn from time to time or
until the time fixed for the next regular meeting of the executive committee.
SEC. 13. Inspection of Records. - The record or records of the acts and
proceedings of the executive committee, including its minutes, shall at all
times be open to inspection by any
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member of the board of directors or any committee or any person appointed by the
board of directors for that purpose and such inspection shall include the right
to make extracts.
SEC. 14. Fees. - Each member of the executive committee, except those
members who are salaried officers of the corporation, shall receive such fee, if
any, as shall be fixed by the board of directors for their respective attendance
at each meeting. Members of the executive committee who are salaried officers
of this corporation shall not receive additional fees or compensation for their
respective attendance at executive committee meetings.
Article V. - OFFICERS
SECTION 1. Number and Qualifications. - The officers of the corporation
shall be a chairman of the board who shall be a member of the board of
directors; a president; one or more executive vice presidents, senior vice
presidents, vice presidents, and 2nd vice presidents as the board of directors
may from time to time determine; a secretary, treasurer, general counsel,
corporate actuary, controller, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold any two offices and perform the duties thereof except that of chairman and
secretary and except that of president and secretary.
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SEC. 2 Election, Term of Office. - Each officer, except such officers as
may be appointed in accordance with the provisions of Section 3 of this Article
V, shall be chosen annually by the board of directors and shall hold his office
until his successor shall have been duly chosen and shall have qualified, or
until his death, or until he shall resign, or until he shall have been removed
in the manner hereinafter provided.
SEC. 3. Other Officers, etc. - The Board of directors may appoint such
assistant vice presidents, assistant secretaries, assistant treasurers, and
other officers as the business of the corporation may require, each of whom
shall hold office for such period and have such authority and perform such
duties as are provided in these bylaws or as the board of directors may from
time to time determine. The board of directors may delegate to the executive
committee, or any officer or officers, the power to appoint any officer or
officers provided for in this Section 3 of Article V.
SEC. 4. Removal. - Any officer chosen under Section 2 of this Article V
may be removed, either with or without cause, by a two-thirds vote of the
directors present at any regular meeting of the board of directors. Any
officer, except an officer chosen by the board of directors pursuant to Section
2 of this Article V, may also be removed at any time, with or without cause, by
the executive committee or any officer or officers upon whom such powers of
removal may be conferred by the board of directors.
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SEC. 5. Resignation. - Any officer may resign at any time by giving
written notice to the board of directors or to the chairman of the board or to
the chief executive officer or to the secretary of the corporation. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SEC. 6. Vacancies. - A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the bylaws for regular election or appointment to such
office.
SEC. 7. Chairman of the Board. - The chairman of the board shall be the
chief executive officer of the corporation and shall have supervision, direction
and control of the business and affairs of the corporation and shall consult
with the president and the executive vice presidents as to policies laid down or
defined by the board of directors and major policy decisions relating to the
policies laid down or defined by the board of directors and major policy
decisions relating to the conduct of the affairs of the corporation. He shall
preside at all meetings of the members of the board of directors and in the
absence or disability of the chairman of the executive committee, he shall
exercise the powers and perform the duties of the chairman of the executive
committee. He shall be an ex officio member of all committees, and shall have
such other powers and duties as may be prescribed from time to time by the board
of directors or elsewhere in these bylaws.
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SEC. 8. Vice Chairman. - The vice chairman shall also be the chief
investment officer and shall have such powers and duties as may be prescribed
from time to time by the board of directors, the chairman of the board, or
elsewhere in these bylaws. He shall be an ex officio member of all committees.
In the absence or disability of the chairman of the board, he shall exercise the
powers and perform the duties of the chairman of the board. In the absence or
disability of both the chairman of the board and vice chairman, an officer
designated by the chairman of the board shall exercise the powers and perform
the duties of the vice chairman.
SEC. 9. Executive Vice Presidents. - The executive vice presidents shall
assist the chairman of the board and the president in the exercise of their
powers and duties and shall have such other powers and perform such other duties
as may be prescribed from time to time by the chairman of the board, the
president, the board of directors, or elsewhere in these bylaws.
SEC. 10. Senior Vice President, Vice Presidents and 2nd Vice Presidents.
- - The senior vice presidents, vice presidents and 2nd vice presidents shall
assist the chairman of the board, the president and the executive vice
presidents in the exercise of their powers and duties and shall have such other
powers and perform such other duties as may be prescribed from time to time by
the chairman of the board, the president, the executive vice presidents, the
board of directors or elsewhere in these bylaws.
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SEC. 11. Secretary. - The secretary shall keep, or cause to be kept, a
book of minutes at the principal office, or such other place as the board of
directors may order, of all meetings of the directors, executive committee and
members with the time and place of holding, whether regular or special, and if
special, how authorized, the notice thereof given, the names of those present at
directors' and executive committee meetings, the number of members present or
represented at members meetings and the proceedings thereof.
The secretary shall give, or cause to be given, notice of all meetings of
the members, the board of directors and the executive committee, required by the
bylaws or bylaw to be given; and he shall keep the seal of the corporation in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the chairman of the board, the president, the executive
vice presidents, the board of directors or elsewhere in these bylaws.
SEC. 12. Treasurer. - The treasurer shall have custody of all funds,
securities and other valuables of the corporation which may have or shall come
into his hands. He shall have such powers and perform such duties as may be
prescribed by the chairman of the board, the president, the executive vice
presidents, the board of directors or elsewhere in these bylaws, and in addition
thereto shall:
(a) Deposit or cause to be deposited all funds, securities and other
valuables in the name of and to the credit of the corporation in its own or with
such depositaries as shall be designated in accordance with the provision of
Section 4, Article VI of these bylaws.
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(b) Be responsible for the due and proper disbursement of the funds
of the corporation.
(c) When necessary or proper, endorse on behalf of this corporation
for collection, checks, notes and other obligations.
(d) Make a report each month to the board of directors of such cash
receipts and disbursements as shall have occurred during the period of the
report and, in addition, shall render to the board of directors, the chairman of
the board, or the president, whenever requested, an account of all his
transactions as treasurer.
(e) Record regularly, full and accurate accounts of all monies
received and paid by him on account of the corporation.
SEC. 13. General Counsel. - The general counsel shall have the general
powers and duties usually vested in such officer and shall have such other
powers and duties as may be prescribed by the chairman of the board, the
president, the executive vice presidents, the board of directors or elsewhere in
these bylaws.
SEC. 14. Corporate Actuary. - The corporate actuary's duties shall be to
coordinate the actuarial bases of the company's operations, to maintain
surveillance of the financial
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performance of the company and its subsidiaries, to maintain surveillance of tax
and regulatory compliance, to direct the auditing of the various accounts and
records, and to have such other duties and responsibilities as may from time to
time be assigned to him by the chairman of the board, the president, the
executive vice presidents, the board of directors or elsewhere in these bylaws.
SEC. 15. Controller. - The controller's duties shall be to direct the
maintenance of the various accounts and other accounting media of the
corporation, to supervise expenses and operating efficiencies of the company and
its subsidiaries, and to have such further duties and responsibilities as may
from time to time be assigned to him by the chairman of the board, the
president, the executive vice presidents, the board of directors or elsewhere in
these bylaws.
SEC. 16. Assistant Vice Presidents. - The assistant vice presidents
shall have such powers and perform such duties as may from time to time be fixed
and prescribed for them by the board of directors, the chairman of the board,
the president, the executive vice presidents or elsewhere in these bylaws.
SEC. 17. Assistant Secretaries and Assistant Treasurers. - The assistant
secretaries and the assistant treasurers shall have such powers and perform such
duties as are assigned to them by these bylaws and shall have such other powers
and perform such other duties not inconsistent with these bylaws as may from
time to time be assigned to them by the secretary or the treasurer,
respectively, or by the board of directors.
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Article VI. - INSURANCE POLICIES, CONTRACTS, CHECKS,
DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Insurance Policies, How Signed. - All policies issued by this
corporation shall be signed by the chairman or president and countersigned by
the secretary either personally or by facsimile.
SEC. 2. Checks, Drafts, etc. - All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, except as in these
bylaws otherwise provided, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as from
time to time shall be determined by resolution of the board of directors or by
resolution of the executive committee, if the board of directors delegate such
authority to it.
SEC. 3. Contracts, etc., How Executed. - The board of directors, or the
executive committee if such authority is delegated to it by the board of
directors, except as by law or in the bylaws otherwise provided, may authorize
any officer or officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to special instances; and unless so
authorized, no officer, agent or employee shall have any power or authority to
bind the corporation by any
25
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contract or engagement or to pledge its credit to render it liable for any
purpose or to any amount.
SEC. 4. Bank Accounts. - All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation,
and in its name, in such banks, trust companies, or other depositaries as the
board of directors may select or as may be selected by any committee, officer or
officers, agent or agents of the corporation to whom such powers may from time
to time be delegated by the board of directors; and for the purpose of such
deposits the chairman of the board, the president, any vice president, the
secretary, the treasurer, or any other officer or agent or employee of the
corporation to whom such power may be delegated by the board of directors or by
the executive committee, if such authority be delegated to it by the board of
directors, may endorse, assign and deliver checks, drafts and other orders for
the payments of monies which are payable to the order of the corporation.
SEC. 5. Departmentalization. - So long as the corporation maintains two
or more departments, the corporation may apportion among them their fair and
equitable share of expenses; may exchange assets between such departments on a
fair and equitable basis; and may, at customary reinsurance rates, reinsure
business between such departments.
Article VII. - INVESTMENTS
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SECTION 1. Investments in the Corporation's Name. - All investments of
the corporation shall be made in the name of Pacific Mutual Life Insurance
Company or its nominee.
SEC. 2. Investments by the Corporation. - The corporation shall invest
as much of its capital, surplus and accumulations as the board of directors or
the executive committee, if such authority is delegated to it by the board of
directors, may determine in the purchase of or loans upon any of the securities
specified by law, which investment or investments shall be approved by the
executive committee, if such authority is delegated to it by the board of
directors, and by a vote of two-thirds of all the directors of the corporation,
unless such latter approval is not required by law, and any such approval by the
board of directors shall be entered upon the records or minutes of the
corporation which must show the fact of making such investment or investments,
the amount thereof, the name of each director voting to approve the same, the
amount, character and value of the security purchased or taken as collateral
and, if the investment be a loan, the name of the borrower, the rate of interest
thereon, and the date when the loan will become due or payable.
Article VIII. - MEMBERS
SECTION 1. Members Defined. - The words "member" and "members" as used in these
bylaws are hereby defined to include only those policyholders of the
Participating and Non-
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Participating Life classes. In any case where a Participating or Non-
Participating Life policy names two or more persons as joint insureds, payees,
owners or holders thereof, the persons so named shall be deemed collectively to
be but one member for the purposes of these bylaws. In any case where such a
policy shall have been assigned by assignment absolute on its face to an
assignee other than the corporation, and such assignment shall have been filed
at the principal office of the corporation at least thirty days prior to the
date of any election or meeting referred to in these bylaws, then such assignee
shall be deemed to be the member entitled to vote at such election or meeting.
SEC. 2. One Class of Members. - There shall be but one class of members
of the corporation.
Article IX. - CORPORATE RECORDS, ANNUAL REPORT
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
SECTION 1. Inspection of Bylaws. - The corporation shall keep in its principal
office for the transaction of business the original or a copy of the bylaws as
amended or otherwise altered to date, certified by the secretary, which shall be
open to inspection by the members at all reasonable times during office hours.
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SEC. 2. Inspection of Corporate Records. - The books of account, and
minutes of proceedings of the members, of the board of directors and of the
executive committee shall be open to inspection upon the written demand of any
member at any reasonable time and for a purpose reasonably related to his
interests as a member and shall be exhibited at any time when required by the
demand of ten percent (10%) of the members entitled to vote at any members'
meeting shall be made in writing upon the chairman of the board, the president,
secretary or assistant secretary of the corporation.
SEC. 3. Representation of Shares of Other Corporations. - The chairman
of the board, the president or any vice president and the secretary or any
assistant secretary of this corporation are authorized to vote, represent and
exercise on behalf of this corporation all rights incident to any and all share
or other evidence of ownership of any other business entities such as
corporations, business trusts and partnerships standing in the name of this
corporation. The authority herein granted to said officers to vote or represent
on behalf of this corporation any and all such evidences of ownership held by
this corporation may be exercised either by such officers n person or by any
person authorized so to do by proxy or power of attorney duly executed by said
officers.
Article X. - AMENDMENTS
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SECTION 1. Powers of Members. - A bylaw or bylaws may be adopted,
amended, or repealed by the vote of members entitled to exercise a majority of
the voting power of the corporation or by the written assent of such members.
SEC. 2. Power of Directors. - Subject to the rights of the members, as
provided in Section I of this Article, to adopt, amend or repeal a bylaw or
bylaws, other than a bylaw or amendment thereof changing the authorized number
of directors, may be adopted, amended, or repealed by the board of directors.
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EXHIBIT 99.1(6)(b)
Articles of Incorporation of Pacific Mutual Life Insurance Company
<PAGE>
ARTICLES OF INCORPORATION
of
PACIFIC MUTUAL LIFE INSURANCE COMPANY
ONE: The name of this corporation is
PACIFIC MUTUAL LIFE INSURANCE COMPANY.
TWO: The purposes for which this corporation is formed are:
(a) To transact the business of life insurance, including insurance upon the
lives of persons or appertaining thereto, and the granting, purchasing and/or
disposing of annuities; to transact the business of disability insurance,
including insurance appertaining to injury, disablement or death resulting to
the insured from accidents, and appertaining to disablements resulting to the
insured from sickness.
(b) To issue its policies and contracts of insurance upon a legal reserve basis,
including, but not limited to, participating insurance policies and contracts.
(c) To purchase, take in exchange, or by gift or otherwise, hold, own, maintain,
work, develop, subdivide, improve, sell, convey, encumber by mortgage, deed of
trust or otherwise, lease or otherwise acquire and dispose of, real and/or
personal property and any interest or right therein as provided by law; to
acquire, hold, erect, remodel, repair, operate, maintain, lease and sell
buildings of any and every kind and description as provided by law.
(d) To lend or borrow money and incur indebtedness as provided by law, to issue
bonds, debentures, coupons, notes and other negotiable or non-negotiable
instruments and/or securities, and to secure the same by mortgage, pledge, deed
of trust or otherwise as provided by law.
(e) To acquire the capital stock of other corporations, or any other property,
rights or franchise as provided by law; to hold, purchase or otherwise acquire,
sell, assign, transfer, mortgage, pledge, hypothecate or otherwise dispose of
shares of the capital sock of other evidences of indebtedness created by any
other corporation, or any other property rights or franchises as provided by
law; to aid in any manner any corporation whose stock, bonds, or other
obligations are held or are guaranteed in any manner by the corporation hereby
created, and to do any other acts or things for the preservation, protection,
improvement or enhancement of the value of any such stock, bonds or other
obligations as provided by law; and while the owner of any stock of other
corporations to exercise all of the rights and privileges of such ownership,
including the right to vote thereon, to the same extent as a natural person
might or could do as provided by law.
(f) To acquire all or any part of the assets of any other corporation authorized
to transact an insurance
<PAGE>
business, either from such corporation directly or from its conservator,
liquidator or receiver, and in connection with such acquisition to reinsure or
assume any or all of the obligations of such corporation to its policyholders or
other creditors and to execute such agreements with, or in favor of such
corporation, its conservator, liquidator or receiver, or its policyholders,
creditors or stockholders, as may be approved by the board of directors of this
corporation.
(g) Generally to carry on any other business necessarily or impliedly incidental
to or in any way connected with the foregoing purposes, or any of them; to have
and exercise all of the powers conferred by the laws of the State of California
upon corporations; to do any or all of the things hereinbefore set forth, either
as principal or as agent, and to the same extent as natural persons might or
could do; to enter into, make, perform and carry out contracts of every sort and
kind with any person, firm, association or corporation, private, public or
municipal, or body politic, or with the Government of the United States, or any
state or territory thereof, or any foreign government or municipal corporation
or body politic; to exercise all or any of its said powers and own and hold
property and to transact business in the State of California and elsewhere
within and without the United States; and, for the purpose of attaining or
furthering any of its objects, to do any and all other acts and things, and to
exercise all or any other powers, which a natural person could do or exercise,
which now or hereafter may be authorized by law.
(h) To carry on any other business or businesses not prohibited to domestic life
insurance companies, either as principal, partner, or agent, which this
corporation deems proper or convenient whether in connection with any of the
foregoing purposes or otherwise, or which may be calculated directly or
indirectly to promote the interest of this corporation or to enhance the value
of its property or business.
The foregoing clauses contained in this statement of purposes shall be construed
as purposes, objects and powers, and the statement contained in any clause shall
not be limited or restricted in any way by reference to or inference from the
terms of any other clause. Each such object, purpose and power shall be
regarded as an independent object, purpose or power, and shall be in furtherance
and not in limitation of each and/or every other object, purpose and power.
THREE: The county in the State of California where the principal office for the
transaction of the business of this corporation is to be located is Orange
County.
FOUR: This corporation shall be a nonstock life and disability insurance
corporation, conducted for the benefit of its members who shall be the
policyholders of the Participating and Non-Participating Life classes.
FIVE: (There is no article five).
SIX: (a) The number of the directors of this corporation shall be fifteen (15);
(b) The names and addresses of the persons who are appointed to act as the first
directors of this corporation are:
<PAGE>
Name Address
HARRY J. BAUER Edison Building, Los Angeles, CA
ASA V. CALL Pacific Mutual Building, Los Angeles, CA
ANDREW M. CHAFFEY California Bank Building, Los Angeles, CA
H. S. DUDLEY 19433 Roosevelt Highway, Los Angeles, CA
CAREY GROETEN 1472 Beaudry Blvd., Glendale, CA
GEORGE GUND The Riverside, Reno, Nevada
H. W. O'MELVENY 433 South Spring St., Los Angeles, CA
T. RUSSELL HARRIMAN 537 South Euclid Ave., Pasadena, CA
ALFRED G. HANN Pacific Mutual Building, Los Angeles, CA
A. N. KEMP Pacific Mutual Building, Los Angeles, CA
H. S. MacKAY, Jr. 458 South Spring St., Los Angeles, CA
D. C. McEWEN Pacific Mutual Building, Los Angeles, CA
HENRY S. McKEE 650 South Spring Street, Los Angeles, CA
LAWRENCE MORGAN 537 Las Palmas, Los Angeles, CA
HENRY M. ROBINSON Pacific Southwest Bldg., Los Angeles, CA
SEVEN: This corporation expressly reserves the right to amend its articles of
incorporation from time to time in such manner and for such purposes as may at
the time be permitted by law.
IN WITNESS WHEREOF, for the purpose of forming this corporation under the laws
of the State of California, we, the undersigned, constituting the incorporators
of this corporation and the persons named hereinabove as the first directors
thereof, have executed these articles of incorporation this 21st day of July,
1936.
Harry J. Bauer
Asa V. Call
Andrew M. Chaffey
<PAGE>
H. S. Dudley
Carey Groeten
George Gund
H. W. O'Melveny
T. Russell Harriman
Alfred G. Hann
H. S. MacKay, Jr.
D. C. McEwen
Henry S. McKee
Lawrence Morgan
Henry M. Robinson
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared HARRY J. BAUER, known to me to be the person whose name is
subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
<PAGE>
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared ANDREW M. CHAFFEY, known to me to be the person whose name
is subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared HENRY S. McKEE, known to me to be the person whose name is
subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared HENRY M. ROBINSON, known to me to be the person whose name
is subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los
<PAGE>
Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, MILTON A. TAYLOR, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared ASA V. CALL, GEORGE GUND, H. W. O'MELVENY and H. S. MacKAY,
JR., known to me to be the persons whose names are subscribed to the foregoing
Articles of Incorporation, and acknowledged to me that they executed the same.
WITNESS my hand and official seal.
MILTON A. TAYLOR
Notary Public in and for the County of
Los Angeles, State of California.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared H. S. DUDLEY, CAREY GROETEN, T. RUSSELL HARRIMAN, ALFRED G.
HANN, A. N. KEMP, D. C. McEWEN and LAWRENCE MORGAN, known to me to be the
persons whose names are subscribed to the foregoing Articles of Incorporation,
and acknowledged to me that they executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
<PAGE>
EXHIBIT 99.1(9)
Participation Agreement between Pacific Mutual Life Insurance Company
and Pacific Select Fund
<PAGE>
FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 6th day of November, 1992, by and between Pacific
Mutual Life Insurance Company (the "Company"), a life insurance company
domiciled in California, on its behalf and on behalf of the segregated asset
accounts of the Company listed on Exhibit A to this Agreement (the "Separate
Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts business trust;
and Pacific Equities Network ("Distributor"), a California corporation.
WITNESSETH
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act") and the Fund is authorized to issue
separate classes of shares of beneficial interests ("shares"), each representing
an interest in a separate portfolio of assets known as a "series" and each
series has its own investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is currently
comprised of nine separate series, and other series may be established in the
future; and
WHEREAS, the Fund has obtained an order from the SEC granting Participating
Insurance Companies, separate accounts funding Variable Contracts of
Participating Insurance Companies, and the Fund exemptions from the provisions
of sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and paragraph (b)(15)
of Rule 6e-3(T) under the 1940 Act, to the extent necessary to permit such
persons to rely on the exemptive relief provided under paragraph (b)(15) of Rule
6e-3(T), even though shares of the Fund may be offered to and held by separate
accounts funding variable annuity contracts or scheduled or flexible premium
variable life insurance contracts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company wishes to purchase shares of one or more of the Fund's series on
behalf of its Separate Accounts to serve as an investment medium for Variable
Contracts funded by the Separate Accounts, and the Distributor is authorized to
sell shares of the Fund's series;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I. Sale of Fund Shares
1
<PAGE>
1.1. The Distributor agrees to sell to the Company those shares of the series
offered and made available by the Fund and identified on Exhibit B ("Series")
that the Company orders on behalf of its Separate Accounts, and agrees to
execute such orders on each day on which the Fund calculates its net asset value
pursuant to rules of the SEC ("business day") at the net asset value next
computed after receipt and acceptance by the Fund or its agent of the order for
the shares of the Fund.
1.2. The Fund agrees to make available on each business day shares of the
Series for purchase at the applicable net asset value per share by the Company
on behalf of its Separate Accounts' provided, however, that the Board of
Trustees of the Fund may refuse to sell shares of any Series to any person, or
suspend or terminate the offering of shares of any Series, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Trustees, acting in good faith and in light of the
Trustees' fiduciary duties under applicable law, necessary in the best interests
of the shareholders of any Series.
1.3. The Fund and the Distributor agree that shares of the Series of the Fund
will be sold only to Participating Insurance Companies, their separate accounts,
and other persons consistent with each Series being adequately diversified
pursuant to Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code") and the regulations thereunder. No shares of any Series will be sold
directly to the general public.
1.4. The Fund and the Distributor will not sell shares of the Series to any
insurance company or separate account unless an agreement containing provisions
substantially the same as this Agreement is in effect to govern such sales.
1.5. Upon receipt of a request for redemption in proper form from the Company,
the Fund agrees to redeem any full or fractional shares of the Series held by
the Company, ordinarily executing such requests on each business day at the net
asset value next computed after receipt and acceptance by the Fund or its agent
of the request for redemption, except that the Fund reserves the right to
suspend the right of redemption, consistent with Section 22(e) of the 1940 Act
and any rules thereunder. Such redemption shall be paid consistent with
applicable rules of the SEC and procedures and policies of the Fund as described
in the current prospectus.
1.6. The Company agrees to purchase and redeem the shares of each Series in
accordance with the provisions of the current prospectus for the Fund.
1.7. The Company shall pay for shares of the Series on the same day that it
places an order to purchase shares of the Series. Payment shall be in federal
funds transmitted by wire.
1.8. Issuance and transfer of shares of the Series will be by book entry only
unless otherwise agreed by the Fund. Stock certificates will not be issued to
the Company or the Separate Accounts unless otherwise agreed by the Fund.
Shares ordered from the Fund will be recorded in an appropriate title for the
Separate Accounts or the appropriate subaccounts of the Separate Accounts.
1.9. The Fund shall promptly furnish notice (by wire or telephone, followed by
written confirmation) to the Company of any income dividends or capital gain
distributions payable on the
2
<PAGE>
shares of the Series. The Company hereby elects to reinvest in the Series all
such dividends and distributions as are payable on a Series' shares and to
receive such dividends and distributions in additional shares of that Series.
The Company reserves the right to revoke this election in writing and to receive
all such dividends and distributions in cash. The Fund shall notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall instruct its recordkeeping agent to advise the Company on
each business day of the net asset value per share for each Series as soon as
reasonably practical after the net asset value per share is calculated.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it is taxed as an
insurance company under Subchapter L of the Code.
2.2. The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the ________________________ Insurance Code, and that each of the Separate
Accounts is a validly existing segregated asset account under applicable federal
and state law.
2.3. The Company represents and warrants that the Variable Contracts issued by
the Company or interests in the Separate Accounts under such Variable Contracts
(1) are or, prior to issuance, will be registered as securities under the
Securities Act of 1933 ("1933 Act") or, alternatively (2) are not registered
because they are properly exempt from registration under the 1933 Act or will be
offered exclusively in transactions that are properly exempt from registration
under the 1933 Act.
2.4. The Company represents and warrants that each of the Separate Accounts (1)
has been registered as a unit investment trust in accordance with the provisions
of the 1940 Act or, alternatively (2) has not been registered in proper reliance
upon an exclusion from registration under the 1940 Act.
2.5. The Company represents that it believes, in good faith, that the Variable
Contracts issued by the Company are currently treated as annuity contracts or
life insurance policies (which may include modified endowment contracts),
whichever is appropriate, under applicable provisions of the Code.
2.6. The Company represents and warrants that any of its Separate Accounts that
fund variable life insurance contracts and that are registered with the SEC as
investment companies rely on the exemptions provided by Rule 6e-3(T), or any
successor thereto, and not on Rule 6e-2 under the 1940 Act.
2.7. The Fund represents and warrants that it is duly organized as a business
trust under the laws of the Commonwealth of Massachusetts, and is in good
standing under applicable law.
2.8. The Fund represents and warrants that the shares of the Series are duly
authorized for issuance
3
<PAGE>
in accordance with applicable law and that the Fund is registered as an open-end
management investment company under the 1940 Act.
2.9. The Fund represents that it believes, in good faith, that the Series
currently comply with the diversification provisions of Section 817(h) of the
Code and the regulations issued thereunder relating to the diversification
requirements for variable life insurance policies and variable annuity
contracts.
2.10. The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. General Duties
3.1. The Fund shall take all such actions as are necessary to permit the sale
of the shares of each Series to the Separate Accounts, including maintaining its
registration as an investment company under the 1940 Act, and registering the
shares of the Series sold to the Separate Accounts under the 1933 Act for so
long as required by applicable law. The Fund shall amend its Registration
Statement filed with the SEC under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of the shares of the
Series. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states to the extent deemed necessary by the Fund
or the Distributor.
3.2. The Fund shall make every effort to maintain qualification of each Series
as a Regulated Investment Company under Subchapter M of the Code (or any
successor or similar provision) and shall notify the Company immediately upon
having a reasonable basis for believing that a Series has ceased to so qualify
or that it might not so qualify in the future.
3.3. The Fund shall make every effort to enable each Series to comply with the
diversification provisions of Section 817(h) of the Code and the regulations
issued thereunder relating to the diversification requirements for variable life
insurance policies and variable annuity contracts and any prospective amendments
or other modifications to Section 817 or regulations thereunder, and shall
notify the Company immediately upon having a reasonable basis for believing that
any Series has ceased to comply.
3.4. The Fund shall be entitled to receive and act upon advice of its General
Counsel or its outside counsel in meeting the requirements specified in Sections
3.2 and 3.3 hereof.
3.5 The Company shall take all such actions as are necessary under applicable
federal and state law to permit the sale of the Variable Contracts issued by the
Company, including registering each Separate Account as an investment company to
the extent required under the 1940 Act, and registering the Variable Contracts
or interests in the Separate Accounts under the Variable Contracts to the extent
required under the 1933 Act, and obtaining all necessary approvals to offer the
Variable Contracts from state insurance commissioners.
3.6. The Company shall make every effort to maintain the treatment of the
Variable Contracts issued
4
<PAGE>
by the Company as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code, and shall notify the Fund
and the Distributor immediately upon having a reasonable basis for believing
that such Variable Contracts have ceased to be so treated or that they might not
be so treated in the future.
3.7. The Company shall offer and sell the Variable Contracts issued by the
Company in accordance with applicable provisions of the 1933 Act, the 1934 Act,
the 1940 Act, the NASD Rules of Fair Practice, and state law respecting the
offering of variable life insurance policies and variable annuity contracts.
3.8. The Distributor shall sell and distribute the shares of the Series of the
Fund in accordance with the applicable provisions of the 1933 Act, the 1934 Act,
the 1940 Act, the NASD Rules of Fair Practice, and state law.
3.9. A majority of the Board of Trustees of the Fund shall consist of persons
who are not "interested persons" of the Fund ("disinterested Trustees"), as
defined by Section 2(a)(19) of the 1940 Act, except that if this provision of
this Section 3.9 is not met by reason of the death, disqualification, or bona
fide resignation of any Trustee or Trustees, then the operation of this
provision shall be suspended (a) for a period of 45 days if the vacancy or
vacancies may be filled by the Fund's Board; (b) for a period of 60 days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
3.10. The Company agrees to provide, as promptly as possible, notice to the
Fund and to the Distributor if the Company has reason to know about a meeting of
some or all of the owners of the Variable Contracts or shareholders of the Fund,
where the agenda or purpose of the meeting relates, in whole or in part, to the
Fund and that has not been called by the Fund's Board of Trustees (and which
shall not include a vote of Variable Contract Owners having an interest in a
Separate Account to substitute shares of another investment company for
corresponding shares of the Fund or a Series, as described in Section 9(e) and
to which the notice provision of Section 9.2 shall apply). In such an event,
the Company agrees to distribute proxy statements and any additional
solicitation materials upon the request of the Fund or the Distributor to the
owners of the Variable Contracts issued by the Company at least 30 days prior to
the meeting. The Company further agrees that it shall take no action, directly
or indirectly, in furtherance of shareholders of the Fund or Contract Owners
taking any action with respect to the Fund by written consent and without a
meeting.
3.11. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
ARTICLE IV. Potential Conflicts
4.1. The Fund's Board of Trustees shall monitor the Fund for the existence of
any material irreconcilable conflict (1) between the interests of owners of
variable annuity contracts and variable
5
<PAGE>
life insurance policies, and (2) between the interests of owners of Variable
Contracts ("Variable Contract Owners") issued by different Participating
Insurance Companies that invest in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretive letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of the Fund or any Series are being managed; or (e) a decision by a
Participating Insurance Company to disregard the voting instructions of Variable
Contract Owners.
4.2. The Company agrees that it shall be responsible for reporting any
potential or existing conflicts to the Fund's Board of Trustees. The Company
will be responsible for assisting the Board of Trustees of the Fund in carrying
out its responsibilities under this agreement, by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
This includes, but is not limited to, an obligation by the Company to inform the
Board whenever Variable Contract Owner voting instructions are disregarded. The
Company shall carry out its responsibility under this Section 4.2 with a view
only to the interests of the Variable Contract Owners.
4.3. The Company agrees that in the event that it is determined by a majority
of the Board of Trustees of the Fund or a majority of the Fund's disinterested
Trustees that a material irreconcilable conflict exists, the Company shall, to
the extent reasonably practicable (as determined by a majority of the
disinterested Trustees of the Board of the Fund), take whatever steps are
necessary to eliminate the irreconcilable material conflict, including: (1)
withdrawing the assets allocable to some or all of the Separate Accounts from
the Fund or any Series and reinvesting such assets in a different investment
medium, which may include another series of the Fund, or submitting the question
of whether such segregation should be implemented to a vote of all affected
Variable Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., Contract Owners of Variable Contracts issued by one or
more Participating Insurance Companies) that votes in favor of such segregation,
or offering to the affected Variable Contract Owners the option of making such a
change; and (2) establishing a new registered management investment company or
managed separate account. If a material irreconcilable conflict arises because
of the Company's decision to disregard Variable Contract Owners' voting
instructions and that decision represents a minority position or would preclude
a majority vote, the Company shall be required, at the Fund's election, to
withdraw the Separate Accounts' investment in the Fund, and no charge or penalty
will be imposed as a result of such withdrawal. The Fund shall neither be
required to bear the costs of remedial actions taken to remedy a material
irreconcilable conflict nor shall it be requested to pay a higher investment
advisory fee for the sole purpose of covering such costs. In addition, no
Variable Contract Owner shall be required directly or indirectly to bear the
direct or indirect costs of remedial actions taken to remedy a material
irreconcilable conflict. A new funding medium for any Variable Contract need
not be established pursuant to this Section 4.3, if an offer to do so has been
declined by vote of a majority of Variable Contract Owners materially adversely
affected by the irreconcilable material conflict. All reports received by the
Fund's Board of Trustees of potential or existing conflicts, and all Board
action with regard to determining the existence of a conflict, notifying
Participating Insurance Companies and the Fund's investment adviser of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded
6
<PAGE>
in the minutes of the Board of Trustees of the Fund or other appropriate
records, and such minutes or other records shall be made available to the SEC
upon request. The Company and the Fund shall carry out their responsibilities
under this Section 4.3 with a view only to the interests of the Variable
Contract Owners.
4.4. The Board of Trustees of the Fund shall promptly notify the Company in
writing of its determination of the existence of an irreconcilable material
conflict and its implications.
ARTICLE V. Prospectuses and Proxy Statements; Voting
5.1. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by the
Company as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2. The Distributor shall provide the Company with as many copies of the
current prospectus of the Fund as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type or
in camera-ready copy) and other assistance as is reasonably necessary in order
for the Company to print together in one document the current prospectus for the
Variable Contracts issued by the Company and the current prospectus for the
Fund. The Fund shall bear the expense of printing copies of its current
prospectus that will be distributed to existing Variable Contract Owners, and
the Company shall bear the expense of printing copies of the Fund's prospectus
that are used in connection with offering the Variable Contracts issued by the
Company.
5.3. The Fund and the Distributor shall provide (1) at the Fund's expense, one
copy of the Fund's current Statement of Additional Information ("SAI") to the
Company and to any owner of a Variable Contract issued by the Company who
requests such SAI, (2) at the Company's expense, such additional copies of the
Fund's current SAI as the Company shall reasonably request and that the Company
shall require in accordance with applicable law in connection with offering the
Variable Contracts issued by the Company.
5.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by the Company.
The Fund, at the Company's expense, shall provide the Company with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as the Company shall reasonably request for use in connection with
offering the Variable Contracts issued by the Company. If requested by the
Company in lieu thereof, the Fund shall provide such documentation (including a
final copy of the Fund's proxy materials, periodic reports to shareholders and
other communications to shareholders, as set in type or in camera-ready copy)
and other assistance as reasonably necessary in order for the Company to print
such shareholder communications for distribution to owners of Variable Contracts
issued by the Company.
5.5. For so long as the SEC interprets the 1940 Act to require pass-through
voting by Participating Insurance Companies whose Separate Accounts are
registered as investment companies under the
7
<PAGE>
1940 Act, the Company shall vote shares of each Series of the Fund held in a
Separate Account or a subaccount thereof, whether or not registered under the
1940 Act, at regular and special meetings of the Fund in accordance with
instructions timely received by the Company (or its designated agent) from
owners of Variable Contracts funded by such Separate Account or subaccount
thereof having a voting interest in the Series. The Company shall vote shares
of a Series of the Fund held in a Separate Account or a subaccount thereof that
are attributable to the Variable Contracts as to which no timely instructions
are received, as well as shares held in such Separate Account or subaccount
thereof that are not attributable to the Variable Contracts and owned
beneficially by the Company (resulting from charges against the Variable
Contracts or otherwise), in the same proportion as the votes cast by owners of
the Variable Contracts funded by that Separate Account or subaccount thereof
having a voting interest in the Series from whom instructions have been timely
received. The Company shall vote shares of each Series of the Fund held in its
general account, if any, in the same proportion as the votes cast with respect
to shares of the Series held in all Separate Accounts of the Company or
subaccounts thereof, in the aggregate.
5.6. The Fund shall disclose in its prospectus that (1) shares of the Series of
the Fund are offered to affiliated or unaffiliated insurance company separate
accounts which fund both annuity and life insurance contracts, (2) due to
differences in tax treatment or other considerations, the interests of various
Variable Contract Owners participating in the Fund or a Series might at some
time be in conflict, and (3) the Board of Trustees of the Fund will monitor for
any material conflicts and determine what action, if any, should be taken. The
Fund hereby notifies the Company that prospectus disclosure may be appropriate
regarding potential risks of offering shares of the Fund to separate accounts
funding both variable annuity contracts and variable life insurance policies and
to separate accounts funding Variable Contracts of unaffiliated life insurance
companies.
ARTICLE VI. Sales Material and Information
6.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund (or any Series thereof) or its investment adviser or the
Distributor is named, and no such sales literature or other promotional material
shall be used without the approval of the Fund and the Distributor or the
designee of either.
6.2. The Company agrees that neither it nor any of its affiliates or agents
shall give any information or make any representations or statements on behalf
of the Fund or concerning the Fund other than the information or representations
contained in the Registration Statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee
and by the Distributor or its designee, except with the permission of the Fund
or its designee and the Distributor or its designee.
6.3. The Fund or the Distributor or the designee of either shall furnish to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or its Separate Accounts are named, and no such
material shall be used without the approval of the Company or its designee.
8
<PAGE>
6.4. The Fund and the Distributor agree that each and the affiliates and agents
of each shall not give any information or make any representations on behalf of
the Company or concerning the Company, the Separate Accounts, or the Variable
Contracts issued by the Company, other than the information or representations
contained in a registration statement or prospectus for such Variable Contracts,
as such registration statement and prospectus may be amended or supplemented
from time to time, or in reports for the Separate Accounts or prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by the Company or its designee, except with
the permission of the Company.
6.5. The Fund will provide to the Company at least one complete copy of all
prospectuses, Statements of Additional Information, reports, proxy statements
and other voting solicitation materials, and all amendments and supplements to
any of the above, that relate to the Fund or its shares, promptly after the
filing of such document with the SEC or other regulatory authorities.
6.6. The Company will provide to the Fund at least one complete copy of all
prospectuses (which shall include an offering memorandum if the Variable
Contracts issued by the Company or interests therein are not registered under
the 1933 Act), Statements of Additional Information, reports, solicitations for
voting instructions, and all amendments or supplements to any of the above, that
relate to the Variable Contracts issued by the Company or the Separate Accounts
promptly after the filing of such document with the SEC or other regulatory
authority.
6.7. For purposes of this Article VI, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, computerized media, or other public
media), sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees.
ARTICLE VII. Indemnification
7.1. Indemnification By The Company
7.1(a). The Company agrees to indemnify and hold harmless the Fund, each of its
Trustees and officers, any affiliated person of the Fund within the meaning of
Section 2(a)(3) of the 1940 Act, and the Distributor (collectively, the
"Indemnified Parties" for purposes of this Section 7.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation expenses (including legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or litigation expenses are related to the sale or
acquisition of the Fund's shares or the Variable Contracts issued by the Company
and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material
9
<PAGE>
fact contained in the registration statement or prospectus (which shall include
an offering memorandum) for the Variable Contracts issued by the Company or
sales literature for such Variable Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Fund for use in the registration statement or prospectus for the Variable
Contracts issued by the Company or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of such Variable
Contracts or Fund shares; or
(ii) arise out of or as a result of any statement or representation (other than
statements or representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or any of its
affiliates, employees or agents with respect to the sale or distribution of the
Variable Contracts issued by the Company or the Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation expenses
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his or her
duties or by reason of his or her reckless disregard of obligations or duties
under this Agreement or to the Fund.
7.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such Party
shall have notified the Company in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such Party
shall have received notice of such service on any designated agent), but failure
to notify the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company to
such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for
10
<PAGE>
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.1(d). The Indemnified Parties shall promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Variable Contracts issued by the
Company or the operation of the Fund.
7.2 Indemnification By the Distributor
7.2(a). The Distributor agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who is an affiliated
person of the Company within the meaning of Section 2(a)(3) of the 1940 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or litigation
expenses (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or litigation expenses are related to
the sale or acquisition of the Fund's shares or the Variable Contracts issued by
the Company and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or sales literature of the Fund (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Distributor or the Fund
or the designee of either by or on behalf of the Company for use in the
registration statement or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the sale of the
Variable Contracts issued by the Company or Fund shares; or
(ii) arise out of or as a result of any statement or representation (other than
statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by the
Distributor or any employees or agents thereof) or wrongful conduct of the Fund
or Distributor, or the affiliates, employees, or agents of the Fund or the
Distributor with respect to the sale or distribution of the Variable Contracts
issued by the Company or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts issued by the Company, or any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Company by or on
behalf of the Fund;
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
11
<PAGE>
7.2(b). The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations and
duties under this Agreement or to the Company or the Separate Accounts.
7.2(c). The Distributor shall not be liable under this indemnification
provision with respect to any claim made against the Indemnified Party unless
such Party shall have notified the Distributor in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Party shall have received notice of such service on any designated agent),
but failure to notify the Distributor of any such claim shall not relieve the
Distributor from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
Indemnification Provision. In case any such action is brought against the
Indemnified Parties, the Distributor will be entitled to participate, at its own
expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Distributor to such party of the Distributor's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Distributor
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
7.2(d). The Company shall promptly notify the Distributor of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issuance or sale of the Variable Contracts issued by the
Company or the operation of the Separate Accounts.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of California.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934, and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. Termination
9.1. This Agreement shall terminate:
(a) at the option of any party upon 180 days advance written notice to the other
parties; or
(b) at the option of the Company if shares of the Series are not reasonably
available to meet the requirements of the Variable Contracts issued by the
Company, as determined by the Company, and upon prompt notice by the Company to
the other parties; or
12
<PAGE>
(c) at the option of the Fund or the Distributor upon institution of formal
proceedings against the Company or its agent by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the Variable
Contracts issued by the Company, the operation of the Separate Accounts, or the
purchase of the Fund shares; or
(d) at the option of the Company upon institution of formal proceedings against
the Fund or the Distributor by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; or
(e) upon requisite vote of the Variable Contract Owners having an interest in
the Separate Accounts (or any subaccounts thereof) to substitute the shares of
another investment company for the corresponding shares of the Fund or a Series
in accordance with the terms of the Variable Contracts for which those shares
had been selected to serve as the underlying investment media; or
(f) in the event any of the shares of a Series are not registered, issued or
sold in accordance with applicable state and/or federal law, or such law
precludes the use of such shares as the underlying investment media of the
Variable Contracts issued or to be issued by the Company; or
(g) by any party to the Agreement upon a determination by a majority of the
Trustees of the Fund, or a majority of its disinterested Trustees, that an
irreconcilable conflict exists; or
(h) at the option of the Company if the Fund or a Series fails to meet the
diversification requirements specified in Section 3.3 hereof.
9.2. Each party to this Agreement shall promptly notify the other parties to
the Agreement of the institution against such party of any such formal
proceedings as described in Sections 9.1(c) and (d) hereof. The Company shall
give 60 day's prior written notice to the Fund of the date of any proposed vote
of Variable Contract Owners to replace the Fund's shares as described in Section
9.1(e) hereof.
9.3. Except as necessary to implement Variable Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Fund shares attributable to the Variable Contracts issued by
the Company (as opposed to Fund shares attributable to the Company's assets held
in the Separate Accounts), and the Company shall not prevent Variable Contract
Owners from allocating payments to a Series, until 60 days after the Company
shall have notified the Fund or Distributor of its intention to do so.
9.4. If this Agreement terminates, any provision of this Agreement necessary to
the orderly windup of business under it will remain in effect as to that
business, after termination.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
13
<PAGE>
If to the Fund:
Pacific Select Fund
Attn: SEC Regulatory Compliance Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92260
If to the Distributor:
Pacific Equities Network
Attn: Compliance Officer
700 Newport Center Drive, NB-4
Newport Beach, CA 92660
If to the Company:
Pacific Mutual Life Insurance Company
Attn: SEC Regulatory Compliance Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92660
ARTICLE XI. Miscellaneous
11.1. The Fund and the Company agree that if and to the extent Rule 6e-3(T)
under the 1940 Act is amended or if Rule 6e-3 is adopted in final form, to the
extent applicable, ,the Fund and the Company shall each take such steps as may
be necessary to comply with the Rule as amended or adopted in final form.
11.2. A copy of the Fund's Agreement and Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts and notice is hereby given
that the Agreement has been executed on behalf of the Fund by a Trustee of the
Fund in his or her capacity as Trustee and not individually. The obligations of
this Agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
11.3. Nothing in this Agreement shall impede the Fund's Trustees or
shareholders of the shares of the Fund's Series from exercising any of the
rights provided to such Trustees or shareholders in the Fund's Agreement and
Declaration of Trust, as amended, a copy of which will be provided to the
Company upon request.
11.4. It is understood that the name "Pacific", "Pacific Mutual", "Pacific
Select" or any derivative thereof or logo associated with that name is the
valuable property of the Distributor and its affiliates, and that the Company
has the right to use such name (or derivative or logo) only so long as this
Agreement is in effect. Upon termination of this Agreement the Company shall
forthwith cease to
14
<PAGE>
use such name (or derivative or logo).
11.5. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
11.6. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.7. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.8. This Agreement may not be assigned by any party to the Agreement except
with the written consent of the other parties to the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC SELECT FUND
ATTEST: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON
Name: AUDREY L. MILFS Name: THOMAS C. SUTTON
Title: SECRETARY Title: PRESIDENT
PACIFIC EQUITIES NETWORK
ATTEST: /s/ AUDREY L. MILFS BY: /s/ ARTHUR M. KESSELHAUT
Name: AUDREY L. MILFS Name: ARTHUR M. KESSELHAUT
Title: SECRETARY Title: PRESIDENT
PACIFIC MUTUAL LIFE INSURANCE CO.
ATTEST: /s/ AUDREY L. MILFS BY: /s/ WILLIAM D. CVENGROS
Name: AUDREY L. MILFS Name: WILLIAM D. CVENGROS
Title: SECRETARY Title: CHIEF INVESTMENT OFFICER
15
<PAGE>
EXHIBIT A
PACIFIC SELECT SEPARATE ACCOUNT
PACIFIC SELECT EXEC SEPARATE ACCOUNT
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
PACIFIC COLI SEPARATE ACCOUNT
SEPARATE ACCOUNT A
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to be executed
by their Officers designated below on this 3rd day of January, 1995.
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GERALD W. ROBINSON
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: President
17
<PAGE>
EXHIBIT B
MONEY MARKET SERIES
MANAGED BOND SERIES
GOVERNMENT SECURITIES SERIES
HIGH YIELD BOND SERIES
GROWTH SERIES
GROWTH LT SERIES
EQUITY INCOME SERIES
MULTI-STRATEGY SERIES
EQUITY SERIES
BOND AND INCOME SERIES
EQUITY INDEX SERIES
INTERNATIONAL SERIES
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit B to be executed
by their Officers designated below on this 3rd day of January, 1995.
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GERALD W. ROBINSON
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: President
19
<PAGE>
ADDENDUM TO PARTICIPATION AGREEMENT
The Participation Agreement, made the 6th day of November, 1992 by and between
PACIFIC MUTUAL LIFE INSURANCE COMPANY (the "Company"), a life insurance company
domiciled in California, on its behalf and on behalf of the segregated asset
accounts of the Company listed on Exhibit A to this Agreement (the "Separate
Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts business trust;
and Pacific Equities Network ("Distributor"), a California Corporation ("the
Agreement") is hereby amended by the addition of the provisions set forth in
this Addendum to the Agreement ("Addendum"), which is made this 4th day of
January, 1994.
WITNESSETH:
WHEREAS, the Fund is authorized to issue separate classes of shares of
beneficial interest ("shares") each representing an interest in a separate
portfolio of assets known as a "series" and each series has its own investment
objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts"); and
WHEREAS, the Fund currently consists of nine separate series designated as the
Money Market Series, Managed Bond Series, High Yield Bond Series, Government
Securities Series, Growth Series, Equity Income Series, Multi-Strategy Series,
International Series and Equity Index Series; and
WHEREAS, the Fund intends to establish one additional Series to be designated as
the Growth LT Series; and
NOW THEREFORE, in consideration of the mutual promises and covenants contained
in this
Addendum, it is agreed between the parties hereto as follows:
The Agreement is amended by replacing the second paragraph with the following
language:
"WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts') and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is comprised of
multiple separate series, and other series may be established in the future;
and"
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
by their officers designated below on the date written above.
1
<PAGE>
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GLENN S. SCHAFER
Name: Audrey L. Milfs Name: Glenn S. Schafer
Title: Secretary Title: President
Attest: /s/ AUDREY L. MILFS By: /s/ DIANE N. LEDGER
Name: Audrey L. Milfs Name: Diane N. Ledger
Title: Secretary Title: Assistant Vice President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ WILLIAM D. CVENGROS
Name: Diane N. Ledger Name: William D. Cvengros
Title: Assistant Vice President Title: Chief Investment Officer
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
2
<PAGE>
ADDENDUM TO PARTICIPATION AGREEMENT
The Participation Agreement, made the 6th day of November, 1992, by and between
PACIFIC MUTUAL LIFE INSURANCE COMPANY (the "Company"), a life insurance company
domiciled in California, on its behalf and on behalf of the segregated asset
accounts of the company listed on Exhibit A to this Agreement (the "Separate
Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts business trust;
and Pacific Equities Network ("Distributor"), a California Corporation ("the
Agreement") is hereby amended by the addition of the provisions set forth in
this Addendum to the Agreement ("Addendum"), which is made this 15th day of
August, 1994.
WITNESSETH:
WHEREAS, the Fund is authorized to issue separate classes of shares of
beneficial interest ("shares") each representing an interest in a separate
portfolio of assets known as a "series" and each series has its own investment
objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts"); and
WHEREAS, the Fund currently consists of ten separate series designated as the
Money Market Series, Managed Bond Series, High Yield Bond Series, Government
Securities Series, Growth Series, Equity Income Series, Multi-Strategy Series,
International Series, Equity Index Series and Growth LT Series; and
WHEREAS, the Fund intends to establish two additional Series to be designated as
the Equity Series and Bond and Income Series; and
NOW THEREFORE, in consideration of the mutual promises and covenants contained
in this addendum, it is agreed between the parties hereto as follows:
The Agreement is amended by replacing the second paragraph with the following
language:
"WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is comprised of
multiple separate series, and other series may be established in the future;
and"
IN WITNESS WHEREOF, the parties hereto have caused this addendum to be executed
by their officers designated below on the date written above.
PACIFIC SELECT FUND
1
<PAGE>
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GLENN S. SCHAFER
Name: Audrey L. Milfs Name: Glenn S. Schafer
Title: Secretary Title: President
Attest: /s/ AUDREY L. MILFS By: /s/ DIANE N. LEDGER
Name: Audrey L. Milfs Name: Diane N. Ledger
Title: Secretary Title: Assistant Vice President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ WILLIAM D. CVENGROS
Name: Diane N. Ledger Name: William D. Cvengros
Title: Assistant Vice President Title: Chief Investment Officer
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
2
<PAGE>
ADDENDUM TO PARTICIPATION AGREEMENT
-----------------------------------
The Participation Agreement, made the 6th day of November, 1992 and
subsequently amended on January 4, 1994 and August 15, 1994, by and between
PACIFIC MUTUAL LIFE INSURANCE COMPANY (the "Company"), a life insurance
company domiciled in California, on its behalf and on behalf of the segregated
asset accounts of the Company listed on Exhibit A to this Agreement (the
"Separate Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts
business trust; and Pacific Equities Network ("Distributor"), a California
Corporation (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement ("Addendum"), which
is made this 20th day of November, 1995.
WITNESSETH:
WHEREAS, the Fund is authorized to issue separate classes of shares of
beneficial interest ("Shares") each representing an interest in a separate
portfolio of assets known as a "series" and each series has its own
investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its
series to separate accounts of insurance companies that fund variable
life insurance policies and variable annuity contracts ("Variable
Contracts"); and
WHEREAS, the Fund currently consists of twelve separate series
designated as the Money Market Portfolio, Managed Bond Portfolio, High
Yield Bond Portfolio, Government Securities Portfolio, Growth Portfolio,
Equity Income Portfolio, Multi-Strategy Portfolio, International
Portfolio, Equity Index Portfolio, Growth LT Portfolio, Equity Portfolio
and Bond and Income Portfolio (each referred to as a "Series" in the
Agreement, and hereinafter referred to as a "Portfolio"); and
WHEREAS, the Fund intends to establish two additional Portfolios to
be designated as the Emerging Markets Portfolio and Aggressive Equity
Portfolio; and
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as
follows:
The Agreement is amended by replacing the second paragraph
with the following language:
"WHEREAS, the Fund is available to offer shares of one or more
of its Portfolios to separate accounts of insurance companies that
fund variable life insurance policies and variable annuity contracts
("Variable Contracts") and to serve as an investment medium for
Variable Contracts offered by insurance companies that have entered
into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is
comprised of multiple separate Portfolios, and other Portfolios may
be established in the future; and"
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GERALD W. ROBINSON
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President, Director & CEO
Attest: /s/ AUDREY L. MILFS By: /s/ EDWARD R. BYRD
Name: Audrey L. Milfs Name: Edward R. Byrd
Title: Secretary Title: CFO & Treasurer
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ THOMAS C. SUTTON
Name: Diane N. Ledger Name: Thomas C. Sutton
Title: Assistant Vice President Title: Chairman and CEO
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
<PAGE>
EXHIBIT B
MONEY MARKET PORTFOLIO
MANAGED BOND PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
HIGH YIELD BOND PORTFOLIO
GROWTH PORTFOLIO
GROWTH LT PORTFOLIO
EQUITY INCOME PORTFOLIO
MULTI-STRATEGY PORTFOLIO
EQUITY PORTFOLIO
BOND AND INCOME PORTFOLIO
EQUITY INDEX PORTFOLIO
INTERNATIONAL PORTFOLIO
EMERGING MARKETS PORTFOLIO
AGGRESSIVE EQUITY PORTFOLIO
<PAGE>
Exhibit 99.1(10)
Application for Flexible Premium
Variable Life Insurance Policy
<PAGE>
NEWBSAPPLC
PACIFIC MUTUAL
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
No. 358724
APPLICATION, PART 1
FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLEASE PRINT USING DARK INK
SECTION A CLIENT INFORMATION
PROPOSED INSURED
1. Full Name (Print as to appear in policy)
2. Sex Male Female
3. State of Birth
4. Date of Birth MO. DAY YR.
5. Ins. Age
6. Address (CITY, COUNTY, STATE, ZIP CODE)
7. Telephone (OPTIONAL) ( )
8. Employer Name and Address
9. Occupation
10. Specific Duties
11. Social Security No. or Taxpayer I.D. No. (SHOW ALL HYPHENS)
OWNER (IF OTHER THAN PROPOSED INSURED) or PAYOR (OR PROPOSED INSURED IS
JUVENILE)
12. Full Name (PRINT AS TO APPEAR IN POLICY)
13. Social Security No. or Taxpayer I.D. No. (SHOW ALL HYPHENS)
14. Address (CITY, COUNTY, STATE, ZIP CODE)
15. Telephone (OPTIONAL) ( )
16. Contingent Owner
BENEFICIARY
17. Primary Beneficiary (PRINT FULL NAME AND RELATIONSHIP)
18. Contingent Beneficiary (PRINT FULL NAME AND RELATIONSHIP)
SECTION B PLAN INFORMATION
19. Policy Desired:
20. Planned Annual Premium: $
21. Face Amount: $
22. Option A - (Level) - Death benefit equals greater of face amount or
guideline minimum death benefit
<PAGE>
Option B - (Increasing) - Death benefit equals greater of face amount plus
accumulated value or guideline minimum death benefit
23. Optional Benefits:
A. Term rider on proposed insured for $________ (Face Amount) for ________
years.
B. ART on other covered persons (COMPLETE AP8852VL)
C. Waiver of Charges
D. Guaranteed Insurability
E. ADB $________ (INS. AMT.)
F. Children's Term ________ (Units) (COMPLETE PART 2, B)
G. ___________________________________________________
H. ___________________________________________________
I. ____________________________________________________
24. If any optional benefit cannot be approved, should the policy be issued
without it?
Yes No
Any person who, with intent to defraud or knowing that he or she is facilitating
a fraud against an insurer, submits an application or files a claim containing
false or deceptive statement is guilty of insurance fraud.
25. Premium allocations: Select up to five accounts and indicate allocations.
THE TOTAL OF THE PERCENTAGES MUST BE 100%. (WHOLE NUMBERS.)
Fixed Account: ________% Equity Income: ________%
Money Market: ________% Multi-strategy: ________%
Managed Bond: ________% International: ________%
Government Securities: ________% Equity Index: ________%
High Yield Bond: ________% Growth LT: ________%
Growth: ________% ____________ ________%
SECTION C BILLING INFORMATION
26.A. Billing Method:
Direct Billing List Bill Payroll Deduction Single Premium
B. Frequency of premium payment reminder notice:
Annual Semi-Annual Quarterly Monthly List Bill
SECTION D SUITABILITY
Yes No
27. DO YOU BELIEVE THAT THIS POLICY WILL MEET YOUR INSURANCE NEEDS AND
<PAGE>
FINANCIAL OBJECTIVES?
28. DO YOU UNDERSTAND THAT THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY
VARY, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNTS IN THE
SEPARATE ACCOUNT?
29. DO YOU UNDERSTAND THAT THE POLICY VALUES MAY INCREASE OR DECREASE, DEPENDING
ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT?
30. DID YOU RECEIVE THE SEPARATE ACCOUNT PROSPECTUS AND THE FUND PROSPECTUS FOR
THE POLICY APPLIED FOR?
If "Yes", give dates of prospectuses: S.A. ________ Fund ________
POLICY VALUES MAY INCREASE OR DECREASE IN ACCORDANCE WITH THE EXPERIENCE OF THE
VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT (SUBJECT TO ANY SPECIFIED MINIMUM
GUARANTEES). THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER SPECIFIED
CONDITIONS.
SECTION E GENERAL INFORMATION
1. Give details of life insurance in force in other companies. If none (or if
conversion application) check this box
COMPANY YEAR TAKEN PLAN LIFE AMOUNT ACC. DEATH AMOUNT
2. Is the proposed insured married? Yes No If "Yes", show amount of life
insurance on spouse $________
3. For the proposed insured, provide the following:
A. Annual earned income from occupation (after deduction of business expenses)
$________
B. Spouse's annual earned income $________
C. Other income (STATE SOURCE IN "REMARKS") $________
4. Does any proposed insured contemplate leaving the U.S.A. for travel or
residence? Yes No (IF "YES", EXPLAIN IN "REMARKS")
5. Within the last 2 years, has any proposed insured:
A. Flown or plan to fly as a pilot, student pilot or crew member? Yes No
B. Engaged in parachute jumping, scuba diving, auto or motorboat racing or any
form of motorcycling? Yes No
C. Had a drivers license restricted or revoked, or been charged with 3 or more
moving violations? Yes No
(IF "YES" TO "A" OR "B", COMPLETE APPROPRIATE SECTION OF THE GENERAL
QUESTIONNAIRE; IF "YES" TO "C", GIVE STATE AND NUMBER OF DRIVERS LICENSE IN
"REMARKS")
6.A. Has any proposed insured ever had insurance declined, rated, modified,
cancelled or not renewed? Yes No
B. Has any proposed insured been convicted of a felony within the past 5 years?
Yes No
C. has any other insurance been applied for within the last 3 months on any
proposed insured? Yes No
D. Will the policy applied for replace or change any existing insurance or
annuity on any proposed insured? Yes No
<PAGE>
(IF "YES", EXPLAIN IN "REMARKS")
7. Is cash or check tendered with this application? Yes No
If "Yes", show amount $________
If "No", do not complete question #8
8. Do you understand, accept and agree to the terms of the Temporary Insurance
Agreement (TIA)? Yes No
If "Yes", and a face amount is requested which is larger than that which Pacific
Mutual will insure under the TIA, complete the following statement: If
approved, please issue an alternate policy identical to the one applied for, but
for a face amount of $________.
SECTION F MEDICAL CERTIFICATION (COMPLETE WHEN SUBMITTING MEDICAL EXAMINATION
OF ANOTHER INSURANCE COMPANY.)
1. The attached examination is on the life of: Proposed Insured Spouse
2. Name of insurance company for which examination was made and date of
examination: COMPANY DATE OF EXAMINATION
3. To the best of your knowledge and belief, are the statements in the
examination true as of today? Yes No
4. Has the person who was examined consulted a doctor or other practitioner or
received medical or surgical advice since the date of the examination? (IF
"YES", EXPLAIN IN "REMARKS") Yes No
REMARKS IDENTIFY QUESTION NUMBER AND PERSON
HOME OFFICE ENDORSEMENTS
<PAGE>
APPLICATION, PART 2 - NON-MEDICAL
SECTION A NON-MEDICAL INFORMATION
COMPLETE ON PROPOSED INSURED (IF UNDER AGE 16, COMPLETE SECTION B)
1. Full Name
2a. Date of Birth MO. DAY YR.
2b. Height FT. IN.
2c. Weight LBS.
3.a. Name and address of physician or practitioner last seen:
__________________________
(IF NONE, SO STATE)
b. Date: _______________ MO. YR.
c. Reason consulted: _______________________
Yes No
d. Did any symptoms prompt consultation?
e. Was any treatment given or medication prescribed?
(IF "D" OR "E" ANSWERED "YES, GIVE DETAILS)
4. To the best of your knowledge and belief, during the past 10 years, have you
had or been told that you had, or been treated by a member of the medical
profession for:
(CIRCLE APPLICABLE ITEMS AND GIVE DETAILS)
a. Disorder of the eyes, ears, nose or throat?
b. Dizziness, fainting, convulsions, headaches, speech defect, paralysis or
stroke, or mental or nervous disorder?
c. Hoarseness or cough, blood spitting, asthma, pneumonia, emphysema,
tuberculosis, or other respiratory system disorder?
d. Chest pain, high blood pressure, rheumatic fever, murmur, heart attack or
other disorder of the heart or blood vessels?
e. Jaundice, intestinal bleeding, ulcer, colitis, diverticulitis, hepatitis, or
other disorder of the liver, gallbladder, stomach, or intestines?
f. Sugar, albumin, or blood in urine; venereal disease; stone or other disorder
of kidney, bladder, prostate, breasts or reproductive organs?
g. Diabetes; thyroid or other endocrine disorders?
h. Neuritis, sciatica, arthritis, gout, or disorder of the muscles or bones,
including spine, back or joints?
i. Cancer, cyst, tumor or disorder of skin, blood or lymph glands?
j. Any disorder(s) of the Immune System, including AIDS (Acquired Immune
Deficiency Syndrome) and ARC (AIDS Related Complex)?
5.a. Have you within the past 5 years been a patient in a hospital, clinic,
sanitarium or other medical facility?
b. Are you now under regular medical observation or taking treatment?
6.a. Except as prescribed by a physician, have you used heroin, morphine or
other narcotic drugs in the last 10 years?
b. Except as prescribed by a physician, have you used cocaine, LSD, marijuana or
other hallucinogenic agents, or barbiturates, sedatives, tranquilizers or any
amphetamines in the last 5 years?
<PAGE>
c. In the last 5 years have you received treatment for or joined an organization
because of alcoholism or drug addiction?
7. Other than as stated in answers above, have you within the past 5 years:
a. Had a checkup, consultation, illness, injury or operation?
b. Had an electrocardiogram, X-ray, blood test or other test?
c. Been advised to have any diagnostic test, hospitalization or surgery which
was not completed?
8. Have you had any change in weight in the past year?
9.a. Do you currently smoke cigarettes?
b. If "Yes", how many a day? _______________
c. Did you ever smoke cigarettes?
d. If "Yes" on 9(C), give date last cigarette smoked: ____________ MO. YR.
e. Do you use tobacco in any other form? (IF "YES" SPECIFY TYPE IN "REMARKS")
10. Have either of your parents, brothers or sisters had diabetes, cancer, high
blood pressure, heart disease, or mental illness? (IF "YES", STATE CONDITION,
GIVE RELATIONSHIP AND AGE AT ONSET)
11. Parents' Record (COMPLETE BELOW):
IF LIVING IF DECEASED
AGE STATE OF HEALTH AGE AT DEATH CAUSE OF DEATH
Father
Mother
SECTION B ADDITIONAL INSUREDS and PROPOSED INSURED UNDER AGE 16
(OWNER, PAYOR, FAMILY, CHILDREN)
1. FULL NAME OF PERSON TO BE COVERED
RELATIONSHIP TO PROPOSED INSURED
DATE OF BIRTH (MO./DAY/YR.)
STATE OF BIRTH
HEIGHT (FT./IN.)
WEIGHT (POUNDS)
AMOUNT OF INSURANCE NOW IN FORCE
AMT. OF INS. CURRENTLY APPLIED FOR
Note: If payor or owner waiver of charges is being applied for, please indicate
the individual's occupation and the employer's name and address: ______________
_______________________________________________________________________________
2. Has any person named in Question 1 during the past 10 years had or been told
that he had, or been treated for: Yes No
A. Diabetes, cancer or epilepsy?
B. Heart murmur, high blood pressure or any heart condition?
C. Any disorder(s) of the Immune System, including AIDS (Acquired Immune
Deficiency Syndrome) and ARC (AIDS Related Complex)?
3. Has any person named in Question 1:
A. Been in a hospital, sanitarium or other institution for diagnosis, treatment
or a surgical operation within the past 5 years?
B. Had any medical consultation or treatment within the past 3 years, other than
as stated in any
<PAGE>
answer above?
GIVE DETAILS BELOW FOR EACH "YES" ANSWER IN QUESTIONS 2 AND 3:
QUESTION NO.
FIRST NAME
REASON FOR CONSULTATION
DATE
DURATION - RESULT
NAME AND ADDRESS OF PHYSICIAN
DECLARATIONS
I represent that the foregoing answers and statements (contained in Parts 1 and
2) are correctly recorded, complete, and true to the best of my knowledge and
belief. I understand that:
1. EXCEPT AS OTHERWISE PROVIDED IN ANY TEMPORARY INSURANCE AGREEMENT, NO
INSURANCE WILL TAKE EFFECT BEFORE THE POLICY FOR SUCH INSURANCE IS DELIVERED AND
THE FIRST PREMIUM PAID DURING THE LIFETIME(S) AND BEFORE ANY CHANGE IN THE
HEALTH OF THE PROPOSED INSURED(S). UPON SUCH DELIVERY AND PAYMENT, INSURANCE
WILL TAKE EFFECT IF THE ANSWERS AND STATEMENTS IN THIS APPLICATION ARE THEN
TRUE.
2. Acceptance of a life insurance policy will be ratification of any
administrative change with respect to such policy made by the Company in the
space entitled "Home Office Endorsements". All other changes, including plan
and amount of insurance, benefits, classification or age at issue, must be
accepted in writing.
3. No agent or medical examiner is authorized to make or modify contracts or to
waive any of the Company's rights or requirements.
Dated at_____________________ on __________________________.
CITY STATE MO. DAY YR.
I certify that I have truly and accurately recorded hereon the information
supplied.
______________________________________________
Signature of Soliciting Agent
______________________________________________
Florida License ID Number
IF OWNER IS A CORPORATION, THE SIGNATURE AND TITLE OF AN AUTHORIZED OFFICER
OTHER THAN THE PROPOSED INSURED IS REQUIRED AND THE FULL NAME OF THE CORPORATION
MUST BE SHOWN.
X ____________________________________________
Signature of Proposed Insured (OR PARENT, IF PROPOSED INSURED UNDER AGE 16)
______________________________________________
Signature of Other Adult Proposed Insured
<PAGE>
______________________________________________
Signature of Applicant (IF OTHER THAN PROPOSED INSURED)
________________________________________________
Signature of Owner (IF OTHER THAN PROPOSED INSURED OR APPLICANT)
AP8851VL
<PAGE>
APPLICATION, PART 3 - AGENT'S REPORT
SECTION A COMPLETE THIS SECTION IF APPLYING FOR (CHECK ONE)
ALTERNATE ADDITIONAL
1. Plan Desired:
2. Face Amount:
3. Planned Annual Premium:
4. Premium allocations: select up to five accounts and indicate allocations.
THE TOTAL OF THE PERCENTAGES MUST BE 100% (WHOLE NUMBERS.)
Fixed Account: ________% Equity Income: ________%
Money Market: ________% Multi-strategy: ________%
Managed Bond: ________% International: ________%
Government Securities: ________% Equity Index: ________%
High Yield Bond: ________% Growth LT: ________%
Growth: ________% ____________ ________%
5. Option A (Level)
Death benefit equals greater of face amount or guideline minimum death benefit.
Option B (Increasing)
Death benefit equals greater of face amount plus accumulated value or guideline
minimum death benefit.
6. Optional Benefits:
A. ____________________________
B. ____________________________
C. ____________________________
D. ____________________________
SECTION B COMPLETE THIS SECTION IF APPLYING FOR BUSINESS INSURANCE
1. Names of Principal Officers, Partners or Key Employees
Position
% of Business Owned
Amount of Insurance Owned by Business
2. Purpose of this insurance:
A. Buy & Sell
B. Employee Fringe Benefit
C. Deferred comp.
D. Split Dollar
E. Key Employee Insurance
<PAGE>
F. Other
(EXPLAIN IN "REMARKS")
3. Are other officers, partners, or key employees proportionately insured?
Yes No (IF "NO", EXPLAIN IN "REMARKS")
SECTION C COMPLETE THIS SECTION IF PROPOSED INSURED IS UNDER AGE 16
1. Did you personally observe the proposed insured?
Yes No (IF "NO", EXPLAIN IN "REMARKS")
2. Is the amount of insurance in force and applied for on proposed insured
larger than amount on any brother or sister? Yes No (IF "YES", EXPLAIN IN
"REMARKS")
3. Answer for person on whom proposed insured depends for support:
A. Name
B. Relationship
C. Est. annual income $
D. Est. net worth $
E. Amt. of life ins. $
4. Answer for applicant
A. Name
B. Relationship
C. Purpose of insurance
D. Time at present address. (IF LESS THAN 3 YEARS, GIVE PRIOR ADDRESS IN
"REMARKS") Yrs. Mo.
E. Amt. of life ins. in force
REMARKS IDENTIFY SECTION AND QUESTION
<PAGE>
SECTION E COMPLETE FOR ALL APPLICATIONS - AGENT INFORMATION
1. How well do you know proposed insured (OR APPLICANT IF PROPOSED INSURED IS
UNDER AGE 16)?
2. Have you personally asked all applicable questions in this application?
Yes No (IF "NO", EXPLAIN IN "REMARKS")
3. Have you attached Personal History Interview information sheet?
Yes No (IF "NO", EXPLAIN IN "REMARKS")
4. Are you aware of any information not given in the application which might
affect the insurability of the proposed insured? Yes No (IF "YES", EXPLAIN
IN "REMARKS")
5.A. Insured's time at present address: Yrs. ________ Mo. ________
B. Insured's time with present employer: Yrs. ________ Mo. ________
(IF EITHER LESS THAN 3 YEARS, GIVE PREVIOUS DATA IN "REMARKS")
6. Did the proposed insured or applicant make the initial inquiry which led to
the sale of this insurance? Yes No (IF "YES", EXPLAIN IN "REMARKS")
7. Has the proposed insured changed name within last 5 years?
(IF "YES", GIVE FORMER NAME IN "REMARKS") Yes No
8. To the best of your knowledge, does any policy applied for either replace,
involve a change in, or involve use of value from any existing life insurance
policy or annuity?
(IF "YES", GIVE COMPANY. IF PM POLICY, THEN GIVE POLICY NUMBER AND HOW VALUES
ARE TO BE APPLIED IN "REMARKS") Yes No
9. If a special billing address, other than the owner's, is desired, indicate
here:
10. Is application submitted on a:
(A) Non-Medical Basis? Yes No
(B) Guaranteed Issue Basis? Yes No
(C) Guaranteed to Issue Basis? Yes No
Check appropriate items which have been ordered:
Medical Exam
Paramedical Exam
EKG
Blood Profile
H.O. Specimen
APS _____________
__________________
__________________
11. Estimated Net Worth of Proposed Insured:
REMARKS IDENTIFY SECTION AND QUESTION
I certify that to the best of my knowledge and belief: Yes No
A. I have presented to the Company all pertinent facts and have correctly and
completely recorded all required answers.
B. I have given the Proposed Insured (or Parent for Juvenile insurance) a copy
of the F.C.R.A. and MIB Disclosure Notice, and any other disclosure notice or
statement required by state or federal law.
<PAGE>
C. I have fully explained the terms and conditions of the Temporary Insurance
Agreement(s) to the Proposed Insured (or Applicant) and have given it to him/her
(them).
D. I have complied with state and federal laws on disclosure, cost comparison
and replacement.
E. I have reviewed the purchase of this insurance policy as to suitability.
X _________________________________________________________
Signature(s) of Soliciting Agent(s) (Pay Commission As Indicated Below)
Agency Agent Commission
Agent Name Number Code Share
%
%
%
%
<PAGE>
AUTHORIZATION TO OBTAIN INFORMATION
I authorize any physician, medical practitioner, hospital, clinic, other medical
or medically related facility insurance company, the Medical Information Bureau,
consumer reporting agency or employer to release to Pacific Mutual Life
Insurance Company, its subsidiaries, its reinsurer(s) or its legal
representative any information they may have as to diagnosis, treatment and
prognosis of any physical or mental condition including drug and/or alcohol
abuse and/or any other information of me, my minor children and in the case of a
family health application, my spouse.
I understand that any information obtained will be used to determine eligibility
for insurance and will not be released to any person or organization except
reinsurer(s), the Medical Information Bureau, and other persons or organizations
performing business or legal services in connection with my application, or as
may be otherwise lawfully required, or as I may further authorize. I also
understand that I may revoke this authorization as it applies to drug and/or
alcohol abuse information at anytime, except to the extent it will not affect
any action taken or information released prior to the revocation.
I know that I may request to receive a copy of this authorization. I also
acknowledge receipt of Disclosure Notice to Applicants for Insurance.
A photographic copy of this Authorization shall be as valid as the original and
shall be valid for two years from the date shown below.
Date ___________________________________ MO. DAY YR.
X _______________________________________________________
SIGNATURE OF PROPOSED INSURED
(Or Parent, If Proposed insured is Under Age 16)
X _______________________________________________________
PROPOSED INSURED
USE RECEIPT ON REVERSE ONLY IF A PREMIUM IS PAID FOR A CONVERSION POLICY.
(DETACH-LEAVE WITH APPLICANT)
DISCLOSURE NOTICE TO APPLICANTS FOR INSURANCE
This brief description of our underwriting process is designed to help you to
understand how an application for insurance is handled, the types and sources of
information we may collect about you, the circumstances under which we may
disclose that information to others and your right to learn the nature and
substance of that information upon written request. The purpose of the
underwriting process is to make sure you qualify for insurance under Pacific
Mutual's rules and, assuming you do, establish the proper premium charge for
that insurance. This process - the evaluation of risks -assures that the cost
of insurance is distributed equitably among all policyowners, and that each
<PAGE>
individual pays his or her fair share. To determine your insurability, we must
consider such factors as your medical history, physical condition, occupation
and hazardous avocations. We get this information from various sources.
SOURCES OF INFORMATION
APPLICATION AND MEDICAL RECORDS - Your application, including the medical
history, is the primary source of information in the evaluation process. In
addition, we may ask you to take a physical examination or other special test
such as electrocardiogram. We may also ask for a report from your doctor or
hospital, another insurance company or the Medical Information Bureau. When we
do so, we use the authorization form you signed with your application.
MIB, INC., (MEDICAL INFORMATION BUREAU) - MIB, Inc., is a non-profit corporation
which operates an information exchange on behalf of member life insurance
companies. As a member company, we will ask the MIB if it has a record
concerning you. If you previously applied to a member company for insurance,
MIB may have information about you in its file. The purpose of the MIB is to
protect member companies and their policyowners from those who would conceal
significant facts relevant to their insurability. The information which is
obtained from MIB may be used only as an alert to the possible need for further
independent investigation. It cannot be used as a basis in making a final
underwriting decision.
Information regarding your insurability will be treated as confidential.
Pacific Mutual, its subsidiaries or its reinsurer(s) may, however, make a brief
report to the MIB. If you later apply to another Bureau member company for life
or health insurance coverage, or a claim for benefits is submitted to such a
company, the Bureau, upon request, will supply the company with the information
it may have about you in its file. Pacific Mutual, its subsidiaries or its
reinsurer(s) may also release information in its file to other life insurance
companies to whom you may apply for life or health insurance, or to whom a claim
for benefits may be submitted.
At your request, the MIB will arrange disclosure of any information it may have
about you in its file. If you question the accuracy of information on file, you
may contact the MIB and seek a correction in accordance with the procedures set
forth in the federal Fair Credit Reporting Act. The address of the information
office of MIB, Inc. is Post Office Box 105, Essex Station, Boston, Massachusetts
02112, telephone number (617) 426-3660.
INVESTIGATIVE CONSUMER REPORT - As part of our underwriting procedure, we may
request an investigative consumer report from a consumer reporting agency.
Because you may want to know more about the nature and scope of such a report,
we are providing this information on the reverse side as part of this Notice.
(Continued on reverse side)
<PAGE>
THE AUTHORIZATION THE REVERSE SIDE
MUST BE SIGNED IN EVERY CASE
PACIFIC MUTUAL LIFE INSURANCE COMPANY
700 Newport Center Drive
Box 7500
Newport Beach, California 92658-7500
No. 358724
Received from _________________________________, the sum of $_________ as
payment on account of premium for policy on the life of the person named in an
application to Pacific Mutual Life Insurance Company bearing the same number as
this receipt.
ALL CHECKS MUST BE MADE PAYABLE TO PACIFIC MUTUAL. DO NOT MAKE CHECKS PAYABLE
TO THE AGENT OR LEAVE PAYEE BLANK.
Date _____________________ _________________________________________Agent
MO. DAY YR.
AP8851VL
DISCLOSURE NOTICE TO APPLICANTS FOR INSURANCE (continued)
A consumer report confirms and supplements the information on your application
pertaining to employment and residence verification, smoking habits, marital
status, occupation, hazardous avocations and general health. This report may
also cover information concerning your general reputation, personal
characteristics and mode of living, except as may be related directly or
indirectly to your sexual orientation including drug and alcohol use, motor
vehicle driving record and any criminal activity. This information may be
obtained through personal interviews with you, your family, friends, neighbors
and business associates. If a report is required and you wish to be personally
interviewed, please let us know and we will notify the consumer reporting
agency.
The information contained in the report may be retained by the consumer
reporting agency and subsequently disclosed to other companies to the extent
permitted by the Fair Credit Reporting Act.
Investigative consumer reports are held in strict confidence and used only to
evaluate your application on a fair and equitable basis. You have a right to
inspect and obtain a copy of the report from the consumer reporting agency.
These reports rarely have an adverse affect on an individual's eligibility for
insurance. If it should, however, we will notify you in writing and identify
the reporting agency.
DISCLOSURE TO OTHERS
Personal information obtained about you during the underwriting process is
confidential and will not be disclosed to other persons or organizations without
your written authorization except to the extent
<PAGE>
necessary for the conduct of our business. Examples of situations where we may
share information about you are as follows:
1. The agent may retain a copy of your application. If reinsurance is required,
the reinsurance company would have access to our application file.
2. We may release information to another life insurance company to whom you have
applied for life or health insurance or to whom you have submitted a claim for
benefits, if you have authorized it to obtain such information.
3. As stated earlier, we may report information to the Medical Information
Bureau.
4. We will disclose information to government regulatory officials, law
enforcement authorities and others where required by law.
DISCLOSURE TO YOU
In general, you have a right to learn the nature and substance of any personal
information about you in our file upon written request. Whenever an adverse
underwriting decision is made, we will notify you of the reason(s) for the
decision and the source of the information upon which our action is based.
Medical record information, however, will normally be given only to a licensed
physician of your choice. Please refer to the section on MIB, Inc., for that
organization's disclosure procedure.
Should you feel that any information we have is inaccurate or incomplete, please
write to the Manager, Risk Selection Department, Pacific Mutual Life Insurance
Company, 700 Newport Center Drive, P.O. Box 7500, Newport Beach, California
92658-7500. Your comments will be carefully considered and corrections made
where justified.
We hope this Notice will help you to understand how we obtain and use personal
information in the underwriting process, and the ways you can learn about this
information. We are concerned with insuring privacy as well as lives, and the
collection, use and disclosure of personal information is limited to those
specified in this Notice.
<PAGE>
EXHIBIT 99.3
Form of Opinion and Consent of Legal Officer of Pacific Mutual as to Legality of
Policies Being Registered
<PAGE>
[LETTERHEAD of PACIFIC MUTUAL LIFE INSURANCE COMPANY]
August 13, 1987
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Post Office Box 9000
Newport Beach, California 92660
Dear Sirs:
In my capacity as Second Vice President, Associate General Counsel of Pacific
Mutual Life Insurance Company ("Pacific Mutual"), I have supervised the
establishment of Pacific Select Separate Account of Pacific Mutual Life
Insurance Company on November 20, 1986, by resolution of the Board of Directors
of Pacific Mutual as the separate account for assets applicable to variable life
policies, pursuant to the provisions of Section 10506 of the Insurance Code of
the State of California. Moreover, I have been associated with the preparation
of the Registration Statement on Form S-6 ("Registration Statement") filed by
Pacific Mutual and Pacific Select Separate Account with the Securities Act of
1933, as amended, for the registration of the Variable Life Insurance Policies
to be issued with respect to Pacific Select Separate Account.
I have made such examination of the law and examined such corporate records and
such other documents as in my judgment are necessary and appropriate to enable
me to render the following opinion that:
1. Pacific Mutual has been duly organized under the laws of the State of
California and is a validly existing corporation.
2. Pacific Select Separate Account is duly created and validly existing as a
separate account pursuant to the aforesaid provisions of California law.
3. The portion of the assets to be held in Pacific Select Select Account equal
to the reserves and other liabilities under the Variable Life Insurance Policies
is not chargeable with liabilities arising out of any other business Pacific
Mutual may conduct.
4. The Variable Life Insurance Policies have been duly authorized by Pacific
Mutual and, when issued as contemplated by the Registration Statement, will
constitute legal, validly issued and binding obligations of Pacific Mutual.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ David R. Carmichael
David R. Carmichael
Second Vice President,
Associate General Counsel
<PAGE>
EXHIBIT 99.6(a)
Consent of Deloitte & Touche LLP
<PAGE>
DELOITTE & TOUCHE LLP
Suite 1200 Telephone: (714) 436-7100
695 Town Center Drive Facsimile: (714) 436-7200
Costa Mesa, California 92626-1924
CONSENT OF INDEPENDENT AUDITORS
Pacific Mutual Life Insurance Company:
We hereby consent to the use in Post-Effective Amendment No. 13 to Registration
Statement No. 33-14032 on Form S-6 of our reports dated February 16, 1996
related to the financial statements of Pacific Select Separate Account of
Pacific Mutual Life Insurance Company as of and for the year ended December 31,
1995 and February 23, 1996 related to the financial statements of Pacific Mutual
Life Insurance Company as of and for the years ended December 31, 1995 and 1994
appearing in such Registration Statement and to the references to us under the
headings "Independent Accountants" and "Financial Statements" in the Prospectus,
which is a part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
March 22, 1996
- --------------------
DELOITTE & TOUCHE
TOHMATSU
INTERNATIONAL
- --------------------
<PAGE>
EXHIBIT 99.6(b)
Consent of Dechert Price & Rhoads
<PAGE>
[LETTERHEAD OF LAW OFFICES OF DECHERT PRICE & RHOADS]
August 27, 1987
Board of Directors
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Re: Pacific Select Separate Account of Pacific Mutual Life Insurance Company,
SEC File No. 33-14032
Dear Sirs and Madam:
We hereby consent to the reference to our firm under the caption "Legal Matters"
in the Prospectus comprising a part of the above-referenced Registration
Statement.
Very truly yours,
Dechert Price & Rhoads
<PAGE>
EXHIBIT 99.7
Opinion Of Actuary
<PAGE>
[LETTERHEAD of PACIFIC MUTUAL LIFE INSURANCE COMPANY]
October 12, 1987
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
Gentlemen:
In my capacity as Vice-President of the Actuarial and Financial department of
Pacific Mutual Life Insurance Company, I have provided actuarial advice
concerning:
The preparation of the post-effective amendment to the registration statement on
Form S-6, filed by Pacific Mutual Life Insurance Company with the Securities and
Exchange Commission under the Securities Act of 1933 with respect to variable
life insurance policies (the "Registration Statement") and the preparation of
the policy forms for the variable life insurance policies described in the
Registration Statement (the "Policies").
It is my professional opinion that:
The illustration of death benefits, cash values and accumulated premiums shown
on pages 41 through 46 of the prospectus, based on the assumptions stated in the
illustrations and on page 40, are consistent with the provisions of the
Policies. The rate structure of the Policies has not been designed to as to
make the relationship between premiums and benefits, as shown in the
illustrations, appear to be correspondingly more favorable to the prospective
purchaser of the Policies at ages 30, 45 or 60 in the underwriting classes
illustrated than to prospective purchasers of Policies at other ages or
underwriting classes.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Experts" in the
prospectus.
Sincerely,
Lynn C. Miller, F.S.A.
Vice-President
LCM:dws768
<PAGE>
EXHIBIT 99.8
Memorandum Describing
Issuance, Transfer and
Redemption Procedures
<PAGE>
Pacific Mutual Life Insurance Company's
Description of Issuance, Transfer and Redemption
Procedures for Policies Pursuant to
Rule 6e-3(T)(B)(12)(iii)
This document sets forth the administrative procedures that will be followed by
Pacific Mutual Life Insurance Company ("Pacific Mutual") in connection with the
issuance of its Flexible Premium Variable Life Insurance Policy ("Policy"), the
transfer of assets held under the contract, and the redemption by policy owners
of their interests in said contracts.
I. PURCHASE AND RELATED TRANSACTIONS
A. Premium Schedules and Underwriting Standards
The contract is a flexible premium variable life insurance policy. The Policy
provides lifetime insurance protection on the life of the insured named in the
Policy through the maturity date so long as the Policy is not surrendered or in
default beyond the grace period. The determination of the face amount of the
Policy, as a function of the initial premium, is based upon the insured's age
and underwriting classification, and upon the initial death benefit of the
Policy. The Policy will be offered and sold pursuant to an established
mortality structure and underwriting standards in accordance with state
insurance laws which prohibit unfair discrimination among policy owners, but
allow cost of insurance rates to be based upon factors such as age, health or
occupation.
The minimum initial premium to purchase the Policy is $10,000. The policy owner
may choose a minimum initial premium payment that constitutes at least 50% and
up to 100% of the Guideline Single Premium for the initial face amount. Pacific
Mutual may reduce the minimum initial premium under certain circumstances, such
as for group or sponsored arrangements. The maximum initial premium that will
be routinely accepted is $1,000,000. Larger premiums may be accepted on a case-
by-case basis subject to prior approval.
B. Application and Initial Premium Processing
Upon receipt of a completed application for a Policy, Pacific Mutual will follow
certain insurance underwriting (i.e., evaluation of risk) procedures designed to
determine whether the proposed insured is insurable. This process may involve
verification procedures and may require that further information be provided by
the applicant before a determination can be made. A Policy will not be issued
until an initial premium and a completed application have been received by
Pacific Mutual, and this underwriting procedure has been completed.
After the Policy is issued, insurance coverage under the Policy will be deemed
to have begun as of the policy date. The policy date is the date the
application is accepted, or, if later, the date the premium is received at
Pacific Mutual's home office. The policy date is the date used to determine
<PAGE>
policy years, policy months, and policy anniversaries.
C. Additional Premium Payments
Pacific Mutual does not require the payment of premiums other than the initial
premium. However, the Policy is a flexible-premium policy, and it provides
flexibility to pay additional premiums at the policy owner's discretion.
Additional premiums may be required to keep the Policy in force, depending upon
the face amount of the Policy, and the performance of the variable accounts.
Pacific Mutual accepts additional premium payments subject to the following
conditions: (1) the minimum additional premium payment amount is $5,000, except
that smaller amounts may be paid during the grace period; (2) any payment that
would result in an immediate increase in the difference between the death
benefit and accumulated value may be subject to insurance underwriting and
evidence of insurability may be required; and (3) premiums may not exceed the
limitation based on the Guideline Single Premium or Guideline Level Premiums.
D. Premium Allocation
A policy owner may allocate net premiums among the variable accounts and/or the
fixed account. The initial allocation must be made in the application for the
Policy. During the free-look period (a limited period of time during which the
policy owner may return and cancel the Policy for a full refund of premiums
paid), all premiums are allocated to the Money Market Variable Account. The
accumulated value is allocated according to the policy owner's instructions the
later of 15 days after the Policy is issued or 45 days after the application is
completed. The accumulated value may be allocated to no more than five
investment alternatives at any time. Those alternatives currently include eight
variable accounts and a fixed account.
Additional premium payments will be allocated among the investment alternatives
according to the policy owner's instructions. If the current instructions would
cause the accumulated value to be allocated to more than five investment
alternatives, the premium payment less the premium load will be allocated to the
variable accounts and fixed account in the same proportion as the accumulated
value in those accounts. A policy owner may change the allocation of
accumulated value by submitting a proper written request to Pacific Mutual's
home office.
E. Reinstatement
Pacific Mutual will reinstate a lapsed Policy (see "Policy Lapsation," Section
III.C. on page 13 of this document) at any time within five years after the end
of the grace period but before the maturity date, provided Pacific Mutual
receives the following: (1) a written application of the policy owner; (2)
evidence of insurability satisfactory to Pacific Mutual; and (3) payment of all
monthly charges and deductions that were due and unpaid during the grace period,
payment of the amount by which net cash surrender value was less than zero at
the beginning of the grace period, and payment of a premium at least equal to
three times the most recent monthly deduction.
When the Policy is reinstated, the accumulated value will be equal to the
accumulated value on the
<PAGE>
date of the lapse subject to the following: (1) If the Policy is reinstated
after the first monthly payment date following lapse, the accumulated value will
be reduced by the amount of policy indebtedness on the date of lapse and no
policy indebtedness will exist on the date of reinstatement; (2) If the Policy
is reinstated on the monthly payment date next following lapse, any policy
indebtedness on the date of lapse will also be reinstated; and (3) No interest
on amounts held in Pacific Mutual's Loan Account to secure policy indebtedness
will be paid or credited between lapse and reinstatement.
Reinstatement will be effective as of the monthly payment date on or next
following the date of approval by Pacific Mutual, and accumulated value minus
policy indebtedness will be allocated among the variable accounts and the fixed
account in accordance with the policy owner's current premium allocation
instructions.
F. Policy Loans
A policy owner may borrow from Pacific Mutual an amount up to 90% of the
Policy's cash surrender value less any outstanding policy debt. The minimum
loan that may be taken is $1,000. A Policy is the only security required for a
loan.
When a policy owner takes a loan, an amount equal to the loan is transferred out
of the policy owner's accumulated value in the variable accounts and the fixed
account on a proportional basis, unless the policy owner instructs Pacific
Mutual otherwise.
The interest rate on loans is 4.75% a year. Pacific Mutual will credit interest
monthly on amounts held in the Loan Account to secure the loan at an annual rate
of 4.0%. The owner may repay all or part of the loan at any time while the
Policy is in force. If not repaid, the policy indebtedness will reduce the
amount of death proceeds paid upon the death of the insured or the cash
surrender value paid upon surrender or maturity.
A loan may affect the length of time the Policy remains in force. The Policy
will lapse when indebtedness equals or exceeds the cash surrender value and the
minimum payment required is not made during the grace period. Moreover, the
Policy may enter the grace period more quickly when a loan is outstanding,
because the loaned amount is not available to cover monthly deductions and
charges.
II. TRANSFER AMONG INVESTMENT DIVISIONS
The Pacific Select Separate Account (the "Separate Account") is a separate
investment account of Pacific Mutual used to support the variable death benefits
and policy values of Pacific Mutual's life insurance policies. The Separate
Account currently is made up of eight variable accounts which invest in shares
of a corresponding series of Pacific Select Fund (the "Fund"), the investment
vehicle of the Separate Account. The Fund is registered with the SEC under the
Investment Company Act of 1940 as an open-end management investment company of
the series type. The series of the Fund, each of which has a different
investment objective, are the Money Market Series, the Managed Bond
<PAGE>
Series, the Government Securities Series, the High Yield Bond Series, the Growth
Series, the Equity Income Series, the Multi-Strategy Series and the
International Series.
A policy owner may allocate accumulated value among the variable accounts in any
way he or she chooses. However, after the transfer, the accumulated value may
be allocated to no more than five investment alternatives. No transfers are
allowed during the grace period if the required premium has not been paid.
There is currently no charge imposed upon transfers, and no limit to the number
and frequency of transfers permitted.
Accumulated value may also be transferred from the variable accounts to the
fixed account. However, such a transfer will only be permitted in the policy
month preceding a policy anniversary. Transfers from the fixed account to the
variable account are also permitted, subject to the following restrictions: (1)
The policy owner may not make more than one transfer from the fixed account to
the variable accounts in any 12-month period; (2) If a policy owner has $1,000
or more in the fixed account, the policy owner may not transfer more than 20% of
such amount to the variable accounts in any year.
III. REDEMPTION PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
A. Surrender for Net Cash Surrender Value
A policy owner may fully surrender a Policy at any time during the life of the
insured. The amount received in the event of a full surrender is the Policy's
net cash value, which is equal to the account value less any outstanding policy
debt less unrecovered deferred load.
In addition, a Policy may be partially surrendered. The minimum partial
surrender allowed is $1,000. The amount that can be withdrawn is also limited
so that after the withdrawal, (1) accumulated value is at least $5,000 and (2)
any policy indebtedness in no greater than 90% of the new cash surrender value.
Two partial surrender plans are offered, preferred withdrawal and partial
withdrawal.
Preferred withdrawal is available from the first policy anniversary until the
15th policy anniversary. Under this benefit, the policy owner may make one
"preferred withdrawal" per year of up to 10% of the amount of the policy owner's
initial premium payment and any additional payments subsequently made and
accepted.
The partial withdrawal is available on the 15th policy anniversary and
thereafter. The limitations on preferred withdrawals do not apply to this
benefit, and the policy owner may withdraw net cash surrender value.
As of the effective date of any withdrawal, the policy owner's accumulated value
and cash surrender value will be reduced by the amount of the withdrawal. No
surrender charge or withdrawal fee will be charged for any partial surrender.
However, the amount of the deferred load determined at the time of an initial
premium payment remains unchanged.
<PAGE>
A preferred withdrawal will not affect the Policy's death benefit, although an
adjustment of the face amount at the time of the withdrawal may be necessary to
insure this result. When a partial withdrawal is made, the face amount under
the Policy is decreased by the lesser of (1) the amount of the partial
withdrawal or (2) if the death benefit prior to the withdrawal is greater than
the face amount, the amount, if any, by which the face amount exceeds the
difference between death benefit and the amount of the partial withdrawal.
B. Death Claims
Upon the death of an insured, Pacific Mutual will pay to a named beneficiary
death benefit proceeds, either in a lump sum or under a payment plan offered
under the Policy. The proceeds will be the death benefit under the Policy
reduced by adjustments for any outstanding policy indebtedness.
The death benefit will be the greater of the face amount of the Policy or
accumulated value multiplied by a certain percentage. The specified percentages
vary according to the age of the insured, and are shown in a table in the
Policy. Because the specified percentage is applied to a policy owner's
accumulated value, an increase in accumulated value may increase the death
benefit. However, because the death benefit will never be less than the face
amount, a decrease in the accumulated value may decrease the death benefit but
never below the face amount.
The face amount of the Policy may be changed by the policy owner after the first
policy year subject to approval from Pacific Mutual. Such a change may change
the death benefit, depending, among other things, upon whether and the degree to
which the death benefit under a Policy exceeds the face amount prior to the
change. A change in the face amount may affect the net amount at risk under a
Policy, which may affect a policy owner's cost of insurance charge. For these
purposes, the net amount at risk is equal to the death benefit less the policy
owner's accumulated value.
Any request for a change in face amount must be in writing at Pacific Mutual's
home office. A policy owner may make only one such request per policy year. In
the case of a request for an increase, additional evidence of insurability
satisfactory to Pacific Mutual will also be required.
C. Policy Lapsation
If the net cash surrender value of a Policy is insufficient to cover deductions
and charges on a monthly payment date, Pacific Mutual will give written notice
to the policy owner that if an amount shown in the notice (which will be
sufficient to cover the deduction amount(s) due) is not paid within 61 days (the
"grace period"), the policy owner faces a danger of lapse. The Policy will
remain in force through the grace period, but if no payment is forthcoming, it
will terminate at the end of the grace period. In order to avoid termination,
the policy owner must pay an amount equal to the amount by which net cash
surrender value is less than zero plus a minimum of three times the charges and
deductions due on the monthly payment date on which net cash surrender value
became insufficient to cover deductions and charges.
If the required payment is made during the grace period, such payment and the
accumulated value in the money market variable account (to which accumulated
value in the variable accounts is
<PAGE>
transferred when lapsation is threatened) will be allocated among the variable
accounts and the fixed account in accordance with the policy owner's allocation
instructions. If the insured dies during the grace period, the death benefit
proceeds will equal the amount of the death benefit immediately prior to the
commencement of the grace period, reduced by any unpaid monthly deductions and
charges due and any policy indebtedness.
A lapsed policy may be reinstated at any time within five years after the end of
the grace period but before the maturity date. See "Reinstatement," Section
I.E. on page 5 of this document.
D. Policy Loans
See Section I.F. on page 6 of this document.
<PAGE>
EXHIBIT 99.9
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/13/94 Thomas C. Sutton
Chairman of the Board
and Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 1/3/95 Glenn S. Schafer
Director and President
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-13-94 Edward Byrd
Controller
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-15-94 Harry G. Bubb
Director and
Chairman Emeritus
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/13/94 Richard M. Ferry
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-16-94 Donald E. Guinn
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/15/94 Ignacio E. Lozano, Jr.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-14-94 Charles A. Lynch
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept 14, 1994 Dr. Allen W. Mathies, Jr.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept 15, 1994 Charles D. Miller
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/15/94 Donn B. Miller
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 6/23/95 J. Fernando Niebla
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept 14, 1994 Susan Westerberg Prager
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept. 14, 1994 James R. Ukropina
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept. 26, 1994 Raymond L. Watson
Director
