<PAGE>
As filed with the Securities and Exchange Commission on March 28, 1996
Registration No. 33-32704
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 485BPOS
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post Effective Amendment No. 9 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]
Amendment No. 10 [X]
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
700 Newport Center Drive, Newport Beach, California 92660
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: 1-800-342-3322
Sharon A. Cheever, Esq.
Vice President and Investment Counsel
Pacific Mutual Life Insurance Company
700 Newport Center Drive
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
[X] 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 a separate account funding
individual flexible premium variable accumulation deferred annuity contracts.
DECLARATION PURSUANT TO RULE 24f-2
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. The Registrant will file its Notice pursuant to Rule 24f-2 for the
fiscal year ending December 31, 1996, on or before February 28, 1997.
<PAGE>
CROSS-REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus) and
Part B (Statement of Additional Information)
of Registration Statement of Information Required by Form N-4
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Summary; Expense Table
4. Condensed Financial Information Financial Highlights
5. General Description Information About Pacific Mutual,
The Separate Account and The
Fund; Voting of Fund Shares
6. Deductions and Expenses Charges and Deductions
7. General Description of Variable The Contracts; More About the
Annuity Contracts Contracts; Summary
8. Annuity Period Annuity Period
9. Death Benefit The Death Benefit; Death of Owner;
Guaranteed Death Benefit Option
10. Purchase and Policy Values Premium Payments; Allocation of
Premiums; Accumulated Value;
Determination of Accumulated Value
11. Redemptions Transfers of Accumulated Value;
Surrender and Partial Withdrawals
12. Taxes Federal Tax Matters
13. Legal Proceedings Other Information
14. Table of Contents for the Statement
of
<PAGE>
Additional Information Statement of Additional Information
PART B
Statement of Additional
Item of Form N-4 Information Caption
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History General Information and History
18. Services Custody of Assets; Independent
Accountants
19. Purchase of Securities Being Offered Distribution of Contracts;
(Prospectus) Charges and
Deductions
20. Underwriters Distribution of Contracts
21. Calculation of Performance Date Performance Information
22. Annuity Payments (Prospectus) Annuity Period
23. Financial Statements Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements and Exhibits (Statement of Additional Information)
Financial Statements and Exhibits
25. Directors and Officers of the Directors and Officers of Pacific
Depositor Mutual
26. Persons Controlled By or Under Common Persons Controlled By or Under
Control with Depositor or Registrant Common Control with Depositor
or Registrant
27. Number of Policyowners Number of Contractholders
28. Indemnification Indemnification
<PAGE>
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
33. Signature Page Signatures
<PAGE>
PROSPECTUS
<PAGE>
[LOGO OF PACIFIC SELECT VARIABLE ANNUITY]
PROSPECTUS
FOR
PACIFIC SELECT VARIABLE ANNUITY
ISSUED BY
PACIFIC MUTUAL LIFE INSURANCE COMPANY
DATED APRIL 1, 1996
--------------
PROSPECTUS
FOR
PACIFIC SELECT FUND
DATED APRIL 1, 1996
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY
ISSUED BY:
PACIFIC MUTUAL LIFE INSURANCE COMPANY
1-800-722-2333
MAILING ADDRESS:
VARIABLE ANNUITY DEPARTMENT
P.O. BOX 7187
PASADENA, CALIFORNIA 91109-7187
[LOGO OF PACIFIC SELECT VARIABLE ANNUITY]
This Prospectus describes Pacific Select Variable Annuity--an individual
flexible premium variable accumulation deferred annuity contract (the
"Contract") offered by Pacific Mutual Life Insurance Company ("Pacific
Mutual"). The Contract presents a dynamic concept in retirement planning
designed to give Contract Owners flexibility in attaining financial goals. The
Contract is available for individuals as a non-tax qualified retirement plan
("Non-Qualified Plan") under certain tax-qualified retirement plans
("Qualified Plan").
During the Accumulation Period, the Contract provides for the accumulation
of a Contract Owner's value on either a variable basis, a fixed basis, or
both. The Contract also provides several options for fixed annuity payments to
begin on a future date. Premium payments may be allocated at the Contract
Owner's discretion to one or more of the Investment Options currently
available. Each of the Variable Investment Options (also called "Variable
Accounts") is a subaccount of a separate account of Pacific Mutual called the
Pacific Select Variable Annuity Separate Account (the "Separate Account"). The
Variable Accounts invest in one or more of the corresponding Portfolios of the
Pacific Select Fund (the "Fund"), which currently are the following fourteen
Portfolios:
Money Market Portfolio Equity Income Portfolio
High Yield Bond Portfolio Multi-Strategy Portfolio
Managed Bond Portfolio Equity Portfolio
Government Securities Portfolio Bond and Income Portfolio
Growth Portfolio* Equity Index Portfolio
Aggressive Equity Portfolio International Portfolio
Growth LT Portfolio Emerging Markets Portfolio
A Fixed Option called the Fixed Account is also available. The Accumulated
Value in the Fixed Account will accrue interest at rates that are paid by
Pacific Mutual as described in "The Fixed Account".
The Accumulated Value in the Variable Accounts under a Contract will vary
based on investment performance of the Variable Accounts to which the
Accumulated Value is allocated. No minimum amount of Accumulated Value is
guaranteed.
A Contract may be returned according to the terms of its Free-Look Right
(See "Free-Look Right").
THE CONTRACT INVOLVES INVESTMENT RISK, INCLUDING LOSS OF PRINCIPAL, AND IS
NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THE
CONTRACT IS NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus concisely sets forth information about the Contract and the
Separate Account that an investor should know before purchasing a Contract.
Certain additional information is contained in a "Statement of Additional
Information ("SAI")," dated April 1, 1996, which has been filed with the
Securities and Exchange Commission (the "SEC"), and can be obtained by calling
or writing Pacific Mutual at the telephone number and address above. The table
of contents of the Statement of Additional Information is set forth on page 42
of this Prospectus.
* The Growth Variable Account that invests in the Growth Portfolio is
available only to Owners of Contracts issued prior to January 1, 1994. It is
not available to Owners of Contracts issued on or after January 1, 1994.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUS
FOR THE FUND. THESE PROSPECTUSES SHOULD BE READ
CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
DATE: APRIL 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITIONS................................................................ 4
SUMMARY.................................................................... 6
Purpose of the Contract.................................................. 6
The Variable Accounts and the Fund....................................... 6
Fixed Account............................................................ 6
Premiums................................................................. 6
Contract Benefits........................................................ 7
Free-Look Right.......................................................... 7
Charges and Deductions................................................... 7
Contacting Pacific Mutual................................................ 9
EXPENSE TABLE.............................................................. 10
Contractual Expenses..................................................... 10
Separate Account Annual Expenses......................................... 10
Fund Annual Expenses After Expense Limitation............................ 10
FINANCIAL HIGHLIGHTS....................................................... 13
SELECTED ACCUMULATION UNIT INFORMATION..................................... 13
INFORMATION ABOUT PACIFIC MUTUAL, THE SEPARATE ACCOUNT, AND THE FUND....... 14
Pacific Mutual Life Insurance Company.................................... 14
Separate Account......................................................... 14
Pacific Select Fund...................................................... 14
The Investment Adviser................................................... 16
THE CONTRACT............................................................... 16
General.................................................................. 16
Application for a Contract............................................... 16
Premium Payments......................................................... 16
Allocation Limitation.................................................... 17
Allocation of Premiums................................................... 17
Dollar Cost Averaging Option............................................. 18
Portfolio Rebalancing Option............................................. 18
Transfers of Accumulated Value........................................... 18
Accumulated Value........................................................ 19
Determination of Accumulated Value....................................... 19
Full and Partial Withdrawals............................................. 20
Preauthorized Scheduled Withdrawals...................................... 20
Free-Look Right.......................................................... 21
Death Benefit............................................................ 22
Death of Owner........................................................... 22
CHARGES AND DEDUCTIONS..................................................... 23
Contingent Deferred Sales Charge......................................... 23
Mortality and Expense Risk Charge........................................ 24
Administrative Charge.................................................... 24
Maintenance Fee.......................................................... 25
Transfer Fee............................................................. 25
Premium Tax and Other Taxes.............................................. 25
Variations in Charges.................................................... 25
Guarantee of Certain Charges............................................. 26
Fund Expenses............................................................ 26
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ANNUITY PERIOD............................................................. 26
General.................................................................. 26
Annuity Options.......................................................... 27
Selection of an Option................................................... 28
THE FIXED ACCOUNT.......................................................... 28
Interest................................................................. 28
Bail Out Provision....................................................... 29
Death Benefit............................................................ 29
Contract Charges......................................................... 29
Transfers and Withdrawals................................................ 29
Payments from the Fixed Account.......................................... 30
MORE ABOUT THE CONTRACT.................................................... 30
Ownership................................................................ 30
Designation and Change of Beneficiary.................................... 30
Payments from the Separate Account....................................... 30
Proof of Age and Survival................................................ 31
Loans.................................................................... 31
Restriction on Withdrawals from 403(b) Programs.......................... 32
Restrictions Under the Texas Optional Retirement Program................. 33
FEDERAL TAX MATTERS........................................................ 33
Introduction............................................................. 33
Tax Status of Pacific Mutual and the Separate Account.................... 34
Taxation of Annuities in General--Non-Qualified Plans.................... 34
Additional Considerations................................................ 35
Qualified Plans.......................................................... 36
Charge for Pacific Mutual Income Taxes................................... 38
OTHER INFORMATION.......................................................... 38
Voting of Fund Shares.................................................... 38
Substitution of Investments.............................................. 39
Changes to Comply with Law and Amendments................................ 39
Reports to Owners........................................................ 40
Telephone Transfer Privileges............................................ 40
Legal Proceedings........................................................ 40
Legal Matters............................................................ 40
PERFORMANCE INFORMATION.................................................... 41
ADDITIONAL INFORMATION..................................................... 41
Registration Statement................................................... 41
Financial Statements..................................................... 41
STATEMENT OF ADDITIONAL INFORMATION........................................ 42
APPENDIX................................................................... 43
</TABLE>
----------------
THE CONTRACT 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 OR
THE STATEMENT OF ADDITIONAL INFORMATION, THE FUND'S PROSPECTUS OR THE
STATEMENT OF ADDITIONAL INFORMATION OF THE FUND, OR ANY SUPPLEMENT THERETO.
3
<PAGE>
DEFINITIONS
Various terms commonly used in this Prospectus are defined as follows:
Accumulated Value--The total value of the amounts in the Variable Accounts of
the Separate Account and the Fixed Account as well as any amount set aside in
the Loan Account to secure loans as of any Valuation Date.
Accumulation Period--The period commencing on the Contract Date and ending on
the Annuity Start Date or, if earlier, when the Contract is terminated, either
through a full withdrawal, payment of charges, or payment of the death benefit
proceeds.
Accumulation Unit--A unit of measure used to calculate the value of a Contract
Owner's interest in a Variable Account during the Accumulation Period.
Age--The Owner's or Annuitant's age as of his or her nearest birthday as of
the Contract Date, increased by the number of complete Contract Years elapsed.
Annuitant--The person or persons on whose life annuity payments depend. If
Joint Annuitants are named in the Contract, "Annuitant" means both Annuitants
unless otherwise stated.
Annuity--A series of periodic income payments made by Pacific Mutual to an
Annuitant, Contingent Annuitant, or Beneficiary during the period specified in
the Annuity Option.
Annuity Options--Options under the Contract that prescribe the provisions
under which a series of annuity payments are made.
Annuity Period--The period during which annuity payments are made.
Annuity Start Date--The date when annuity payments are to begin.
Beneficiary--The person having the right to the death benefit, if any, payable
upon the death of the Annuitant during the Accumulation Period, and the person
having the right to benefits, if any, payable upon the death of the Annuitant
during the Annuity Period.
Contract--An individual flexible premium variable accumulation deferred
annuity contract offered by Pacific Mutual.
Contract Date--The date shown as the Contract Date in a Contract. Contract
monthly, quarterly, semi-annual, and annual anniversaries and Contract months,
quarters, and years are measured from the Contract Date. It is usually the
date that the initial premium is credited to the Contracts. The term "Issue
Date" shall be substituted for the term "Contract Date" for Contracts issued
to residents of the Commonwealth of Massachusetts.
Contract Debt--The unpaid loan balance including accrued loan interest.
Contract Owner or Owner--The person entitled to the ownership rights under the
Contract and in whose name the Contract is issued.
Contract Year--Each twelve-month period measured from the Contract Date.
Designated Beneficiary--The person selected by the Owner to succeed to the
Owner's interest in the Contract for purposes of Section 72(s) of the Internal
Revenue Code, and which includes an Owner Beneficiary and a Joint or
Contingent Owner.
Fixed Account--An account that is part of Pacific Mutual's General Account in
which all or a portion of the Accumulated Value may be held for accumulation
at fixed rates of interest (which may not be less than 4.0%) declared by
Pacific Mutual at least annually.
Full Withdrawal Value--The amount a Contract Owner may receive upon full
withdrawal of the Contract, which is equal to Accumulated Value minus any
unpaid maintenance fee, any applicable contingent deferred sales charge, and
any Contract Debt.
4
<PAGE>
Fund--Pacific Select Fund. The Fund is a diversified, open-end management
investment company commonly referred to as a mutual fund.
General Account--All assets of Pacific Mutual other than those allocated to
the Separate Account or to any other separate account of Pacific Mutual.
Investment Option--A Variable Account or the Fixed Account.
Owner Beneficiary--The person named (other than a Joint or Contingent Owner)
to receive death benefit proceeds if the Owner dies before the Annuitant
during the Accumulation Period.
Premium--The amounts paid to Pacific Mutual as consideration for the Contract.
Separate Account--The Pacific Select Variable Annuity Separate Account. A
separate account of Pacific Mutual that consists of subaccounts, referred to
as Variable Accounts, each of which invests in a separate Portfolio of the
Pacific Select Fund.
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 Pacific Mutual's administrative offices are open. The New
York Stock Exchange is closed on weekends and on the following holidays: New
Year's Day, President's Day, Good Friday, Memorial Day, July Fourth, Labor
Day, Thanksgiving Day, and Christmas Day. Pacific Mutual may choose to close
on other holidays, a day immediately preceding or following a national
holiday, or in emergency situations. Any transaction or determination of value
called for on or as of any day is effected as of the end of that day. If any
transaction or event called for under a Contract is scheduled to occur on a
day that is not a Valuation Date, such transaction or event will be deemed to
occur on the next following Valuation Date, unless otherwise specified.
Valuation Period--A period used in measuring the investment experience of each
Variable Account of the Separate Account. The Valuation Period begins at the
close of one 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 a
separate account to which the Accumulated Value under the Contract may be
allocated for variable accumulation. Currently, fourteen Variable Accounts are
available under the Contract unless otherwise indicated in this Prospectus.
Variable Annuities Department--The Department of Pacific Mutual that services
the Contract. The addresses of the Variable Annuities Department are described
in "Contacting Pacific Mutual".
Variable Investment Option--A subaccount of the Separate Account.
5
<PAGE>
SUMMARY
This summary is intended to provide a brief overview of the more significant
aspects of the Contract. Further detail is provided in this Prospectus, the
Statement of Additional Information, and the Contract. Unless the context
indicates otherwise, the discussion in this summary and the remainder of the
Prospectus relates to the portion of the Contract involving the Separate
Account. The Fixed Account is briefly described under "The Fixed Account," in
this Prospectus and in the Contract.
PURPOSE OF THE CONTRACT
The Contract described in this Prospectus presents a dynamic concept in
retirement planning designed to give Contract Owners flexibility in attaining
financial goals. The Contract provides for the accumulation of values on a
variable basis, a fixed basis, or both, during the Accumulation Period and
provides several options for fixed annuity payments. During the Accumulation
Period, an Owner can pursue various allocation options by allocating premiums
to the Variable Accounts of the Separate Account or to the Fixed Account. See
"The Contract," page 16.
The Contract is eligible for purchase as a non-tax qualified retirement plan
for an individual ("Non-Qualified Plan"). The Contract is also eligible for an
individual in connection with a retirement plan qualified under Section 401,
408, or 457 of the Internal Revenue Code of 1986, as amended. These plans are
sometimes referred to in this Prospectus as "Qualified Plans."
THE VARIABLE ACCOUNTS AND THE FUND
Premiums designated to accumulate on a variable basis are allocated to the
Separate Account. See "Separate Account." The Separate Account is currently
divided into fourteen subaccounts called Variable Accounts or Variable
Investment Options. Each Variable Account invests exclusively in shares of a
specific Portfolio of the Fund. The Portfolios of the Fund, each of which has a
different investment objective or objectives, are as follows: Money Market
Portfolio, High Yield Bond Portfolio, Managed Bond Portfolio, Government
Securities Portfolio, Growth Portfolio, Aggressive Equity Portfolio, Growth LT
Portfolio, Equity Income Portfolio, Multi-Strategy Portfolio, Equity Portfolio,
Bond and Income Portfolio, Equity Index Portfolio, International Portfolio, and
Emerging Markets Portfolio. See "Pacific Select Fund," page 14. Amounts held in
a Variable Account will increase or decrease in dollar value depending on the
investment performance of the corresponding Portfolio of the Fund in which such
Variable Account invests. The Contract Owner bears the investment risk for
amounts allocated to a Variable Account.
The Growth Variable Account that invests in the Growth Portfolio is available
only to Owners of Contracts issued prior to January 1, 1994. It is not
available to Owners of Contracts issued on or after January 1, 1994.
FIXED ACCOUNT
Premiums designated to accumulate on a fixed basis may be allocated to the
Fixed Account, which is part of Pacific Mutual's General Account. Amounts
allocated to the Fixed Account earn interest at rates determined at least
annually by Pacific Mutual and that are guaranteed to be at least an effective
annual rate of 4%. See "The Fixed Account," on page 28.
PREMIUMS
The minimum initial premium is $5,000 for a Contract issued in connection
with a Non-Qualified Plan and $2,000 for a Contract issued in connection with a
Qualified Plan. Thereafter, the Contract Owner may choose the amount and
frequency of premium payments, except that the minimum subsequent premium is
$250 for both Non-Qualified and Qualified Plans, except for certain Qualified
Plans, in which case it is $50.
6
<PAGE>
CONTRACT BENEFITS
During the Accumulation Period, Accumulated Value may be transferred by the
Contract Owner among the Variable Accounts and to and from the Fixed Account,
subject to certain restrictions as described in "Transfers of Accumulated
Value," on page 18.
At any time before the Annuity Start Date, a Contract may be surrendered for
its Full Withdrawal Value, and partial withdrawals, including preauthorized
scheduled withdrawals, may be taken from the Accumulated Value. Full and
partial withdrawals, including preauthorized scheduled withdrawals, may result
in the deduction of a contingent deferred sales charge. See "Full and Partial
Withdrawals," on page 20 and "Preauthorized Scheduled Withdrawals," on page 20
for more information, including the possible charges and tax consequences
associated with full and partial withdrawals.
The Contract provides for a death benefit upon the death of the Annuitant
during the Accumulation Period. See "Death Benefit," on page 22. The Contract
provides for several fixed Annuity Options. Payments under the Annuity Options
will be fixed and guaranteed by Pacific Mutual. Pacific Mutual reserves the
right to offer annuity options on a variable basis. See "Annuity Period," on
page 26.
FREE-LOOK RIGHT
An Owner may return a Contract within the Free-Look Period, which is a ten-
day period beginning when the Owner receives the Contract unless state law
requires otherwise.
Premiums received during the Free-Look Period will, except as indicated
below, be allocated according to the Contract Owner's instructions contained in
the application or more recent instructions received, if any. In the event that
an Owner returns a Contract within the Free-Look Period, Pacific Mutual will
refund to the Owner any premium payments allocated to the Fixed Account and the
Accumulated Value allocated to the Variable Accounts as of the end of the
Valuation Period in which Pacific Mutual receives the Contract plus any
Contract Fees and Charges deducted from the Contract Owner's Accumulated Value
allocated to the Variable Accounts.
If the Contract Owner resides in a state that requires Pacific Mutual to
return premium payments to Owners who exercise the Free-Look Right, Pacific
Mutual will refund any premiums received or, if required by the Owner's state
of residence, premiums allocated to the Fixed Account plus the greater of
premiums allocated to the Variable Accounts or Accumulated Value in the
Variable Accounts plus any charges and fees deducted from the Variable Accounts
on the contract date. Premiums received during the Free-Look Period will
initially be allocated to the Money Market Variable Account. The Accumulated
Value in the Money Market Variable Account will be transferred automatically to
the Variable Accounts and the Fixed Account elected in the Owner's application
(or, if received more recently, in written instructions) 15 days after the
Contract is issued. In Pennsylvania, Pacific Mutual will refund premiums
allocated to the Fixed Account plus the Accumulated Value in the Variable
Accounts plus any Charges deducted from the Variable Accounts on the Contract
Date.
CHARGES AND DEDUCTIONS
Pacific Mutual does not make any deductions for sales load from premium
payments before allocating them to the Owner's Accumulated Value. Certain
charges will be deducted in connection with the Contract.
7
<PAGE>
Contingent Deferred Sales Charge
A contingent deferred sales charge (which may also be referred to as a
withdrawal charge) may be assessed by Pacific Mutual on a full or partial
withdrawal, including a scheduled withdrawal, during the Accumulation Period
and, under certain circumstances, upon annuitization. The withdrawal charge
will be waived on withdrawals to the extent that total withdrawals that are
free of charge during the Contract Year do not exceed 10% of the sum of the
premium payments made during the current Contract Year up to the Valuation Date
of the withdrawal and the preceding four Contract Years. The withdrawal charge
applies against any withdrawal to the extent the amount withdrawn is
attributable to premium payments made. For the purpose of determining any
withdrawal charge, withdrawals are applied to premium payments in the order
premium payments are made, then to earnings. The amount of the charge will
depend upon the number of Contract Years that a premium has remained credited
under the Contract, as follows:
<TABLE>
<CAPTION>
AGE OF PREMIUM
IN CONTRACT
YEARS WITHDRAWAL CHARGE
-------------- -----------------
<S> <C>
1 6%
2 6%
3 5%
4 4%
5 3%
6 0%
</TABLE>
In no event will the amount of any withdrawal charge, when added to any such
charge previously assessed against any amount withdrawn from the Contract,
exceed 6% of the premiums paid under a Contract. In addition, no withdrawal
charge will be imposed upon: (1) payment of death benefit proceeds under the
Contract; (2) withdrawals effected to meet the minimum distribution rules for
Qualified Plans as they apply to amounts held under the Contract; and (3) in
certain instances annuitization. Subject to approval of state insurance
authorities, the withdrawal charge will also be waived on a full or partial
withdrawal if the Annuitant has been diagnosed with a medically determinable
condition which results in a life expectancy of 12 months or less. See
"Contingent Deferred Sales Charge," on page 23.
Mortality and Expense Risk Charge
Pacific Mutual deducts a daily charge from the assets of each Variable
Account for mortality and expense risks equal to an annual rate of 1.25% of the
average daily net assets of each Variable Account. See "Mortality and Expense
Risk Charge," on page 24.
Administrative Charge
On each Monthly Anniversary following the Contract Date, Pacific Mutual
deducts a monthly administrative charge during the Accumulation Period equal to
.000125 multiplied by a Contract's Accumulated Value in the Variable Accounts
and Fixed Account, which is equal to an annual rate of 0.15% of a Contract's
Accumulated Value in the Variable Accounts and Fixed Account. On Contracts
issued in connection with applications received by Pacific Mutual at its
Variable Annuity Department before May 1, 1992, the rate of this charge is
currently reduced to .0001 (.12% on an annual basis), and, if the initial
premium is $50,000 or more on such Contracts, to .00005 (.06% on an annual
basis). See "Administrative Charge," on page 24.
Maintenance Fee
During the Accumulation Period, an annual fee of $30 is deducted on each
Contract Anniversary to cover the costs of maintaining records for the
Contract. This charge is pro-rated upon annuitization or a full withdrawal. The
charge is currently waived on Contracts for which the premium payments received
during the first Contract Year equal $50,000 or more. See "Maintenance Fee," on
page 25.
8
<PAGE>
Transfer Fee
Currently no transfer fee is imposed. Pacific Mutual reserves the right to
assess a transfer fee of $10 per transaction on the thirteenth and any
subsequent transfer occurring in a Contract Year.
Premium Tax Charge
Pacific Mutual assesses a premium tax charge to reimburse itself for any
premium taxes that it incurs. This charge will be deducted on annuitization or
upon full withdrawal if a premium tax was incurred by Pacific Mutual and is not
refundable. Partial withdrawals, including scheduled withdrawals, may result in
a premium tax charge if a premium tax is incurred by Pacific Mutual and is not
refundable. Pacific Mutual reserves the right to deduct such taxes when
incurred or upon distributions. Premium tax rates currently range from 0% to
3.5%. See "Premium Tax and Other Taxes," on page 25.
Other Expenses
The operating expenses of the Separate Account are paid by Pacific Mutual.
Investment advisory fees and operating expenses of the Fund are paid by the
Fund. For a description of these charges and expenses, see the Prospectus for
the Fund.
CONTACTING PACIFIC MUTUAL
Premium payments, applications accompanying premium payments, and loan
repayments should be directed to Pacific Mutual at P.O. Box 100060, Pasadena,
California 91189-0060. All written requests, notices, and other forms required
by the Contract, including applications not accompanied by premium payments,
and any questions or inquiries should be directed to Pacific Mutual at P.O. Box
7187, Pasadena, California 91109-7187. Express Mail should be directed to
Pacific Mutual Life Insurance Company, c/o FCNPC, 1111 South Arroyo Parkway,
1st Floor, Pasadena, California 91105. A service representative may be reached
by calling 1-800- 722-2333 between the hours of 6:00 a.m. and 5:00 p.m.,
Pacific time.
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.
Pacific Mutual "receives" this information only when it arrives, in good form,
at the correct mailing address set out above. Please call Pacific Mutual at 1-
800-722-2333 if the Owner has any questions regarding which address to use.
Additional premium payments, loan repayments, 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 on the same
Valuation Date that Pacific Mutual receives them in "proper form", unless the
transaction or event is scheduled to occur on another day. Generally, whenever
the Owner submits any other form, notice or request, the instructions will be
effective on the next Valuation Date after Pacific Mutual receives them in
"proper form" unless the transaction or event is scheduled to occur on another
day. "Proper form" may require, among other things, a signature guarantee or
other verification of authenticity. Pacific Mutual does not generally require a
signature guarantee unless it appears that the Owner's 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 Pacific Mutual. The Owner should call the Owner's
registered representative or Pacific Mutual if the Owner has any questions
regarding the required form of a request.
9
<PAGE>
EXPENSE TABLE
The purpose of this table is to assist investors in understanding the
various costs and expenses borne directly and indirectly by Owners of the
Contracts with Accumulated Value allocated to the Variable Accounts. The table
reflects contractual charges, expenses of the Separate Account, and charges
and expenses of the Fund. The table does not reflect premium taxes that may be
imposed by various jurisdictions. See "Premium Tax and Other Taxes". The
information contained in the table is not generally applicable to amounts
allocated to the Fixed Account (although certain contractual charges also
apply to this Account).
For a complete description of a Contract's costs and expenses, see "Charges
and Deductions". For a more complete description of the Fund's costs and
expenses, see the Fund Prospectus, which accompanies this Prospectus.
CONTRACTUAL EXPENSES
<TABLE>
<S> <C>
Sales load on premiums................................................ None
Contingent deferred sales charge (as a percentage of amounts withdrawn
attributable to
premiums paid in the last five Contract Years)/1/
<CAPTION>
AGE OF PREMIUM CHARGE
-------------- ------
<S> <C>
Contract Year 1...................................................... 6%
Contract Year 2...................................................... 6%
Contract Year 3...................................................... 5%
Contract Year 4...................................................... 4%
Contract Year 5...................................................... 3%
Contract Year 6 and over............................................. None
Administrative Charge (per year)/2/..................................... 0.15%
Maintenance Fee (per year)/3/
Premiums received during the first Contract Year of less than
$50,000............................................................. $30
Premiums received during the first Contract Year of $50,000 or more.. None
Transfer Fee/4/......................................................... None
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and expense risk charge (as a percentage of each Variable Ac-
count's average daily net assets)...................................... 1.25%
</TABLE>
FUND ANNUAL EXPENSES AFTER EXPENSE LIMITATION (as a percentage of each Series'
average daily net assets)/5/
<TABLE>
<CAPTION>
ADVISORY OTHER TOTAL
FEE EXPENSES EXPENSES
-------- -------- --------
<S> <C> <C> <C>
Money Market Portfolio............................ .40% .13% .53%
High Yield Bond Portfolio......................... .60% .17% .77%
Managed Bond Portfolio............................ .60% .16% .76%
Government Securities Portfolio................... .60% .22% .82%
Growth Portfolio.................................. .65% .14% .79%
Aggressive Equity Portfolio....................... .80% .19% .99%
Growth LT Portfolio............................... .75% .19% .94%
Equity Income Portfolio........................... .65% .18% .83%
Multi-Strategy Portfolio.......................... .65% .19% .84%
Equity Portfolio.................................. .65% .15% .80%
Bond and Income Portfolio......................... .60% .20% .80%
Equity Index Portfolio............................ .25% .17% .42%
International Portfolio........................... .85% .27% 1.12%
Emerging Markets Portfolio........................ 1.10% .25% 1.35%
</TABLE>
(Footnotes on following page)
10
<PAGE>
- --------
/1/ The withdrawal charge will be waived to the extent that total withdrawals
free of charge during the Contract Year do not exceed 10% of the sum of the
premium payments made during the current Contract Year and the preceding
four Contract Years. When added to the withdrawal charges assessed on prior
withdrawals, the total withdrawal charge will never exceed 6% of total
premiums paid.
/2/ On Contracts issued in connection with applications received by Pacific
Mutual at its Home Office before May 1, 1992, the rate of this charge is
currently reduced to .0001 (.12% on an annual basis), and, if the initial
premium is $50,000 or more on such Contracts, to .00005 (.06% on an annual
basis). Pacific Mutual has reserved the right to increase the
administrative fee on such Contracts up to 0.15% per year.
/3/ The Maintenance Fee is currently waived on Contracts for which premiums
received in the first Contract Year are $50,000 or more.
/4/ Pacific Mutual reserves the right to assess a transfer fee of $10 per
transaction on the thirteenth and any subsequent transfer occuring in any
Contract Year.
/5/ The expenses listed for the Fund Portfolios reflect current expenses for
the year ending December 31, 1995. The Aggressive Equity and Emerging
Markets Portfolios did not begin operations until April 1, 1996 and their
estimated "other expenses" reflect the policy adopted by Pacific Mutual as
Investment Adviser to the Fund, to waive its fees and reimburse expenses so
that operating expenses (exclusive of advisory fees, additional custodial
fees associated with holding foreign securities, foreign taxes on
dividends, interest or capital gains, and extraordinary expenses) expressed
as a decimal are not greater than 0.0025 of average daily net assets per
year. We began this policy in 1989 and intend to continue this policy until
at least December 31, 1997, but may discontinue it after that time. In the
absence of this policy, it is estimated that such expenses for the Emerging
Markets Portfolio would exceed this expense cap in 1996. No reimbursement
to the Portfolios was necessary for the Fund's fiscal year 1995.
EXAMPLES
Different examples are presented below that show expenses that an Owner of a
Contract with Accumulated Value allocated to a Variable Account would pay at
the end of one, three, five or ten years if, at the end of those time periods,
the Contract is (1) surrendered, (2) annuitized, (3) not surrendered or
annuitized. The examples assume a $1000 investment and a 5% annual rate of
return. In addition, the examples reflect an average initial premium of
approximately $40,000 and a prorata portion of the annual maintenance fee.
Each example shows expenses based upon allocation to each of the Variable
Accounts.
The examples below should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown.
The 5% return assumed in the examples is hypothetical and should not be
considered a representation of past or future actual returns, which may be
greater or lesser than the assumed amount.
11
<PAGE>
<TABLE>
<CAPTION>
CONTRACT NOT SURRENDERED
CONTRACT SURRENDERED AT CONTRACT ANNUITIZED AT OR ANNUITIZED AND REMAINS
VARIABLE ACCOUNT END OF TIME PERIOD END OF TIME PERIOD* IN FORCE AT END OF TIME PERIOD
---------------- ----------------------- ---------------------- ------------------------------
<S> <C> <C> <C>
Money Market
1 yr.................. $ 74 $ 74 $ 20
3 yrs................. 108 63 63
5 yrs................. 135 108 108
10 yrs................ 231 231 231
Managed Bond
1 yr.................. 77 77 23
3 yrs................. 115 70 70
5 yrs................. 146 119 119
10 yrs................ 255 255 255
Growth
1 yr.................. 77 77 23
3 yrs................. 116 71 71
5 yrs................. 148 121 121
10 yrs................ 258 258 258
Aggressive Equity
1 yr.................. 79 79 25
3 yrs................. 123 78 78
Growth LT
1 yr.................. 78 78 24
3 yrs................. 120 75 75
5 yrs................. 156 129 129
10 yrs................ 273 273 273
Equity Income
1 yr.................. 77 77 23
3 yrs................. 117 72 72
5 yrs................. 150 123 123
10 yrs................ 262 262 262
Multi-Strategy
1 yr.................. 77 77 23
3 yrs................. 117 72 72
5 yrs................. 150 123 123
10 yrs................ 263 263 263
Equity
1 yr.................. 77 77 23
3 yrs................. 116 71 71
Bond and Income
1 yr.................. 77 77 23
3 yrs................. 116 71 71
Equity Index
1 yr.................. 73 73 19
3 yrs................. 104 59 59
5 yrs................. 129 102 102
10 yrs................ 220 220 220
International
1 yr.................. 83 83 29
3 yrs................. 135 90 90
5 yrs................. 180 153 153
10 yrs................ 321 321 321
Emerging Markets
1 yr.................. 83 83 29
3 yrs................. 133 88 88
Government Securities
1 yr.................. 77 77 23
3 yrs................. 117 72 72
5 yrs................. 149 122 122
10 yrs................ 261 261 261
High Yield Bond
1 yr.................. 77 77 23
3 yrs................. 115 70 70
5 yrs................. 147 120 120
10 yrs................ 256 256 256
</TABLE>
- --------
*In this example, it is assumed that an Annuity Option has been selected that
provides for annuity payments that continue for at least five years, in which
case the contingent deferred sales charge would not be assessed if the
Contract was in force during the Accumulation Period for at least two Contract
Years.
12
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables present financial highlights with respect to each
Variable Account of the Separate Account, other than the Aggressive Equity and
Emerging Markets Variable Accounts. The information in the tables for the years
or periods ended December 31, 1990, 1991, 1992, 1993, 1994 and 1995 is included
in the Separate Account's financial statements that have been audited by
Deloitte & Touche llp, independent public accountants. The tables should be
read in conjunction with the Separate Account's financial statements, which are
in the Separate Account's Annual Report dated as of December 31, 1995.
The Equity Income, Multi-Strategy and International Portfolios of the Fund,
in which each corresponding Variable Account invests, were advised by other
Portfolio Managers during the periods presented in the 1990, 1991, 1992 and
1993 tables. Effective January 1, 1994, J.P. Morgan Investment Management Inc.
became the Portfolio Manager of the Equity Income and Multi-Strategy Portfolios
and Templeton Investment Counsel, Inc. became the Portfolio Manager of the
International Portfolio.
SELECTED ACCUMULATION UNIT* INFORMATION
Selected accumulation unit information as of the year ended December 31st for
each period:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ACCUMULATION UNIT VALUE
AT BEGINNING OF PERIOD:
Money Market Variable
Account................ 11.36 11.08 10.94 10.73 10.27 10.00(a)
High Yield Bond Variable
Account................ 16.03 16.16 13.86 11.82 9.58 10.00(b)
Managed Bond Variable
Account................ 13.70 14.51 13.15 12.25 10.56 10.00(c)
Government Securities
Variable Account....... 13.37 14.26 13.03 12.27 10.61 10.00(d)
Growth Variable Account. 16.07 18.18 15.10 12.68 9.11 10.00(e)
Growth LT Variable Ac-
count.................. 11.19 10.00(f)
Equity Income Variable
Account................ 14.09 14.31 13.38 12.85 9.88 10.00(g)
Multi-Strategy Variable
Account................ 14.29 14.69 13.62 13.06 10.63 10.00(h)
Equity Variable Account. 10.00(i)
Bond and Income Variable
Account................ 10.00(j)
Equity Index Variable
Account................ 13.03 13.06 12.09 11.44 10.00(k)
International Variable
Account................ 11.47 11.27 8.77 9.85 9.02 10.00(l)
- ----------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE
AT END OF PERIOD:
Money Market Variable
Account................ 11.84 11.36 11.08 10.94 10.73 10.27
High Yield Bond Variable
Account................ 18.82 16.03 16.16 13.86 11.82 9.58
Managed Bond Variable
Account................ 16.11 13.70 14.51 13.15 12.25 10.56
Government Securities
Variable Account....... 15.68 13.37 14.26 13.03 12.27 10.61
Growth Variable Account. 19.95 16.07 18.18 15.10 12.68 9.11
Growth LT Variable Ac-
count.................. 15.11 11.19
Equity Income Variable
Account................ 18.32 14.09 14.31 13.38 12.85 9.88
Multi-Strategy Variable
Account................ 17.68 14.29 14.69 13.62 13.06 10.63
Equity Variable Account. 12.24
Bond and Income Variable
Account................ 13.21
Equity Index Variable
Account................ 17.62 13.03 13.06 12.09 11.44
International Variable
Account................ 12.52 11.47 11.27 8.77 9.85 9.02
- ----------------------------------------------------------------------------------------------
NUMBER OF ACCUMULATION
UNITS OUTSTANDING AT
END OF PERIOD:
Money Market Variable
Account................ 5,268,194 3,822,842 1,329,477 841,839 596,386 290,145
High Yield Bond Variable
Account................ 3,499,795 915,875 579,127 204,530 28,473 5,555
Managed Bond Variable
Account................ 4,110,672 1,972,516 1,653,806 608,417 159,134 9,725
Government Securities
Variable Account....... 3,144,652 1,085,199 1,168,824 668,500 264,937 14,888
Growth Variable Account. 1,431,985 1,684,966 1,951,727 744,468 232,180 41,227
Growth LT Variable Ac-
count.................. 9,411,999 3,169,124
Equity Income Variable
Account................ 7,116,753 2,165,096 1,337,697 748,646 255,940 30,402
Multi-Strategy Variable
Account................ 3,112,558 1,848,366 1,288,197 737,841 276,429 7,594
Equity Variable Account. 2,377,743
Bond and Income Variable
Account................ 1,389,028
Equity Index Variable
Account................ 4,142,024 765,184 554,737 291,497 132,256
International Variable
Account................ 9,523,524 3,744,811 1,397,587 442,951 173,609 25,363
- ----------------------------------------------------------------------------------------------
</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.
Date Variable Account began operations:
(a) 07/24/90 (b) 08/16/90 (c) 09/05/90 (d) 08/22/90 (e) 08/16/90 (f) 01/04/94
(g) 08/16/90 (h) 09/25/90 (i) 01/01/95 (j) 01/01/95 (k) 02/11/91 (l) 08/16/90
13
<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. It was authorized to conduct business as a life
insurance company on January 2, 1868, as Pacific Mutual Life Insurance Company
of California, and was reincorporated under its present name on July 22, 1936.
Pacific Mutual offers a complete line of life insurance policies and annuity
contracts, as well as financial and retirement services. It is admitted to do
business in the District of Columbia, and in all states except New York. As of
the end of 1995, Pacific Mutual had over $44.2 billion of individual life
insurance in force and total assets of $17.6 billion. Together with its
subsidiaries and affiliated enterprises, Pacific Mutual has total assets and
funds under management of over $116.6 billion. It has been ranked according to
assets in the top 24 largest life insurance carriers in the nation for 1994.
The Principal Underwriter for the Contracts is Pacific Mutual Distributors,
Inc. ("PMD"), formerly Pacific Equities Network. PMD is registered as a
broker-dealer with the SEC and is a wholly-owned subsidiary of Pacific Mutual.
SEPARATE ACCOUNT
The Separate Account was established by Pacific Mutual on November 30, 1989,
under procedures established under California law. The income, gains, or
losses of the Separate Account are credited to or charged against the assets
of the Separate Account without regard to other income, gains, or losses of
Pacific Mutual. Assets in the Separate Account attributable to the reserves
and other liabilities under the Contracts are not chargeable with liabilities
arising from any other business that Pacific Mutual conducts. Pacific Mutual
owns the assets in the Separate Account and is required to maintain sufficient
assets in the Separate Account to meet all Separate Account obligations under
the Contracts. Pacific Mutual may transfer to its General Account assets that
exceed anticipated obligations of the Separate Account. All obligations
arising under the Contracts are general corporate obligations of Pacific
Mutual. Pacific Mutual may invest its own assets in the Separate Account for
other purposes, but not to support contracts other than variable annuity
contracts, and may accumulate in the Separate Account proceeds from Contract
charges and investment results applicable to those assets.
The Separate Account is currently divided into fourteen Variable Accounts.
Each Variable Account invests exclusively in shares of a specific Portfolio of
the Fund. Pacific Mutual may in the future establish additional Variable
Accounts of the Separate Account, which may invest in other Portfolios of the
Fund or in other securities, mutual funds, or investment vehicles.
The Separate Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"). Registration with
the SEC does not involve supervision by the SEC of the administration or
investment practices of the Separate Account or of Pacific Mutual.
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 1940 Act. The Fund
currently has fourteen separate Portfolios, each of which pursues different
investment objectives and policies.
Shares of the Fund currently are offered only for purchase by separate
accounts of Pacific Mutual to serve as an investment medium for variable
annuity contracts and for variable life insurance policies issued by Pacific
Mutual and to a separate account of Pacific Corinthian Life Insurance Company,
a subsidiary of Pacific Mutual,
14
<PAGE>
to serve as an investment medium for variable annuity contracts issued 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 Pacific Mutual.
The chart below summarizes some basic data about each Portfolio of the Fund.
There can be no assurance that any Portfolio will achieve its objective. More
detailed information 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
- ------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Money Market Current income consistent Highest quality money Pacific Mutual
with preservation of capital market instruments.
- ------------------------------------------------------------------------------------------------------------
High Yield Bond High level of current income Intermediate and long- Pacific Mutual
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 Pacific Investment
Securities consistent with prudent securities including Management Company
investment management futures and 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 Investors
Equity medium-sized companies.
- ------------------------------------------------------------------------------------------------------------
Growth LT Long-term growth of capital Common stock. Janus Capital Corporation
consistent with the
preservation of capital
- ------------------------------------------------------------------------------------------------------------
Equity Income Long-term growth of capital Dividend paying common J.P. Morgan Investment
and income stock. Management Inc.
- ------------------------------------------------------------------------------------------------------------
Multi-Strategy High total return Equity and fixed income J.P. Morgan Investment
securities. Management Inc.
- ------------------------------------------------------------------------------------------------------------
Equity Capital appreciation Common stocks and Greenwich Street Advisors
securities convertible Division of Smith Barney
into or exchangeable for Mutual Funds Management Inc.
common stocks.
- ------------------------------------------------------------------------------------------------------------
Bond and High level of current Investment grade debt Greenwich Street Advisors
Income income consistent with securities. Division of Smith Barney
prudent investment Mutual Funds Management Inc.
management and
preservation of capital
- ------------------------------------------------------------------------------------------------------------
Equity Index Provide investment results Stocks included in the Bankers Trust Company
that correspond to the total S&P 500.
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 Long-term growth of capital Common stocks of Blairlogie Capital Management
Markets companies domiciled in
emerging market
countries.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE GROWTH VARIABLE ACCOUNT THAT INVESTS IN THE GROWTH PORTFOLIO IS
AVAILABLE ONLY TO OWNERS OF CONTRACTS ISSUED PRIOR TO JANUARY 1, 1994. IT IS
NOT AVAILABLE TO OWNERS OF CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1994.
15
<PAGE>
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.
Pacific Mutual is registered with the SEC as an investment adviser. For twelve
of the Portfolios, the Investment Adviser and the Fund have engaged other
firms to serve as Portfolio Managers under the supervision of Pacific Mutual.
THE CONTRACT
GENERAL
To the extent that all or a portion of premium payments are allocated to the
Variable Accounts, the Contract is significantly different from a fixed
annuity contract in that it is the Owner under a Contract who assumes the risk
of investment gain or loss rather than Pacific Mutual. Upon the maturity of a
Contract, the Contract provides several fixed Annuity Options under which
Pacific Mutual will pay specified periodic annuity payments beginning on the
Annuity Start Date. The amount that will be available for annuity payments
will depend on the investment performance of the Variable Accounts to which
premiums have been allocated.
The Contract is available for purchase as a non-tax qualified retirement
plan by an individual. The Contract is also eligible for use in connection
with certain tax qualified retirement plans that meet the requirements of
Sections 401 and 408 of the Internal Revenue Code. Certain Federal tax
advantages are currently available to retirement plans that qualify as (1)
self-employed individuals' retirement plans under Section 401, such as HR-10
or Keogh plans, (2) pension or profit-sharing plans established by an employer
for the benefit of its employees under Section 401, (3) individual retirement
accounts or annuities, including those established by an employer as a
simplified employee pension plan under Section 408, (4) Section 403(b) Tax-
Sheltered Annuities, and (5) Section 457 plans. Joint Owners are permitted on
a Contract issued pursuant to a Non-Qualified Plan. The Contract is not
available for use in connection with tax qualified retirement plans under
Section 403(b) unless otherwise approved by Pacific Mutual.
APPLICATION FOR A CONTRACT
Any person wishing to purchase a Contract may submit an application and an
initial premium to Pacific Mutual, as well as any other form or information
that Pacific Mutual may require. Pacific Mutual reserves the right to reject
an application or premium payment for any reason, subject to Pacific Mutual's
underwriting standards and guidelines and any applicable state or Federal law
relating to nondiscrimination.
The maximum Age of an Annuitant for which a Contract will be issued is 85.
The Annuitant's Age is calculated as of his or her nearest birthday. If there
are Joint Annuitants, the maximum issue Age will be determined by reference to
the younger Annuitant.
PREMIUM PAYMENTS
The minimum initial premium for the purchase of a Contract is $5,000 in
connection with a Non-Qualified Plan and $2,000 in connection with a Qualified
Plan. Thereafter, the Contract Owner may choose the amount and frequency of
premium payments, except that the minimum subsequent premium is $250 for both
Non-Qualified and Qualified Plans, except for individual retirement annuities
and simplified employee pension plans, in which case it is $50. No minimum
initial or subsequent premium requirements will apply to a Contract purchased
in connection with the Texas Optional Retirement Program. Pacific Mutual may
reduce the minimum premium requirements under certain circumstances, such as
for group or sponsored arrangements.
Any premium that results in total premiums paid under a Contract exceeding
$5 million will not be accepted without prior approval of Pacific Mutual. No
premium or transfer can be allocated to the Fixed Account without
16
<PAGE>
prior approval by Pacific Mutual if, immediately after the premium payment or
transfer, the Accumulated Value in the Fixed Account would be $250,000 or
more.
An initial premium payment will be applied not later than the end of the
second Valuation Date after the Valuation Date it is received by Pacific
Mutual if the premium is preceded or accompanied by sufficient information
necessary to establish an account and properly credit such premium payment. If
Pacific Mutual does not receive sufficient information, Pacific Mutual will
notify the applicant that Pacific Mutual does not have the necessary
information to issue a Contract. If the necessary information is not provided
to Pacific Mutual within five Valuation Dates after the Valuation Date on
which Pacific Mutual first receives the initial premium (or, if sooner, other
period required by law), or if Pacific Mutual determines it cannot otherwise
issue the Contract, Pacific Mutual will return the initial premium to the
applicant unless the applicant consents to Pacific Mutual retaining the
premium until the requested information has been provided.
Subsequent premiums will be credited as of the end of the Valuation Period
in which they are received by Pacific Mutual. Premium payments after the
initial premium may be made at any time prior to the Annuity Start Date, so
long as the Annuitant is living. Subsequent premiums under a Qualified Plan
may be limited by the terms of the plan and provisions of the Internal Revenue
Code. Premiums may be paid monthly via electronic funds transfer under the
Uni-Check plan where the Owner authorizes Pacific Mutual to withdraw premiums
from the Owner's checking account each month. The minimum initial premium can
be met by payment under the Uni-Check plan.
ALLOCATION LIMITATION
The Growth Variable Account that invests in the Growth Portfolio is
available only to Owners of Contracts issued prior to January 1, 1994. It is
not available to Owners of Contracts issued on or after January 1, 1994.
ALLOCATION OF PREMIUMS
In an application for a Contract, the Contract Owner selects the Variable
Accounts or the Fixed Account to which premium payments will be allocated.
During the Free-Look Period, except as indicated below, premiums will be
allocated according to the Contract Owner's instructions contained in the
application (or more recent instructions received, if any). For residents of
states that require a refund of premiums to a Contract Owner who returns a
Contract during the Free-Look Period, premiums received during the Free-Look
Period will be allocated to the Money Market Variable Account. The Accumulated
Value will then be automatically allocated according to the Contract Owner's
instructions contained in the application (or, if received more recently, in
written instructions) 15 days after the Contract is issued. Premiums credited
to the Contract after this time will be allocated according to the Contract
Owner's most recent instructions as of the end of the Valuation Period on
which the premiums are received by Pacific Mutual.
A Contract Owner may change the premium allocation instructions by
submitting a proper written request to Pacific Mutual. Changes in premium
allocation instructions may be made by telephone provided an authorization for
telephone requests is on file at Pacific Mutual. A proper change in allocation
instructions will be effective upon receipt by Pacific Mutual and will
continue in effect until subsequently changed. Changes in
17
<PAGE>
the allocation of future premiums have no effect on existing Accumulated
Value. Such Accumulated Value, however, may be transferred among the Variable
Accounts of the Separate Account or the Fixed Account in the manner described
in "Transfers of Accumulated Value."
DOLLAR COST AVERAGING OPTION
Pacific Mutual currently offers an option under which Contract Owners may
dollar cost average their allocations in the Variable Accounts under the
Contract by authorizing Pacific Mutual to make periodic allocations of
Accumulated Value from any one Variable Account to one or more of the other
Variable Accounts, subject to the limitation on the Growth Variable Account.
Contract Owners may authorize Pacific Mutual to make periodic allocations from
the Fixed Account to one or more Variable Accounts. Dollar Cost Averaging
allocations may not be made from the Fixed Account and a Variable Account at
the same time. 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 Period during
which each transfer is 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 a Contract Owner
will not have losses.
An Owner may request Dollar Cost Averaging by sending a proper written
request to Pacific Mutual, or by telephone request provided an authorization
for telephone requests is on file at Pacific Mutual. The Contract Owner must
designate the specific dollar amounts or percentages 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.
To elect the Dollar Cost Averaging Option, the Accumulated Value in the
Variable Account or Fixed Account from which the Dollar Cost Averaging
transfers will be made must be at least $5,000. The minimum amount that may be
transferred to any one Variable Account is $50. Pacific Mutual may
discontinue, modify, or suspend the Dollar Cost Averaging Option at any time.
See the Statement of Additional Information for further information on the
Dollar Cost Averaging feature.
PORTFOLIO REBALANCING OPTION
Pacific Mutual currently offers an option which allows Contract Owners who
are not currently Dollar Cost Averaging to maintain the percentage of Contract
Value allocated to each Variable Investment Option at a pre-set level (e.g.,
30% in the Equity Index Variable Account, 40% in the Managed Bond Variable
Account, and 30% in the Growth LT Variable Account). Periodically, Pacific
Mutual will "rebalance" the Contract Value to the percentages specified by the
Owner. Rebalancing may result in transferring amounts from a Variable Account
earning a relatively higher return to one earning a relatively lower return.
The Fixed Option is not available for rebalancing. More detailed information
appears in the Statement of Additional Information.
TRANSFERS OF ACCUMULATED VALUE
During the Accumulation Period and after the Free-Look Period, Accumulated
Value may be transferred among the Variable Accounts by the Contract Owner
upon proper written request to Pacific Mutual. Transfers may be made by
telephone if an authorization for telephone requests is on file at Pacific
Mutual. Transfer requests received after 1:00 p.m. Pacific Time, or the close
of the New York Stock Exchange, if earlier, will be processed as of the end of
the next following Valuation Date. Currently there are no limitations on the
number of transfers between Variable Accounts, no minimum amount required for
a transfer (except as required under the Dollar Cost Averaging Option), nor
any minimum amount required to be remaining in a given Variable Account after
a
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<PAGE>
transfer. Owners of Contracts issued prior to January 1, 1994 may continue to
transfer to or from the Growth Variable Account.
Accumulated Value may also be transferred from the Variable Accounts to the
Fixed Account. Transfers from the Fixed Account to the Variable Accounts are
restricted as described in "The Fixed Account".
No charges are currently imposed upon transfers. Pacific Mutual reserves the
right, however, at a future date to charge a transfer fee of $10 per
transaction on the thirteenth and any subsequent transfer in any Contract
Year. See "Transfer Fee". Pacific Mutual also reserves the right to limit the
size of transfers and remaining balances, to limit the number and frequency of
transfers, and to discontinue telephone transfers.
ACCUMULATED VALUE
The Accumulated Value is the sum of the amounts under the Contract held in
each Variable Account of the Separate Account and in the Fixed Account, as
well as the amount set aside in Pacific Mutual's Loan Account to secure any
Contract Debt.
On each Valuation Date, the portion of the 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,"
below. No minimum amount of Accumulated Value is guaranteed. A Contract Owner
bears the entire investment risk relating to the investment performance of
Accumulated Value allocated to the Variable Accounts.
DETERMINATION OF ACCUMULATED VALUE
The Accumulated Value 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 premiums, the amount of any
outstanding Contract Debt, partial withdrawals, and the charges assessed in
connection with the Contract. The amounts allocated to the Variable Accounts
will be invested in shares of the corresponding Portfolios of the Fund. The
investment performance of the Variable Accounts will reflect increases or
decreases in the net asset value per share of the corresponding Portfolios 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 Pacific Mutual, on behalf of the
Separate Account, elects otherwise.
Assets in the Variable Accounts are divided into Accumulation Units, which
are accounting units of measure used to calculate the value of a Contract
Owner's interest in a Variable Account. When a Contract Owner allocates
premiums to a Variable Account, the Contract is credited with Accumulation
Units. The number of Accumulation Units to be credited is determined by
dividing the dollar amount allocated to the particular Variable Account by the
Accumulation Unit value for the particular Variable Account at the end of the
Valuation Period in which the premium is credited. In addition, other
transactions including loans, full or partial withdrawals, transfers, and
assessment of certain charges against the Contract affect the number of
Accumulation Units credited to a Contract. 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 Accumulation Unit value of each Variable Account is determined on
each Valuation Date at or about 1:00 p.m. Pacific Time. The number of
Accumulation Units credited to a Contract shall not be changed by any
subsequent change in the value of an Accumulation Unit, but the dollar value
of an Accumulation Unit may vary from Valuation Date to Valuation Date
depending upon the investment experience of the Variable Account and charges
against the Variable Account.
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 dividing the value of each Variable Account's net assets by the number of
Accumulation Units credited to the Variable Account on that date.
Determination of the value of the net assets of a Variable Account takes into
account the following: (1) the investment performance of the
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<PAGE>
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, (3) the charges, if any, that may be assessed
by Pacific Mutual for taxes attributable to the operation of the Variable
Account, or to the operations of Pacific Mutual with respect to the contract,
and (4) the mortality and expense risk charge under the Contract.
FULL AND PARTIAL WITHDRAWALS
A Contract Owner may obtain proceeds from a Contract by surrendering the
Contract for its Full Withdrawal Value or by making a partial withdrawal. A
full or partial withdrawal, including a scheduled partial withdrawal, may be
taken from a Contract's Accumulated Value at any time while the Annuitant is
living and before the Annuity Start Date, subject to the limitations under the
applicable plan for Qualified Plans and applicable law. A full or unscheduled
partial withdrawal request will be effective as of the end of the Valuation
Period that a proper written request is received by Pacific Mutual.
The proceeds received upon a full withdrawal will be the Contract's Full
Withdrawal Value. The Full Withdrawal Value is equal to the Accumulated Value
as of the end of the Valuation Period during which a proper withdrawal request
is received by Pacific Mutual, minus any maintenance fee, any applicable
contingent deferred sales charge, and any outstanding Contract Debt. A partial
withdrawal may be requested for a specified percentage or dollar amount of
Accumulated Value. Each unscheduled partial withdrawal must be for at least
$500. A request for a partial withdrawal will result in a payment by Pacific
Mutual in accordance with the amount specified in the partial withdrawal
request. Upon payment, the Contract Owner's Accumulated Value will be reduced
by an amount equal to the payment and any applicable contingent deferred sales
charge, and any applicable premium tax. If a partial withdrawal is requested
that would leave the Full Withdrawal Value in the Contract less than $500 then
Pacific Mutual reserves the right to treat the partial withdrawal as a request
for a full withdrawal.
The amount of a partial withdrawal will be allocated proportionately from
the Contract Owner's Accumulated Value in the Variable Accounts and the Fixed
Account, except that the Contract Owner may instruct Pacific Mutual otherwise
with regard to an unscheduled partial withdrawal. A full or partial
withdrawal, including a scheduled partial withdrawal, may result in the
deduction of a contingent deferred sales charge. See "Contingent Deferred
Sales Charge".
A full or partial withdrawal, including a scheduled withdrawal, may result
in a premium tax charge to reimburse Pacific Mutual for any premium tax on a
Contract that may be imposed by various states and municipalities. See
"Premium Tax and Other Taxes".
A full or partial withdrawal, including a scheduled partial withdrawal, may
result in receipt of taxable income to the Owner and, in some instances, in a
penalty tax. In the case of Contracts issued in connection with retirement
plans that meet the requirements of Section 401(a), 401(k), 408 or 457 of the
Internal Revenue Code, reference should be made to the terms of the particular
Qualified Plan for any limitations or restrictions on withdrawals. In the case
of Contracts issued in connection with tax qualified retirement plans under
Section 403(b), Section 403(b) imposes restrictions on certain distributions.
For more information, see "Restrictions on Withdrawals from 403(b) Programs".
The tax consequences of a withdrawal under the Contract should be carefully
considered. See "Federal Tax Matters".
PREAUTHORIZED SCHEDULED WITHDRAWALS
Pacific Mutual has implemented a feature under which preauthorized scheduled
withdrawals may be elected. Under this feature, a Contract Owner may elect to
receive preauthorized scheduled partial withdrawals while the Annuitant is
living before the Annuity Start Date and after the Free-Look Period by sending
a properly completed Preauthorized Scheduled Withdrawal Request form to
Pacific Mutual. A Contract Owner may designate the scheduled withdrawal amount
as a percentage of Accumulated Value allocated to the Variable Accounts and
Fixed Account, or as a specified dollar amount, and the desired frequency of
the scheduled withdrawals, which may be monthly, quarterly, semi-annually or
annually. The day of the month that the Contract Owner wishes each scheduled
withdrawal to be effected may also be elected. Scheduled withdrawals may be
stopped or
20
<PAGE>
modified upon proper written request by the Contract Owner received by Pacific
Mutual at least 10 days in advance. A proper request must include the written
consent of any effective assignee or irrevocable Beneficiary, if applicable.
Each scheduled withdrawal must be at least $100. Upon payment, the Contract
Owner's Accumulated Value will be reduced by an amount equal to the payment
proceeds plus any applicable contingent deferred sales charge and any
applicable premium tax. Any scheduled withdrawal that equals or exceeds the
Full Withdrawal Value will be treated as a full withdrawal. In no event will
payment of a scheduled withdrawal exceed the Full Withdrawal Value less any
applicable premium tax. The Contract will automatically terminate if a
scheduled withdrawal causes the Contract's Full Withdrawal Value to equal
zero.
Each scheduled withdrawal will be effected as of the end of the Valuation
Period during which the withdrawal is scheduled. The deduction caused by the
scheduled withdrawal will be allocated proportionately from the Contract
Owner's Accumulated Value in the Variable Accounts and the Fixed Account.
FREE-LOOK RIGHT
A Contract Owner may return a Contract within the Free-Look Period, which is
a ten-day period beginning when the Owner receives the Contract unless state
law requires otherwise.
Premiums received during the Free-Look Period will, except as indicated
below, be allocated according to the Owner's instructions contained in the
application or more recent instructions, if any. The returned Contract will
then be deemed void and Pacific Mutual will refund any premium payments
allocated to the Fixed Account and any Variable Account Accumulated Value as
of the end of the Valuation Period in which Pacific Mutual receives the
Contract plus any Contract Charges and Fees deducted from the Owner's
Accumulated Value allocated to the Variable Accounts. Thus, an Owner who
returns a Contract within the Free-Look Period bears only the investment risk,
(i.e., the Owner's Accumulated Value allocated to the Variable Accounts may
increase or decrease based on investment performance), but the Owner will not
be subject to any Contract Charges or Fees which would otherwise be deducted
from Accumulated Value.
If the Contract Owner resides in a state that requires Pacific Mutual to
return premium payments to Owners who exercise the Free-Look Right, Pacific
Mutual will refund any premiums received or, if required by the owner's state
of residence, premiums allocated to the Fixed Account plus the greater of
premiums allocated to the Separate Account or Accumulated Value in the
Separate Account plus any charges and fees deducted from the Variable Accounts
on the contract date. Premiums received during the Free-Look Period will
initially be allocated to the Money Market Variable Account. The Accumulated
Value in the Money Market Variable Account will be transferred automatically
to the Variable Accounts and the Fixed Account elected in the Owner's
application (or, if received more recently, in written instructions) 15 days
after the Contract is issued. In Pennsylvania, Pacific Mutual will refund
premiums allocated to the Fixed Account plus the Accumulated Value in the
Separate Account plus any Charges deducted from the Separate Account on the
Contract Date. Any previous loans or withdrawals may reduce the refund amount
on any Contract returned.
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<PAGE>
DEATH BENEFIT
If the Annuitant dies during the Accumulation Period, Pacific Mutual will
pay the death benefit proceeds to the Beneficiary upon receipt of due proof of
the Annuitant's death and instructions regarding payment to the Beneficiary.
If there are Joint Annuitants, the death benefit proceeds will only be payable
upon receipt of due proof of death of both Annuitants during the Accumulation
Period and instructions regarding payment. If there is no Beneficiary living
on the date of death of the Annuitant, Pacific Mutual will pay the death
benefit proceeds to the Annuitant's estate. If the death of the Annuitant
occurs on or after the Annuity Start Date, no death benefit proceeds will be
payable under the Contract, except that benefits under the Annuity Option
elected may be payable to the Joint Annuitant or the Beneficiary.
The death benefit proceeds will be the death benefit reduced by any
outstanding Contract Debt. On or before the fifth Contract Anniversary, the
amount of the death benefit will be the greater of (1) the Accumulated Value
as of the end of the Valuation Period in which due proof of death and
instructions regarding payment are received by Pacific Mutual, or (2) the
aggregate premium payments received less any reductions caused by previous
withdrawals. Unless otherwise required by state insurance authorities, after
the fifth Contract Anniversary the amount of the death benefit will be the
greater of (1) the Accumulated Value as of the end of the Valuation Period in
which due proof of death and instructions regarding payment are received by
Pacific Mutual, (2) the aggregate premium payments received less any
reductions caused by previous withdrawals, or (3) subject to approval of state
insurance authorities, the "Minimum Guaranteed Death Benefit." After the fifth
Contract Anniversary up to the tenth Contract Anniversary, the Minimum
Guaranteed Death Benefit is equal to the Accumulated Value on the fifth
Contract Anniversary plus any premiums received after the fifth Contract
Anniversary and less any reductions caused by previous withdrawals taken after
the fifth Contract Anniversary. The Minimum Guaranteed Death Benefit is
adjusted on the tenth Contract Anniversary and each succeeding fifth Contract
Anniversary to the greater of the most recent Minimum Guaranteed Death Benefit
or the Accumulated Value as of such Anniversary, and during the next five year
interval, is decreased by any reductions caused by partial withdrawals and
increased by any premium payments since such fifth Contract Anniversary. After
the Contract Year in which the Annuitant reaches Age 85, the Minimum
Guaranteed Death Benefit will no longer be adjusted on each fifth Contract
Anniversary (except for adjustments for reductions caused by partial
withdrawals and for premium payments).
The death benefit proceeds will be paid to the Beneficiary in a single sum
or under one of the Annuity Options, as directed by the Owner or as elected by
the Beneficiary. If the Beneficiary is to receive annuity payments under an
Annuity Option, there may be limits under applicable law on the amount and
duration of payments that the Beneficiary may receive, and requirements
respecting timing of payments. A tax adviser should be consulted in
considering Annuity Options.
DEATH OF OWNER
If the Owner of a Contract issued in connection with a Non-Qualified Plan
dies before the Annuitant and before the Annuity Start Date, the death benefit
proceeds will be paid upon receipt of due proof of the Owner's death and
instructions regarding payment. If there are Joint Owners, the term Owner
means the first Joint Owner to die.
Death benefit proceeds will be paid to the Joint Owner or Contingent Owner,
if any, otherwise to the Owner Beneficiary. If there is no Owner Beneficiary,
death benefit proceeds will be paid to the Owner's estate. If an Owner is not
also an Annuitant, then in the event that the deaths of the Owner and the
Annuitant occur under circumstances in which it cannot be determined who died
first, payment will be made to the Annuitant's Beneficiary. If the Owner and
the Annuitant are the same, payment will be made to the Annuitant's
Beneficiary. If the surviving spouse of the deceased Owner is the Owner
Beneficiary, or is the sole surviving joint tenant or Contingent Owner, and if
the deceased Owner was not the sole Annuitant, such spouse may continue this
Contract in force until the earliest of the spouse's death, the death of the
Annuitant, or the Annuity Start Date. For any Designated Beneficiary other
than a surviving spouse, only those options may be chosen that provide for
complete distribution of such Owner's interest in the Contract within five
years of the death of the Owner, or if the Designated Beneficiary is a natural
person, that person can elect to begin receiving annuity payments within one
year of the Owner's death over a period not extending beyond his or her life
expectancy.
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If the Owner of the Contract is not a natural person, these distribution
rules are applicable upon the death of or a change in the primary Annuitant.
These distribution requirements do not apply to Contracts issued in connection
with Qualified Plans.
The death benefit is as stated in the "Death Benefit" section, except that
the Owner's Age, as opposed to the Annuitant's, is used in determining the
death benefit.
On the death of any Owner after the Annuity Start Date, any guaranteed
payments remaining unpaid will continue to be paid to the Annuitant pursuant
to the Annuity Option in force at the date of death. No death benefit will be
paid if the Owner dies after the Annuity Start Date. On the death of the
Annuitant, any unpaid benefit will be paid to the Beneficiary of the
Annuitant, if living, otherwise to the Annuitant's estate. See "Federal Tax
Matters" for a discussion of the tax consequences in the event of death.
CHARGES AND DEDUCTIONS
CONTINGENT DEFERRED SALES CHARGE
Pacific Mutual does not make any deduction for sales charges from premium
payments paid for a Contract before allocating them to a Contract Owner's
Accumulated Value. However, except as set forth below, a contingent deferred
sales charge (which may also be referred to as a withdrawal charge), may be
assessed by Pacific Mutual on a full or partial withdrawal, depending upon the
amount of time such withdrawal amounts have been held under the Contract. The
withdrawal charge will be waived on withdrawals to the extent that total
withdrawals that are free of charge during the Contract Year do not exceed 10%
of the sum of the premium payments made during the current Contract Year up to
the Valuation Date of the withdrawal and the preceding four Contract Years. If
a full or partial withdrawal, including a scheduled withdrawal, in excess of
the 10% allowable amount is made, a withdrawal charge may be assessed on the
amount withdrawn in excess of the 10% allowable amount. If the Contract is
surrendered or a scheduled withdrawal causes the Full Withdrawal Value to
equal zero, any amount allocated to the Loan Account will be included in
determining the charge.
For purposes of the charge, a withdrawal will be attributed to premium
payments in the order they were received by Pacific Mutual, then earnings,
even if the Contract Owner elects to redeem amounts allocated to an Account
(including the Fixed Account) other than an Account to which premium payments
were allocated. The amount of the charge will depend upon the number of
Contract Years that the premiums to which the withdrawal is attributed have
remained credited under the Contract, as follows:
<TABLE>
<CAPTION>
AGE OF PREMIUM
IN CONTRACT
YEARS WITHDRAWAL CHARGE
-------------- -----------------
<S> <C>
1 6%
2 6%
3 5%
4 4%
5 3%
6 0%
</TABLE>
For purposes of determining the age of the premium, the premium is
considered age 1 in the Contract Year the premium is received by Pacific
Mutual and increases in age each Contract Anniversary thereafter. In no event
will the amount of any withdrawal charge, when added to any such charge
previously assessed against any amount withdrawn from the Contract, exceed 6%
of the premiums paid under a Contract. In addition, no charge will be imposed
(1) upon payment of death benefit proceeds under the Contract, (2) upon
withdrawals by Owners to meet the minimum distribution rules for Qualified
Plans as they apply to amounts held under the Contract, or (3) upon
annuitization if the Contract has been in force two years, and if an Annuity
Option offered under the Contract is elected or proceeds are applied to
purchase any other Annuity Option then offered by Pacific Mutual, and, in each
instance, the Annuity Period is at least five years. Subject to approval of
state insurance authorities, after the first Contract Anniversary, the
withdrawal charge will also be waived on a full or partial withdrawal if the
Annuitant has been diagnosed with a medically determinable condition which
results in a life expectancy of
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<PAGE>
12 months or less. This waiver will be subject to medical evidence
satisfactory to Pacific Mutual, and certain other conditions specified in the
Contract. The withdrawal charge will be assessed against the Variable Accounts
and Fixed Account in the same proportion as the withdrawal proceeds are
allocated. (See the Appendix for examples of the operation of the withdrawal
charge.)
Pacific Mutual pays sales commissions to broker-dealers and other expenses
associated with promotion and sales of the Contracts. The withdrawal charge is
designed to reimburse Pacific Mutual for these costs, although it is expected
that actual expenses will be greater than the amount of the charge. To the
extent that all sales expenses are not recovered from the charge, such
expenses may be recovered from other charges, including amounts derived
indirectly from the charge for mortality and expense risks. Broker-dealers may
receive aggregate commissions up to 6.5% of aggregate premium payments. Under
certain circumstances and in exchange for lower initial commissions, certain
sellers of Contracts may be paid a persistency trail commission which will
take into account, among other things, the length of time premium payments
have been held under a Contract, and Contract Accumulated Values. A trail
commission is not anticipated to exceed 1.00%, on an annual basis, of the
Accumulated Value considered in connection with the trail commission. Pacific
Mutual may also pay override payments, expense allowances, bonuses, wholesaler
fees and training allowances. Registered representatives earn commissions from
the broker-dealers with which they are affiliated and such arrangements may
vary. In addition, registered representatives who meet specified production
levels may qualify, under sales incentive programs adopted by Pacific Mutual,
to receive non-cash compensation such as expense-paid trips, expense-paid
educational seminars, and merchandise.
MORTALITY AND EXPENSE RISK CHARGE
Pacific Mutual deducts a daily charge from the assets of each Variable
Account for mortality and expense risks assumed by Pacific Mutual under the
Contracts. The charge is equal to an annual rate of 1.25% of the average daily
net assets of each Variable Account. This amount is intended to compensate
Pacific Mutual for certain mortality and expense risks Pacific Mutual assumes
in offering and administering the Contracts and in operating the Variable
Accounts. The 1.25% charge consists of approximately .25% for expense risk and
1.00% for mortality risk.
The expense risk is the risk that Pacific Mutual's actual expenses in
issuing and administering the Contracts and operating the Variable Accounts
will be more than the charges assessed for such expenses. The mortality risk
borne by Pacific Mutual is the risk that Annuitants, as a group, will live
longer than the Pacific Mutual's actuarial tables predict. In this event,
Pacific Mutual guarantees that annuity payments will not be affected by a
change in mortality experience that results in the payment of greater annuity
income than assumed under the Annuity Options in the Contract. Pacific Mutual
also assumes a mortality risk in connection with the death benefit under the
Contract.
Pacific Mutual may ultimately realize a profit from this charge to the
extent it is not needed to cover mortality and administrative expenses, but
Pacific Mutual may realize a loss to the extent the charge is not sufficient.
Pacific Mutual may use any profit derived from this charge for any lawful
purpose, including any distribution expenses not covered by the contingent
deferred sales charge.
ADMINISTRATIVE CHARGE
Pacific Mutual deducts a monthly administrative charge equal to .000125
multiplied by a Contract's Accumulated Value in the Variable Accounts and the
Fixed Account, which will be deducted monthly, beginning on the Monthly
Anniversary following the Contract Date, during the Accumulation Period. This
charge is equivalent to an annual rate of 0.15% of a Contract's Accumulated
Value in the Variable Accounts and the Fixed Account. On Contracts issued in
connection with applications received by Pacific Mutual at its Variable
Annuity Department before May 1, 1992, the rate of this charge is currently
reduced to .0001 (.12% on an annual basis), and, if the initial premium is
$50,000 or more on such contracts, to .00005 (.06% on an annual basis).
Pacific Mutual reserves the right to increase the administrative charge on
such contracts, but in no event will the charge exceed 0.15% on an annual
basis. The charge will be assessed to each Account in proportion to the
Contract's
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<PAGE>
Accumulated Value in each Variable Account and the Fixed Account. The charge
is deducted at the Contract level and results in the debiting of Accumulation
Units in the Variable Accounts and/or a deduction from the Fixed Account.
MAINTENANCE FEE
During the Accumulation Period, an annual fee of $30 is deducted on each
Contract Anniversary to cover the costs of maintaining records for the
Contracts. The fee will be assessed to each Account in proportion to the
Contract's Accumulated Value in each Variable Account and the Fixed Account.
Upon annuitization or a full withdrawal, the charge will be pro-rated for the
portion of the Contract year during which the Contract was in force. This
charge is currently waived on Contracts issued for which premium payments
received in the first Contract Year equal $50,000 or more. Pacific Mutual
reserves the right to impose the charge on Contracts on which the fee is
waived in the future. The charge is deducted at the Contract level and results
in the debiting of Accumulation Units in the Variable Accounts and or a
deduction from the Fixed Account.
TRANSFER FEE
No transfer fee is currently imposed. Pacific Mutual reserves the right to
assess a transfer fee of $10 per transaction on the thirteenth and any
subsequent transfer occurring in a Contract year. The transfer fee will be
deducted from the remaining balances in the Variable Accounts and Fixed
Account from which the transfer is made. If the remaining balances are
insufficient to pay the transfer fee, the fee will be deducted from the
transferred Accumulated Values.
PREMIUM TAX AND OTHER TAXES
Various states and municipalities impose a tax on premiums on annuity
contracts received by insurance companies. Whether or not a premium tax is
imposed will depend upon, among other things, the Owner's state of residence,
the Annuitant's state of residence, and the insurance tax laws and Pacific
Mutual's status in a particular state. Pacific Mutual assesses a premium tax
charge to reimburse itself for premium taxes that it incurs on behalf of the
Contract Owner. This charge will be deducted upon annuitization or upon full
withdrawal if premium taxes are incurred and are not refundable. Partial
withdrawals, including scheduled withdrawals, may result in a premium tax
charge if a premium tax is incurred by Pacific Mutual and is not refundable.
Pacific Mutual reserves the right to deduct premium taxes when incurred.
Premium tax rates currently range from 0% to 3.5%, but are subject to change
by a governmental entity. Pacific Mutual may charge Variable Accounts of the
Separate Account for the Federal, state, or local income taxes incurred by
Pacific Mutual that are attributable to the Separate Account and its Variable
Accounts, or to the operations of Pacific Mutual with respect to the
Contracts, or that are attributable to payment of premiums or acquisition
costs under the Contracts. No such charge is currently assessed. See "Tax
Status of Pacific Mutual and the Separate Account."
VARIATIONS IN CHARGES
Pacific Mutual may reduce or waive the amount of the contingent deferred
sales charge, administrative charge, and Contract maintenance fee for a
Contract where the expenses associated with the sale of the Contract or the
administrative and maintenance costs associated with the Contract are reduced
for reasons such as the amount of the initial premium payment, the amounts of
projected premium payments, or that the Contract is sold in connection with a
group or sponsored arrangement. For certain trusts, Pacific Mutual may change
the order in which withdrawals are applied to premium payments and earnings to
determine any contingent deferred sales charge. Pacific Mutual may also reduce
or waive the contingent deferred sales charge, administrative charge, and
maintenance fee or credit additional amounts on Contracts sold to the
directors, officers, or employees of Pacific Mutual or any of its affiliates
or to trustees of the Fund, sales representatives, or in the case of an
affiliated broker-dealer, registered representatives of such company, or
directors, officers, employees or registered representatives of a broker-
dealer that has a then current selling agreement with Pacific Mutual, or
members of any of the aforementioneds' immediate family. Pacific Mutual will
only reduce or waive such charges and fees where expenses associated with the
sale of the Contract or the costs associated with administering and
maintaining the Contract are reduced.
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<PAGE>
GUARANTEE OF CERTAIN CHARGES
Pacific Mutual guarantees that the charge for mortality and expense risks
will not increase. The maintenance fee is guaranteed not to exceed $30. The
administrative charge is guaranteed not to exceed an annual rate of 0.15% of a
Contract Owner's Accumulated Value less any Contract Debt. Pacific Mutual does
not intend to profit from the administrative charge and maintenance fee.
FUND EXPENSES
Each Variable Account of the Separate Account purchases shares at the net
asset value of the corresponding Portfolio of the Fund. Each Portfolio's net
asset value reflects the investment advisory fee and other expenses that are
deducted from the assets of the Portfolio. The Fund is governed by its Board
of Trustees. The Fund's expenses are not fixed or specified under the terms of
the Contract. The advisory fees and other expenses are more fully described in
the Fund's prospectus.
ANNUITY PERIOD
GENERAL
The Contract Owner selects the Annuity Start Date at the time of
application. The Annuity Start Date may not be deferred beyond the first day
of the month following the Annuitant's 95th birthday (85th birthday in
Pennsylvania, and for certain trusts, 100th birthday, unless state law
requires otherwise), although the terms of a Qualified Plan generally require
annuitization at an earlier age. If the Contract Owner does not select an
Annuity Start Date, the Annuity Start Date will be the Contract Anniversary
nearest the Annuitant's 85th birthday if the Contract is issued in connection
with a Non-Qualified Plan. See "Selection of an Option." If there are Joint
Annuitants, the birth date of the younger Annuitant will be used to determine
the latest Annuity Start Date unless the terms of a Qualified Plan require
otherwise.
On the Annuity Start Date, the proceeds under the Contract will be applied
to provide an annuity under one of the options described below, unless a lump
sum distribution has been elected. The proceeds attributable to the Variable
Accounts will be transferred to the General Account. The proceeds will be
equal to the Contract Owner's Accumulated Value in the Variable Accounts and
the Fixed Account (which excludes Accumulated Value in the Loan Account) as of
the Annuity Start Date, reduced by any applicable premium taxes, any prorated
portion of maintenance fee due, and any applicable withdrawal charge. However,
no withdrawal charge will be imposed if the Contract has been in force two
years, and an Annuity Option is elected or proceeds are applied to purchase
any other Annuity Option then offered by Pacific Mutual, and, in each case,
the Annuity Period is five years or longer.
The Contracts provide for five optional annuity forms. A lump sum
distribution may also be elected. Other Annuity Options may be available upon
request at the discretion of Pacific Mutual. All Annuity Options are fixed and
the annuity payments remain constant throughout the Annuity Period. Annuity
payments are based upon annuity rates that vary with the Annuity Option
selected. In the case of Options 1, 2, and 3, the rates will vary based on the
Age and sex of the Annuitant, except that unisex rates are available where
required by law. In the case of Options 4 and 5, as described below, Age and
sex are not considerations. The annuity rates are based upon an assumed
interest rate of 4%, compounded annually. If no Annuity Option has been
selected, annuity payments will be made to the Annuitant under an automatic
option. For non-qualified Contracts and Contracts used in connection with a
Qualified Plan under Section 408 of the Internal Revenue Code, the automatic
option shall be an annuity payable during the lifetime of the Annuitant with
payments certain for 120 months under Option 1 or, if a non-qualified Contract
and Joint Annuitants are named, a joint and 50% last survivor annuity under
Option 3. For a Contract used in connection with a Qualified Plan under
Section 401 of the Internal Revenue Code, the automatic option shall be an
annuity payable during the lifetime of the Annuitant with payments certain for
120 months under Option 1, or, for a married Annuitant, a joint and 50%
survivor annuity as described in Option 2 below.
Annuity payments can be made on a monthly, quarterly, semiannual, or annual
basis, although no payments will be made for less than $50. If the frequency
of payments selected would result in payments of less than $50,
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Pacific Mutual reserves the right to change the frequency. Pacific Mutual also
reserves the right to pay the Contract proceeds in a lump sum if the proceeds
are less than $10,000. Once annuity payments have commenced, an Annuitant or
Owner cannot change the Annuity Option and cannot surrender his or her annuity
and receive a lump sum settlement in lieu thereof.
An Owner may, during the lifetime of the Annuitant, designate or change an
Annuity Start Date, Annuity Option, and Contingent Annuitant, provided Pacific
Mutual receives proper written notice at least 30 days prior to the Annuity
Start Date set forth in the Contract. The date selected as the new Annuity
Start Date must be after the date the written notice is received at Pacific
Mutual.
The Contract contains annuity tables for each Annuity Option described
below. The tables show the dollar amount of periodic annuity payments for each
$1,000 applied to an Annuity Option. Pacific Mutual reserves the right to
offer variable annuity options in the future.
ANNUITY OPTIONS
Option 1--Life Income with Guaranteed Payment of 10 or 20 Years
Periodic annuity payments will be made during the lifetime of the Annuitant
with the promise that if, at the death of the Annuitant, payments have been
made for less than a stated period, which may be ten or twenty years, as
elected, annuity payments will be continued during the remainder of such
period to the Beneficiary.
Option 2--Joint and Survivor
Periodic annuity payments will be made during the lifetime of the primary
Annuitant and, after the death of the primary Annuitant, an amount equal to
50%, 66 2/3%, or 100% (as specified in the election) of such payments will be
paid to the secondary Annuitant named in the election if and so long as such
secondary Annuitant lives. THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED
UNDER THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVING
ANNUITANT, REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
Option 3--Joint and Last Survivor
Periodic annuity payments will be made while both the Annuitants are living,
and, after the death of either of the Annuitants, an amount equal to 50%, 66
2/3%, or 100% (as specified in the election) of such payments will be paid to
the surviving Annuitant for so long as he or she lives. AS IN THE CASE OF
OPTION 2, THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER THIS OPTION.
PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVING ANNUITANT, REGARDLESS OF
THE NUMBER OF PAYMENTS RECEIVED.
Option 4--Fixed Payments for Specified Period
Periodic annuity payments will be made for a fixed period, which may be from
three to thirty years, as elected, with the guarantee that, if, at the death
of the Annuitant, payments have been made for less than the selected fixed
period, the discounted value, based on the interest rate that Pacific Mutual
uses to determine the amount of each payment (which will be at least 4%), of
the remaining unpaid payments will be paid to the Beneficiary, if living,
otherwise to the Annuitant's estate.
Option 5--Fixed Payments of a Specified Amount
Periodic payments of the amount elected will be made until the amount
applied and interest thereon are exhausted, with the guarantee that, if, at
the death of the Annuitant, all guaranteed payments have not yet been made,
the discounted value, based on the interest rate that Pacific Mutual uses to
determine the amount of each payment (which will be at least 4%), of the
remaining unpaid payments will be paid to the Beneficiary, if living,
otherwise to the Annuitant's estate.
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SELECTION OF AN OPTION
Contract Owners should carefully review the Annuity Options with their
financial or tax advisers, and, for Contracts used in connection with a
Qualified Plan, reference should be made to the terms of the particular plan
and the requirements of the Internal Revenue Code for pertinent limitations
respecting annuity payments and other matters. For instance, under
requirements for retirement plans that qualify under Sections 401 or 408 of
the Internal Revenue Code, annuity payments generally must begin no later than
April 1 of the calendar year following the year in which the Annuitant reaches
age 70 1/2. For Non-Qualified Plans, annuity payments must begin no later than
the first day of the month following the Annuitant's 95th birthday. Under
requirements for retirement plans that qualify under Sections 401 or 408 of
the Internal Revenue Code, the period elected for receipt of annuity payments
under Annuity Options 1 and 4 generally may be no longer than the joint life
expectancy of the Annuitant and Beneficiary in the year that the Annuitant
reaches age 70 1/2, and must be shorter than such joint life expectancy if the
Beneficiary is not the Annuitant's spouse and is more than 10 years younger
than the Annuitant. Under Options 2 and 3, if the secondary or other Annuitant
is not the Annuitant's spouse and is more than 10 years younger than the
Annuitant, the 66 2/3% and 100% elections specified above may not be
available. The restrictions on options for retirement plans that qualify under
Sections 401 and 408 also apply to a retirement plan that qualifies under
Section 403(b) with respect to amounts that accrued after December 31, 1986.
THE FIXED ACCOUNT
Contract Owners may allocate all or a portion of their premium payments and
transfer Accumulated Value to the Fixed Account. Amounts allocated to the
Fixed Account become part of Pacific Mutual's General Account, which supports
Pacific Mutual's insurance and annuity obligations. The General Account is
subject to regulation and supervision by the California Department of
Insurance as well as the insurance laws and regulations of other jurisdictions
in which the Contract is distributed. In reliance on certain exemptive and
exclusionary provisions, interests in the Fixed Account have not been
registered as securities under the Securities Act of 1933 (the "1933 Act") and
the Fixed Account has not been registered as an investment company under the
Investment Company Act of 1940 (the "1940 Act"). Accordingly, neither the
Fixed Account nor any interests therein are generally subject to the
provisions of the 1933 Act or the 1940 Act. Pacific Mutual has been advised
that the staff of the SEC has not reviewed the disclosure in this Prospectus
relating to the Fixed Account. This disclosure, however, may be subject to
certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in the
Prospectus. This Prospectus is generally intended to serve as a disclosure
document only for aspects of a Contract involving the Separate Account and
contains only selected information regarding the Fixed Account. For more
information regarding the Fixed Account, see "The Contract".
Amounts allocated to the Fixed Account become part of the General Account of
Pacific Mutual, which consists of all assets owned by Pacific Mutual other
than those in the Separate Account and other separate accounts of Pacific
Mutual. Subject to applicable law, Pacific Mutual has sole discretion over the
investment of the assets of its General Account.
INTEREST
Amounts allocated to the Fixed Account earn interest at a fixed rate or
rates that are paid by Pacific Mutual. The Accumulated Value in the Fixed
Account earns interest at an interest rate that is guaranteed to be at least
0.3273% per month, compounded monthly, which is equivalent to an annual
effective rate of 4% per year, and which will accrue daily ("Guaranteed
Rate"). Such interest will be paid regardless of the actual investment
experience of the Fixed Account. In addition, Pacific Mutual may in its
discretion pay interest at a rate ("Current Rate") that exceeds the Guaranteed
Rate. Pacific Mutual will determine the Current Rate, if any, from time to
time. If Pacific Mutual determines a Current Rate that exceeds the Guaranteed
Rate, premiums or transfers allocated or made to the Fixed Account during the
time the Current Rate is in effect are guaranteed to earn interest at that
particular Current Rate until the next Contract Anniversary. Upon the Contract
Anniversary, a Current Rate or Rates may be paid that would remain in effect
until the next succeeding Contract Anniversary.
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Accumulated Value that was allocated or transferred to the Fixed Account
during one Contract Year may be credited with a different Current Rate than
amounts allocated or transferred to the Fixed Account in another Contract
Year. Therefore, at any given time, various portions of a Contract Owner's
Accumulated Value allocated to the Fixed Account may be earning interest at
different Current Rates, depending upon the Contract Year during which such
portions were originally allocated or transferred to the Fixed Account.
Pacific Mutual bears the investment risk for the Accumulated Value allocated
to the Fixed Account and for paying interest at the Guaranteed or Current
Rates, as applicable, on amounts allocated to the Fixed Account.
For purposes of determining the interest rates to be credited on remaining
Accumulated Value in the Fixed Account, withdrawals, loans, or transfers from
the Fixed Account will be deemed to be taken from premiums or transfers in the
order in which they were credited to the Fixed Account, and interest
attributable to each such premium or transfer shall be deemed taken before the
amount of each premium or transfer.
BAIL OUT PROVISION
The first time that the interest rate paid on any portion of a Contract
Owner's Accumulated Value allocated to the Fixed Account falls 1% or more
below the initial Current Rate credited to the premium or transfer from which
that portion of Accumulated Value is derived, the limitations on transfers
from the Fixed Account to the Variable Accounts will be waived for 60 days
with respect to that portion of Accumulated Value in the Fixed Account.
DEATH BENEFIT
The death benefit under the Contract will be determined in the same fashion
for a Contract that has Accumulated Value in the Fixed Account as for a
Contract that has Accumulated Value allocated to the Variable Accounts. See
"Death Benefit".
CONTRACT CHARGES
The contingent deferred sales charge, the administrative charge, the
maintenance fee, and premium taxes will be the same for Contract Owners who
allocate premium payments or transfer Accumulated Value to the Fixed Account
as for those who 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 Contract Owners to the extent the
Accumulated Value is allocated to the Fixed Account; however, such Contract
Owners will not participate in the investment experience of the Variable
Accounts.
TRANSFERS AND WITHDRAWALS
Amounts may be transferred from the Variable Accounts to the Fixed Account
and from the Fixed Account to the Variable Accounts after the Free-Look
Period, subject to the following limitations. The Contract Owner may not make
more than one transfer from the Fixed Account to the Variable Accounts in any
12-month period except as provided under the Dollar Cost Averaging Option. The
Growth Variable Account is not available to Owners of Contracts issued on or
after January 1, 1994. Further, if a Contract Owner has $1,000 or more in the
Fixed Account, the Contract Owner may not transfer more than 20% of such
amount to the Variable Accounts in any 12-month period except as provided
under Dollar Cost Averaging. Currently there is no charge imposed upon
transfers; however, Pacific Mutual reserves the right to assess a $10 transfer
fee in the future on the thirteenth and any subsequent transfer made during a
Contract Year 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. See "Transfer of Accumulated Value".
The Contract Owner may also make full and partial withdrawals to the same
extent as a Contract Owner who has allocated Accumulated Value to the Variable
Accounts. See "Full and Partial Withdrawals". In
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addition, to the same extent as Contract Owners with Accumulated Value in the
Variable Accounts, the Owner of a Contract used in connection with a Qualified
Plan under Section 401 and 403(b) of the Internal Revenue Code may obtain a
loan. See "Loans".
PAYMENTS FROM THE FIXED ACCOUNT
Full and partial withdrawals, loans, and transfers from the Fixed Account
may be delayed for up to six months after a written request in proper form is
received by Pacific Mutual. During the period of deferral, interest at the
applicable interest rate or rates will continue to be credited to the amounts
allocated to the Fixed Account. However, payment of any amounts will not be
deferred if they are to be used to pay premiums on any policies or contracts
issued by Pacific Mutual.
MORE ABOUT THE CONTRACT
OWNERSHIP
The Contract Owner is the individual named as such in the application or in
any later change shown in Pacific Mutual's records. While the Annuitant is
living, the Contract Owner alone has the right to receive all benefits and
exercise all rights that the Contract grants or Pacific Mutual allows.
Joint Owners. Joint Owners are permitted only for Contracts issued in
connection with Non-Qualified Plans. The Joint Owners will be joint tenants
with rights of survivorship and upon the death of an Owner, the surviving
Owner shall be the sole Owner. Any Contract transaction requires the signature
of all persons named jointly.
Contingent Owner. A Contingent Owner, if named in the application, succeeds
to the rights of Owner if the Owner dies before the Annuitant during the
Accumulation Period.
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary is the individual named as such in the application or any
later change shown in Pacific Mutual's records. The Contract Owner may change
the Beneficiary at any time during the life of the Annuitant while the
Contract is in force by written request to Pacific Mutual. The change will not
be binding on Pacific Mutual until it is received and recorded. The change
will be effective as of the date the notice is properly signed subject to any
payments made or other actions taken by Pacific Mutual before the properly
signed notice is received and recorded. A Contingent Beneficiary may be
designated. The Owner may designate a permanent Beneficiary whose rights under
the Contract cannot be changed without his or her consent.
Reference should be made to the terms of a particular Qualified Plan and any
applicable law for any restrictions on the beneficiary designation.
PAYMENTS FROM THE SEPARATE ACCOUNT
Pacific Mutual ordinarily will pay any full or partial withdrawal benefit or
death benefit proceeds from Accumulated Value allocated to the Variable
Accounts, and will effect a transfer between Variable Accounts or from a
Variable Account to the Fixed Account within seven days from the Valuation
Date on which a proper request is received at Pacific Mutual or, if sooner,
other period required by law. However, Pacific Mutual can postpone the
calculation or payment of such a payment or transfer of amounts from the
Variable Accounts to the extent permitted under applicable law, which is
currently permissible only for any period: (a) during which the New York Stock
Exchange is closed other than customary weekend and holiday closings, (b)
during which trading on the New York Stock Exchange is restricted as
determined by the SEC, (c) during which an emergency, as determined by the
SEC, exists as a result of which (i) disposal of securities held by the
Separate Account is not reasonably practicable, or (ii) it is not reasonably
practicable to determine the value of the assets of the Separate Account, or
(d) for such other periods as the SEC may by order permit for the protection
of investors.
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PROOF OF AGE AND SURVIVAL
Pacific Mutual may require proof of age or survival of any person on whose
life annuity payments depend.
LOANS
An Owner of a Contract issued in connection with a retirement plan that is
qualified under Section 401 or 403(b) of the Internal Revenue Code (but not
Section 408) may request a loan, provided that loans are permitted by the
Participant's Plan, from Pacific Mutual using his or her Accumulated Value as
the only security for the loan by submitting a proper written request to
Pacific Mutual. No other Contract Owners may borrow against the Contract. A
loan may be taken by eligible Contract Owners after the first Contract Year
while the Annuitant is living and before the Annuity Start Date. The minimum
loan that can be taken at any time is $1,000. For Contracts with Accumulated
Value of $20,000 or less, the maximum loan that can be taken is the amount
that produces a loan balance immediately after the loan that is 50% of the
Contract Owner's Accumulated Value. For Contracts with Accumulated Value over
$20,000, the maximum loan that can be taken is the amount that produces a loan
balance immediately after the loan that is the lesser of (1) $50,000 reduced
by the excess of (a) the highest outstanding loan balance within the preceding
12 month period ending on the date the loan is made over (b) the outstanding
loan balance on the date the loan is made or (2) 50% of the Contract Owner's
Accumulated Value. Reference should be made to the terms of the particular
Qualified Plan for any additional loan restrictions.
When an eligible Contract Owner takes a loan, an amount equal to the loan is
transferred out of the Contract Owner's Accumulated Value in the Variable
Accounts and the Fixed Account into an account called the "Loan Account" to
secure the loan. Unless otherwise requested by the Contract Owner, loan
amounts will be deducted from the Variable Accounts and the Fixed Account in
the proportion that each bears to the Accumulated Value less Contract Debt.
Subject to any necessary approval of state insurance authorities, any payment
received by Pacific Mutual while a loan is outstanding will be considered a
premium payment unless the Contract Owner indicates that it is a loan
repayment.
Interest will be charged for the loan and will accrue on the loan balance
from the effective date of any loan. Subject to state insurance authorities,
the loan interest rate will be set at the time loan is made and will be equal
to the higher of Moody's Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc., or its successor,
for the most recently available calendar month, or 5%. The loan interest rate
charged on any outstanding loan balance will be determined at the time the
loan is taken.
In the event that the Moody's Corporate Bond Yield Average-Monthly Average
Corporates is no longer published, Pacific Mutual will use a substantially
similar average as established by regulation within the state in which the
Contract is delivered. Pacific Mutual will credit interest monthly on amounts
held in the Loan Account to secure the loan at a rate equal to the loan
interest rate charged minus 1.75%. Interest on a loan is accrued daily.
Loans must be repaid within five years (30 years if the Owner certifies to
Pacific Mutual that the loan is to be used to acquire a principal residence
for the Annuitant) and before the Annuity Start Date. Loan repayments must be
made quarterly. Loans not repaid within the required time periods will be
subject to taxation as
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distributions from the Contract. Loans may be prepaid at any time before the
Annuity Start Date. Subject to any necessary approval of state insurance
authorities, repayments of loan principal plus accrued interest will be due
quarterly on the date corresponding to your quarterly loan anniversary,
beginning with the first such date following the effective date of the loan.
If the repayment is not made when due, interest will continue to accrue and
we will declare the entire remaining loan balance in default. At that time, we
will send written notification of the amount needed to bring the loan back to
a current status. The Contract Owner will have sixty (60) days from the date
on which the loan was declared in default (the "grace period") to make the
required payment. If the required payment is not received by the end of the
grace period, the defaulted loan balance plus accrued interest will be
withdrawn from the Contract Value, if amounts under the Contract are eligible
for distribution. If those amounts are not eligible for distribution, the
defaulted loan balance plus accrued interest will be withdrawn when such
values become eligible (a "Deemed Distribution"). In either case, the
Distribution or the Deemed Distribution will be considered a currently taxable
event, will be subject to the mandatory 20% federal withholding and may be
subject to the early withdrawal tax penalty.
If there is a Deemed Distribution under your Contract and to the extent
allowed by law, any future withdrawals will first be applied as repayment of
the defaulted Contract Debt, including accrued interest.
Any amounts withdrawn and applied as repayment of loan principle will be
withdrawn from the Loan Account. Any amounts withdrawn and applied as
repayment of interest due will be withdrawn from your Fixed and Variable
Accounts on a proportionate basis relative to the Accumulated Value in each
account.
Adverse tax consequences may result if you fail to meet the repayments
requirements for your loan. The tax and ERISA rules relating to Contract loans
are complex and in many cases unclear. For these reasons, and because the
rules vary depending on the individual circumstances of each Contract, WE
ADVISE THAT THE CONTRACT OWNER CONSULT WITH A QUALIFIED TAX ADVISER BEFORE
EXERCISING THE LOAN PROVISIONS OF THE CONTRACT.
If a repayment in excess of the quarterly amount due is received by Pacific
Mutual, we reserve the right to refund such excess unless the loan is paid in
full. Payments received by Pacific Mutual which are less than the quarterly
amount due will be returned to the Contract Owner, unless otherwise approved
by state insurance authorities.
Prepayment of the entire outstanding Contract Debt may be made. At the time
of the prepayment, the Contract Owner will be billed for any interest due and
unpaid. The loan will be considered paid when the interest due is also paid.
Unless otherwise requested by a Contract Owner, a loan repayment will be
transferred into the Variable Accounts and Fixed Account in accordance with
the most recent premium allocation instructions. In addition, on each Contract
Anniversary, any interest earned on the loan balance held in the Loan Account
will be transferred to each of the Variable Accounts and Fixed Account in
accordance with the Contract Owner's most recent premium allocation
instructions.
While the amount to secure the loan is held in the Loan Account, the
Contract Owner forgoes the investment experience of the Variable Accounts and
the Current Rate of interest of the Fixed Account on the loaned amount.
Outstanding Contract Debt will reduce the amount of proceeds paid upon full
withdrawal of the Contract proceeds, upon payment of the death benefit or upon
the Owner's exercise of the Free-Look Right.
Pacific Mutual reserves the right to change the loan provisions of the
Contract to comply with the Internal Revenue Code and the rules and
regulations thereunder.
RESTRICTION ON WITHDRAWALS FROM 403(B) PROGRAMS
Section 403(b) of the Internal Revenue Code permits public school employees
and employees of certain types of charitable, educational, and scientific
organizations specified in Section 501(c)(3) of the Internal Revenue Code to
purchase annuity contracts, and, subject to certain limitations, to exclude
the amount of
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purchase payments from gross income for tax purposes. Section 403(b) imposes
restrictions on certain distributions from tax-sheltered annuity contracts
meeting the requirements of Section 403(b) that apply to tax years beginning
on or after January 1, 1989.
Section 403(b) requires that distributions from Section 403(b) tax-sheltered
annuities that are attributable to employee contributions made after December
31, 1988 under a salary reduction agreement begin only after the employee
reaches age 59 1/2, separates from service, dies, becomes disabled, or incurs
a hardship. Furthermore, distributions of gains attributable to such
contributions accrued after December 31, 1988 may not be made on account of
hardship. Hardship, for this purpose, is generally defined as an immediate and
heavy financial need, such as paying for medical expenses, the purchase of a
residence, or paying certain tuition expenses, that may only be met by the
distribution.
An Owner of a Contract purchased as a tax-sheltered Section 403(b) annuity
contract will not, therefore, be entitled to make a full or partial
withdrawal, as described in this Prospectus, in order to receive proceeds from
the Contract attributable to contributions under a salary reduction agreement
or any gains credited to such Contract after December 31, 1988 unless one of
the above-described conditions has been satisfied. In the case of transfers of
amounts accumulated in a different Section 403(b) contract to this Contract
under a Section 403(b) Program, the withdrawal constraints described above
would not apply to the amount transferred to the Contract attributable to the
Owner's December 31, 1988 account balance under the old contract, provided the
amounts transferred between contracts qualified as a tax-free exchange under
the Internal Revenue Code. An Owner of a Contract may be able to transfer the
Contract's Full Withdrawal Value to certain other investment alternatives
meeting the requirements of Section 403(b) that are available under an
Employer's Section 403(b) arrangement.
Pursuant to Revenue Ruling 90-24, a direct transfer between issuers of an
amount representing all or part of an individual's interest in a Section
403(b) annuity or custodial account is not a distribution subject to tax or to
premature distribution penalty, provided the funds transferred continue after
the transfer to be subject to distribution requirements at least as strict as
those applicable to them before the transfer.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Title 8, Section 830.105 of the Texas Government Code restricts withdrawal
of contributions and earnings in a variable annuity contract in the Texas
Optional Retirement Program (ORP) prior to (1) termination of employment in
all Texas public institutions of higher education, (2) retirement, (3) death,
or (4) the participant's attainment of age 70 1/2. A participant in the Texas
ORP will not, therefore, be entitled to make full or partial withdrawals under
a Contract unless one of the foregoing conditions has been satisfied.
Appropriate certification must be submitted to redeem the participant's
account. Restrictions on withdrawal do not apply to transfers of values from
one annuity contract to another during participation in the Texas ORP. Loans
are not available in the Texas ORP.
FEDERAL TAX MATTERS
INTRODUCTION
The Contract described in this Prospectus is designed for use by individuals
in retirement plans which may or may not be Qualified Plans under the
provisions of the Internal Revenue Code ("Code"). The ultimate effect of
Federal income taxes on the amounts held under a Contract, on annuity
payments, and on the economic benefits to the Owner, the Annuitant, and the
Beneficiary or other payee may depend on Pacific Mutual's tax status, on the
type of retirement plan, if any, for which the Contract is purchased, and upon
the tax and employment status of the individuals concerned. The discussion
contained herein and in the Statement of Additional Information is general in
nature. It is based upon Pacific Mutual's understanding of the present Federal
income tax laws as currently interpreted by the Internal Revenue Service
("IRS"), and is not intended as tax advice. No representation is made
regarding the likelihood of continuation of the present Federal income tax
laws or of the current interpretations by the IRS or the courts. Future
legislation may affect annuity contracts adversely. Moreover, no attempt has
been made to consider any applicable state or other laws. 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 and, if
applicable, the Qualified Plan, any person contemplating the purchase of a
Contract, contemplating selection of an Annuity Option under a Contract, or
receiving annuity payments under a Contract should consult a qualified tax
adviser. PACIFIC MUTUAL DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS,
FEDERAL, STATE, OR LOCAL, OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE
CONTRACTS.
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TAX STATUS OF PACIFIC MUTUAL AND THE SEPARATE ACCOUNT
General
Pacific Mutual is taxed as a life insurance company under Part I, Subchapter
L of the Code. Because the Separate Account is not taxed as a separate entity
and its operations form a part of Pacific Mutual, Pacific Mutual will be
responsible for any Federal income taxes that become payable with respect to
the income of the Separate Account. However, each Variable Account will bear
its allocable share of such liabilities. Under current law, no item of
dividend income, interest income, or realized capital gain of the Variable
Accounts will be taxed to Pacific Mutual to the extent it is applied to
increase reserves under the Contracts.
Under the principles set forth in IRS Revenue Ruling 81-225 and Section
817(h) of the Code and regulations thereunder, Pacific Mutual believes that
Pacific Mutual will be treated as the owner of the assets in the Separate
Account for Federal income tax purposes.
The Separate Account will invest its assets in a mutual fund that is
intended to qualify as a regulated investment company under Part I, Subchapter
M of the Code. If the requirements of the Code are met, the Fund will not be
taxed on amounts distributed on a timely basis to the Separate Account.
Diversification Standards
Each Portfolio of the Fund will be required to adhere to regulations adopted
by the Treasury Department pursuant to Section 817(h) of the Code prescribing
asset diversification requirements for investment companies whose shares are
sold to insurance company separate accounts funding variable contracts. 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
contract owner's gross income. The Treasury Department also announced, in
connection with the issuance of regulations concerning diversification, that
those regulations "do not provide guidance concerning the circumstances in
which investor control of the investments of a segregated asset account may
cause the investor [i.e., the Contract Owner], rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also 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 the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, the Contract Owner has additional flexibility in allocating premium
payments and Contract Values. These differences could result in a Contract
Owner being treated as the owner of the Contract's pro rata portion of the
assets of the Separate Account. In addition, Pacific Mutual does not know what
standards will be set forth, if any, in the regulations or rulings which the
Treasury Department has stated it expects to issue. Pacific Mutual therefore
reserves the right to modify the Contract, as deemed appropriate by Pacific
Mutual, to attempt to prevent a Contract Owner from being considered the owner
of the Contract'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.
TAXATION OF ANNUITIES IN GENERAL--NON-QUALIFIED PLANS
Section 72 of the Code governs taxation of annuities. In general, a contract
owner is not taxed on increases in value under an annuity contract until some
form of distribution is made under the contract. However, the increase in
value may be subject to tax currently under certain circumstances. See
"Contracts Owned by Non-Natural Persons" on page 36 and "Diversification
Standards" above.
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1. Surrenders or Withdrawals Prior to the Annuity Start Date
Code Section 72 provides that amounts received upon a total or partial
surrender or withdrawal from a contract prior to the annuity start date
generally will be treated as gross income to the extent that the cash value of
the contract (determined without regard to any surrender charge in the case of
a partial withdrawal) exceeds the "investment in the contract." The
"investment in the contract" is that portion, if any, of premiums paid under a
contract less any distributions received previously under the contract that
are excluded from the recipient's gross income. The taxable portion is taxed
at ordinary income tax rates. For purposes of this rule, a pledge or
assignment of a contract is treated as a payment received on account of a
partial withdrawal of a contract. Similarly, loans under a contract generally
are treated as distributions under the contract. These rules do not apply to
amounts received under Qualified Plans pursuant to Section 401 of the Code.
2. Surrenders or Withdrawals on or after the Annuity Start Date
Upon receipt of a lump sum payment or an annuity payment under an annuity
contract, the receipt is taxed if the cash value of the contract exceeds the
investment in the contract. Ordinarily, the taxable portion of such payments
will be taxed at ordinary income tax rates.
For fixed annuity payments, the taxable portion of each payment is
determined by using a formula known as the "exclusion ratio," which
establishes the ratio that the investment in the contract bears to the total
expected amount of annuity payments for the term of the contract. That ratio
is then applied to each payment to determine the non-taxable portion of the
payment. That remaining portion of each payment is taxed at ordinary income
rates. Once the excludable portion of annuity payments to date equals the
investment in the contract, the balance of the annuity payments will be fully
taxable.
Withholding of Federal income taxes on all distributions may be required
unless a recipient who is eligible elects not to have any amounts withheld and
properly notifies Pacific Mutual of that election.
3. Penalty Tax on Certain Surrenders and Withdrawals
With respect to amounts withdrawn or distributed before the taxpayer reaches
age 59 1/2, a penalty tax is imposed equal to 10% of the portion of such
amount which is includable in gross income. However, the penalty tax is not
applicable to withdrawals: (i) made on or after the death of the owner (or
where the owner is not an individual, the death of the "primary annuitant,"
who is defined as the individual the events in whose life are of primary
importance in affecting the timing and amount of the payout under the
contract); (ii) attributable to the taxpayer's becoming totally disabled
within the meaning of Code Section 72(m)(7); (iii) which are part of a series
of substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the taxpayer, or the joint lives (or
joint life expectancies) of the taxpayer and his beneficiary; (iv) from
certain qualified plans; (v) under a so-called qualified funding asset (as
defined in Code Section 130(d)); (vi) under an immediate annuity contract, or
(vii) which are purchased by an employer on termination of certain types of
qualified plans and which are held by the employer until the employee
separates from service.
If the penalty tax does not apply to a surrender or withdrawal as a result
of the application of item (iii) above, and the series of payments are
subsequently modified (other than by reason of death or disability), the tax
for the first year in which the modification occurs will be increased by an
amount (determined by the regulations) equal to the tax that would have been
imposed but for item (iii) above, plus interest for the deferral period, if
the modification takes place (a) before the close of the period which is five
years from the date of the first payment and after the taxpayer attains age 59
1/2, or (b) before the taxpayer reaches age 59 1/2.
ADDITIONAL CONSIDERATIONS
1. Distribution-at-Death Rules
In order to be treated as an annuity contract, a contract issued on or after
January 19, 1985 must provide the following two distribution rules: (a) if the
owner dies on or after the annuity start date, and before the entire interest
in the contract has been distributed, the remainder of his interest will be
distributed at least as quickly as
35
<PAGE>
the method in effect on the owner's death; and (b) if the owner dies before
the annuity start date, the entire interest in the contract must generally be
distributed within five years after the date of death, or, if payable to a
designated beneficiary, must be annuitized over the life of that designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, commencing within one year after the date of death of the owner.
If the designated beneficiary is the spouse of the owner, the contract
(together with the deferral of tax on the accrued and future income
thereunder) may be continued in the name of the spouse as owner. Designation
of a beneficiary who is either 37 1/2 years younger than the contract owner or
a grandchild of the contract owner may have Generation Skipping Transfer Tax
consequences under Section 2601 of the Code.
For purposes of determining how generally distributions must begin under the
foregoing rules, where the owner is not an individual, the primary annuitant
is considered the owner. In that case, a change in the primary annuitant will
be treated as the death of the owner. In the case of joint owners, the
distribution-at-death rules will be applied by treating the death of the first
owner as the one to be taken into account in determining how generally
distributions must commence, unless the sole surviving owner is the deceased
owner's spouse.
2. Gift of Annuity Contracts
Generally, gifts of non-tax qualified contracts prior to the annuity start
date will trigger tax on the gain on the contract, with the donee getting a
stepped-up basis for the amount included in the donor's income. The 10%
penalty tax and gift tax also may be applicable. This provision does not apply
to transfers between spouses or incident to a divorce.
3. Contracts Owned by Non-Natural Persons
For contributions to annuity contracts after February 28, 1986, if the
contract is held by a non-natural person (for example, a corporation) the
income on that contract (generally the net surrender value less the premium
payments) is includable in taxable income each year. The rule does not apply
where the contract is acquired by the estate of a decedent, where the contract
is held by certain types of retirement plans, where the contract is a
qualified funding asset for structured settlements, where the contract is
purchased on behalf of an employee upon termination of a qualified plan, and
in the case of a so-called immediate annuity. Code Section 457 (deferred
compensation) plans for employees of state and local governments and tax-
exempt organizations are not within the purview of the exceptions.
4. Multiple Contract Rule
For contracts entered into on or after October 21, 1988, for purposes of
determining the amount of any distribution under Code Section 72(e) (amounts
not received as annuities) that is includable in gross income, all annuity
contracts issued by the same insurer to the same contract owner during any
calendar year are to be aggregated and treated as one contract. Thus, any
amount received under any such contract prior to the contract's annuity start
date, such as a partial surrender, dividend, or loan, will be taxable (and
possibly subject to the 10% penalty tax) to the extent of the combined income
in all such contracts.
In addition, the Treasury Department has broad regulatory authority in
applying this provision to prevent avoidance of the purposes of this new rule.
It is possible that, under this authority, the Treasury Department may apply
this rule to amounts that are paid as annuities (on and after the annuity
start date) under annuity contracts issued by the same company to the same
owner during any calendar year. In this case, annuity payments could be fully
taxable (and possibly subject to the 10% penalty tax) to the extent of the
combined income in all such contracts and regardless of whether any amount
would otherwise have been excluded from income because of the "exclusion
ratio" under the contract.
QUALIFIED PLANS
The Contract may be used with several types of Qualified Plans. Keoghs,
individual retirement annuities, Section 403(b) tax sheltered annuities,
Section 457 plans, and pension and profit sharing plans (including Keoghs)
will be treated, for purposes of this discussion, as Qualified Plans. The tax
rules applicable to
36
<PAGE>
participants in such Qualified Plans vary according to the type of plan and
the terms and conditions of the plan itself. No attempt is made herein to
provide more than general information about the use of the Contract with the
various types of Qualified Plans. Contract Owners, Annuitants, and
Beneficiaries, are cautioned that the rights of any person to any benefits
under such Qualified Plans may be subject to the terms and conditions of the
plans themselves or limited by applicable law, regardless of the terms and
conditions of the Contract issued in connection therewith. For example,
Pacific Mutual may accept beneficiary designations and payment instructions
under the terms of the Contract without regard to any spousal consents that
may be required under the Retirement Equity Act (REA). Consequently, a
Contract Owner's Beneficiary designation or elected payment option may not be
enforceable.
The following are brief descriptions of the various types of Qualified Plans
for which the Contract is available:
1. Individual Retirement Annuities
Code Section 408 permits eligible individuals to contribute to an individual
retirement program known as an "IRA." These IRAs are subject to limitations on
the amount that may be contributed, the persons who may be eligible, and on
the time when distributions may commence. In addition, distribution from
certain other types of Qualified Plans may be placed on a tax-deferred basis
into an IRA.
2. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities"
by public schools and certain charitable, educational and scientific
organizations described in Section 501(c) (3) of the Code. These eligible
employers may make contributions to the Contracts for the benefit of their
employees. Such contributions are not includible in the gross income of the
employee until the employee receives distributions from the Contract. The
amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. Any employee should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
3. 401(k) Plans; Pension and Profit Sharing Plans
Code Sections 401(a) and 401(k) permit employers to establish various types
of deferred compensation plans for employees. Such retirement plans may permit
the purchase of Contracts to provide benefits thereunder. Contributions to
these plans are subject to limitations.
4. Government Plans
Section 457 of the Code permits employees of a state or local government (or
of certain other tax-exempt entities) to defer compensation through an
eligible government plan. Contributions to a Contract in connection with an
eligible government plan are subject to limitations.
Distributions from Qualified Plans are subject to certain restrictions. A
10% penalty tax is imposed on the amount includable in gross income from
distributions from Qualified Plans (other than Section 457 plans) before the
participant reaches age 59 1/2 and that are not made on account of death or
disability with certain exceptions. These exceptions include distributions:
(1) which are part of a series of substantially equal periodic payments made
(at least annually) for the life (or life expectancy) of the participant or
the joint lives (or joint life expectancies) of the participant and a
designated beneficiary; and (for other than IRA distributions) (2) made to an
employee after termination of employment after reaching age 55; or (3) made to
pay for certain medical expenses. Distributions of minimum amounts specified
by the Code must commence by April 1 of the calendar year following the
calendar year in which the participant reaches age 70 1/2. Additional
distribution rules apply after the participant's death. Failure to make
mandatory distributions may result in the imposition of a 50% penalty tax on
any difference between the required distribution amount and the amount
distributed. Distributions to a participant from all Qualified Plans (other
than Section 457 plans) in a calendar year that exceed a specific limit under
the Code are generally subject to a 15% penalty tax (in addition to any
ordinary income tax) on the excess portion of the distributions.
37
<PAGE>
Distributions from a Qualified Plan (not including an individual retirement
annuity subject to Code Section 408) to an employee, surviving spouse, or
former spouse who is an alternate payee under a qualified domestic relations
order, in the form of a lump sum settlement or periodic annuity payments for a
fixed period of fewer than 10 years are subject to mandatory income tax
withholding of 20% of the taxable amount of the distribution, unless (1) the
distributee directs the transfer of such amounts in cash to another Qualified
Plan or an IRA; or (2) the payment is a minimum distribution required under
the Code. The taxable amount is the amount of the distribution less the amount
allocable to after-tax contributions. All other types of taxable distributions
are subject to withholding unless the distributee elects not to have
withholding apply.
The above description of the Federal income tax consequences of the
different types of Qualified Plans which may be funded by the Contract offered
by this Prospectus is only a brief summary and is not intended as tax advice.
The rules governing the provisions of Qualified Plans are extremely complex
and often difficult to comprehend. Anything less than full compliance with the
applicable rules, all of which are subject to change, may have adverse tax
consequences. A prospective Contract Owner considering adoption of a Qualified
Plan and purchase of a Contract in connection therewith should first consult a
qualified and competent tax adviser, with regard to the suitability of the
Contract as an investment vehicle for the Qualified Plan.
CHARGE FOR PACIFIC MUTUAL INCOME TAXES
A charge may be made for any federal taxes incurred by Pacific Mutual that
are attributable to the Variable Accounts or to the operations of Pacific
Mutual with respect to the Contracts or attributable to payment or premiums or
acquisition costs under the Contracts. Pacific Mutual will review the question
of a charge to the Variable Accounts or the Contracts for Pacific Mutual's
federal taxes periodically. Charges may become necessary if, among other
reasons, the tax treatment of Pacific Mutual or of income and expenses under
the Contracts is ultimately determined to be other than what Pacific Mutual
currently believes it to be, if there are changes made in the federal income
tax treatment of variable annuities at the insurance company level, or if
there is a change in Pacific Mutual's tax status.
Under current laws, Pacific Mutual 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, Pacific Mutual reserves the right to charge the Variable Accounts for
such taxes, if any, attributable to the Variable Accounts.
OTHER INFORMATION
VOTING OF FUND SHARES
Pacific Mutual is the legal owner of the shares of the Fund held by the
Variable Accounts of the Separate Account. In accordance with its view of
present applicable law, Pacific Mutual 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 1940 Act. Pacific Mutual
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 1940 Act or any regulations thereunder should be
amended, or if the present interpretation thereof should change, and as a
result Pacific Mutual determines that it is permitted to vote the shares of
the Fund in its own right, it may elect to do so.
The person having the voting interest under a Contract is the Owner. Unless
otherwise required by applicable law, the number of Fund shares of a
particular Portfolio as to which voting instructions may be given to Pacific
Mutual is determined by dividing a Contract Owner's Accumulated Value in a
Variable Account on a particular date by the net asset value per share of that
Portfolio as of the same date. Fractional votes will be counted. The number of
votes as to which voting instructions may be given 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
SEC, Pacific Mutual reserves the right to determine in a different fashion the
voting rights attributable to the shares of the Fund. Voting instructions may
be cast in person or by proxy.
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<PAGE>
Voting rights attributable to the Contract Owner's Accumulated Value in a
Variable Account for which no timely voting instructions are received will be
voted by Pacific Mutual in the same proportion as the voting instructions that
are received in a timely manner for all Contracts participating in that
Variable Account. Pacific Mutual will also exercise the voting rights from
assets in each Variable Account that are not otherwise attributable to
Contract Owners, if any, in the same proportion as the voting instructions
that are received in a timely manner for all Contracts 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 hold shares of a Portfolio,
such shares will be voted in the same proportion as votes cast by the Separate
Account and other separate accounts of Pacific Mutual, in the aggregate.
SUBSTITUTION OF INVESTMENTS
Pacific Mutual reserves the right, subject to compliance with the law as
then in effect, to make additions to, deletions from, substitutions for, or
combinations of 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 Contract, Pacific
Mutual 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 Contract. Pacific Mutual may also purchase, through the Variable
Account, other securities for other classes or contracts, or permit a
conversion between classes of contracts on the basis of requests made by
Owners.
In connection with a substitution of any shares attributable to an Owner's
interest in a Variable Account or the Separate Account, Pacific Mutual will
provide notice, seek Owner approval, seek prior approval of the SEC, and
comply with the filing or other procedures established by applicable state
insurance regulators, to the extent required under applicable law.
Pacific Mutual also reserves the right to establish additional Variable
Accounts of the Separate Account that would invest in a new Portfolio of the
Fund or in shares of another investment company, a portfolio thereof, or other
suitable investment vehicle. New Variable Accounts may be established in the
sole discretion of Pacific Mutual, and any new Variable Account will be made
available to existing Owners on a basis to be determined by Pacific Mutual.
Pacific Mutual may also eliminate or combine one or more Variable Accounts if,
in its sole discretion, marketing, tax, or investment conditions so warrant.
Subject to compliance with applicable law, Pacific Mutual may transfer
assets to the General Account. Pacific Mutual also reserves the right, subject
to any required regulatory approvals, to transfer assets of any Variable
Account of the Separate Account to another separate account or Variable
Account.
In the event of any such substitution or change, Pacific Mutual may, by
appropriate endorsement, make such changes in these and other contracts as may
be necessary or appropriate to reflect such substitution or change. If deemed
by Pacific Mutual to be in the best interests of persons having voting rights
under the Contracts, the Separate Account may be operated as a management
investment company under the 1940 Act 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, Pacific
Mutual 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 AND AMENDMENTS
Pacific Mutual reserves the right, without the consent of Owners, to suspend
sales of the Contract as presently offered and to make any change to the
provisions of the Contracts to comply with, or give Owners the benefit of, any
Federal or state statute, rule, or regulation, including but not limited to
requirements for annuity contracts and retirement plans under the Internal
Revenue Code and regulations thereunder or any state statute or regulation.
Pacific Mutual also reserves the right to limit the amount and frequency of
subsequent premium payments.
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<PAGE>
REPORTS TO OWNERS
A statement will be sent quarterly to each Contract Owner setting forth a
summary of the transactions that occurred during the quarter, and indicating
the Accumulated Value, Full Withdrawal Value, and any Contract Debt as of the
end of each quarter. In addition, the statement will indicate the allocation
of Accumulated Value among the Fixed Account and the Variable Accounts and any
other information required by law. Confirmations will also be sent out upon
premium payments, transfers, loans, loan repayments, and full and partial
withdrawals.
Each Contract Owner will also receive an Annual and a Semi-annual 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 1940 Act, and/or such other reports as may be required by
Federal securities laws.
TELEPHONE TRANSFER PRIVILEGES
A Contract Owner may request a transfer of Accumulated Value by telephone if
an authorization for telephone requests ("telephone authorization") is on file
at Pacific Mutual. All or part of any telephone conversation with respect to
transfer instructions may be recorded by Pacific Mutual. Telephone
instructions received by Pacific Mutual 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 the
Owner's instructions, (presuming that the Free-Look Period has expired).
Pacific Mutual reserves the right to deny any telephone transfer request. If
all telephone lines are busy (which might occur, for example, during periods
of substantial market fluctuations), Contract Owners might not be able to
request transfers by telephone and would have to submit written requests.
Pacific Mutual has 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 Pacific Mutual, and Pacific Mutual will send a
written confirmation of all transfers requested by telephone within 7 days of
the transfer. Upon request in writing for telephone authorization, a Contract
Owner authorizes Pacific Mutual to accept and act upon telephonic instructions
for transfers involving the Contract Owner's Contract, and agrees that neither
Pacific Mutual, any of its affiliates, nor Pacific Select Fund, nor any of the
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 Pacific Mutual to be genuine, provided that Pacific Mutual has complied
with its procedures. As a result of this policy on telephone requests, the
Contract Owner will bear the risk of loss arising from the telephone transfer
privileges.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Separate Account is a
party, or which would materially affect the Separate Account.
LEGAL MATTERS
Legal matters in connection with the issue and sale of the Contracts
described in this Prospectus, Pacific Mutual's authority to issue the
Contracts under California law, and the validity of the forms of the Contracts
under California law have been passed upon by David R. Carmichael, Esq.,
Senior Vice President and General Counsel of Pacific Mutual.
Legal matters relating to the Federal securities and Federal income tax laws
have been passed upon by Dechert Price & Rhoads, Washington, D.C.
40
<PAGE>
PERFORMANCE INFORMATION
Performance information for the Variable Accounts of the Separate Account,
including the yield and effective yield of the Variable Account investing in
the Fund's Money Market Portfolio ("Money Market Variable Account"), the yield
of the remaining Variable Accounts, and the total return of all Variable
Accounts may appear in advertisements, reports, and promotional literature to
current or prospective Owners.
Quotations of average annual total return for any Variable Account will be
expressed in terms of the average annual compounded rate of return on a
hypothetical investment in a Contract over a period of one, five, and ten
years (or, if less, up to the life of the Variable Account), and will reflect
the deduction of the applicable contingent deferred sales charge, the
administrative charge, the maintenance fee, and the mortality and expense risk
charge. Quotations of total return may simultaneously be shown that do not
take into account certain contractual charges such as the contingent deferred
sales charge, the administrative charge, and the maintenance fee.
Performance information for Variable Accounts may also be advertised based
on the historical performance of the Fund Portfolio underlying the Variable
Account for periods beginning prior to the date each Variable Account
commenced operations. Any such performance calculation will be based on the
assumption that the Variable Account corresponding to the applicable Fund
Portfolio was in existence throughout the stated period and that the
contractual charges and expenses of the Variable Account during that period
were equal to those currently assessed under the Contract.
Performance information for any Variable Account reflects only the
performance of a hypothetical Contract under which Accumulated Value is
allocated to a 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 time period, and should not be considered as a
representation of what may be achieved in the future. For a description of the
methods used to determine yield and total return and of the usage of
performance and other related information for the Variable Accounts, see the
Statement of Additional Information.
ADDITIONAL INFORMATION
REGISTRATION STATEMENT
A Registration Statement under the 1933 Act has been filed with the SEC
relating to the offering described in this Prospectus. This Prospectus does
not include all the information included in the Registration Statement,
certain portions of which, including the Statement of Additional Information,
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.
FINANCIAL STATEMENTS
Financial statements of the Separate Account as of and for the periods ended
December 31, 1995 and 1994, including the notes thereto, are incorporated by
reference in the Statement of Additional Information from the Annual Report of
the Separate Account dated as of December 31, 1995. Financial statements of
Pacific Mutual as of and for the years ended December 31, 1995 and 1994, are
contained in the SAI.
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information
and financial statements relating to Pacific Mutual. The Table of Contents of
the Statement of Additional Information is set forth below:
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL INFORMATION AND HISTORY.......................................... 1
Dollar Cost Averaging.................................................. 1
Portfolio Rebalancing Option........................................... 2
Safekeeping of Assets.................................................. 2
Participating.......................................................... 2
Misstatements.......................................................... 2
DISTRIBUTION OF THE CONTRACT............................................. 2
INDEPENDENT ACCOUNTANTS.................................................. 3
PERFORMANCE INFORMATION.................................................. 3
TAX DEFERRED ACCUMULATION................................................ 5
FINANCIAL STATEMENTS..................................................... 7
</TABLE>
42
<PAGE>
APPENDIX
EXAMPLES OF CONTINGENT DEFERRED SALES CHARGE
The following examples illustrate the operation of the contingent deferred
sales charge.
EXAMPLE 1:
A Contract Owner makes a single premium payment of $10,000 in the first
Contract Year and the Contract's Accumulated Value grows to $15,000 in the
fifth Contract Year. A partial withdrawal of $11,000 is requested at that time
and no prior withdrawals have been made.
<TABLE>
<CAPTION>
BASIS OF CHARGE RATE OF CHARGE EXPLANATION
--------------- -------------- -----------
<S> <C> <C>
$1,000 0% 10% free withdrawal amount on premium Age 5--No
charge imposed.
9,000 3% Applied against remaining premium Age 5.
1,000 0% No charge imposed on an amount in excess of
aggregate premiums received in last 5 Contract
Years.
</TABLE>
The contingent deferred sales charge would be $270.
EXAMPLE 2:
A Contract Owner makes an initial premium payment of $5,000 in the first
Contract Year, and subsequent premium payments of $2,000 in the second, third,
and fourth Contract Years for total premiums of $11,000, and the Contract's
Accumulated Value has grown to $17,000 in the sixth Contract Year. A
withdrawal of $12,000 is requested in the sixth Contract Year and no prior
withdrawals have been made.
<TABLE>
<CAPTION>
BASIS OF CHARGE RATE OF CHARGE EXPLANATION
--------------- -------------- -----------
<S> <C> <C>
$5,000 0% Applied against premiums Age 6--No charge
imposed.
600 0% 10% free withdrawal amount applied against
premium Age 5.
1,400 3% Applied against remaining premium Age 5.
2,000 4% Applied against premium Age 4.
2,000 5% Applied against premium Age 3.
1,000 0% No charge imposed on an amount in excess of
aggregate premium received in last 5 Contract
Years.
</TABLE>
The contingent deferred sales charge would be $222.
EXAMPLE 3:
A Contract Owner makes a single premium payment of $12,000 and has received
four quarterly scheduled withdrawals of $200 in the second Contract Year. An
unscheduled partial withdrawal was also made of $500 after the third scheduled
withdrawal.
<TABLE>
<CAPTION>
BASIS OF CHARGE RATE OF CHARGE EXPLANATION
--------------- -------------- -----------
<S> <C> <C>
$200 0% 10% free withdrawal amount on premium Age 2--No
charge imposed.
200 0% 10% free withdrawal amount on premium Age 2--No
charge imposed.
200 0% 10% free withdrawal amount on premium Age 2--No
charge imposed.
500 0% 10% free withdrawal amount on premium Age 2--No
charge imposed.
100 0% 10% free withdrawal amount on premium Age 2--No
charge imposed.
100 6% Applied against premium Age 2.
</TABLE>
The contingent deferred sales charge would be $6.
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<PAGE>
To receive a current copy of the Pacific Select Variable Annuity Statement
of Additional Information without charge, complete the following and send it
to:
Pacific Mutual Life Insurance Company
Variable Annuities
Post Office Box 7187
Pasadena, CA 91109-7187
Name __________________________
Address _______________________
City___________________________ State____________________ Zip ___________
<PAGE>
[LOGO OF PACIFIC SELECT VARIABLE ANNUITY]
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
Prospectus dated April 1, 1996
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
DATE: APRIL 1, 1996
----------------
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ACCUMULATION
DEFERRED ANNUITY CONTRACT
----------------
ISSUED BY
PACIFIC MUTUAL LIFE INSURANCE COMPANY
1-800-722-2333
MAILING ADDRESS:
VARIABLE ANNUITY DEPARTMENT
P.O. BOX 7187
NEWPORT BEACH, CALIFORNIA 91109-7187
----------------
This Statement of Additional Information ("SAI") is intended to supplement
the information provided to investors in the Prospectus dated April 1, 1996 of
the Pacific Select Variable Annuity Separate Account ("the Separate Account")
of Pacific Mutual Life Insurance Company and has been filed with the
Securities and Exchange Commission as part of the Separate Account's
Registration Statement. This SAI is not itself a prospectus and should be read
in conjunction with the current Prospectus for Pacific Select Variable Annuity
Separate Account dated April 1, 1996. The Prospectus may be obtained from
Pacific Mutual Life Insurance Company.
The contents of this SAI are incorporated by reference in the Prospectus in
their entirety.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY............................................ 1
Dollar Cost Averaging Option............................................. 1
Portfolio Rebalancing Option............................................. 2
Safekeeping of Assets.................................................... 2
Dividends................................................................ 2
Misstatements............................................................ 2
DISTRIBUTION OF THE CONTRACT............................................... 2
INDEPENDENT ACCOUNTANTS.................................................... 3
PERFORMANCE INFORMATION.................................................... 3
TAX DEFERRED ACCUMULATION.................................................. 5
FINANCIAL STATEMENTS....................................................... 7
</TABLE>
i
<PAGE>
GENERAL INFORMATION AND HISTORY
For a description of the Individual Flexible Premium Variable Accumulation
Deferred Annuity Contract (the "Contract"), Pacific Mutual, and the Pacific
Select Variable Annuity Separate Account (the "Separate Account"), see the
Prospectus. This SAI contains information that supplements the information in
the Prospectus. Defined terms used in this SAI have the same meaning as terms
defined in the section entitled "Definitions" in the Prospectus.
DOLLAR COST AVERAGING OPTION
Pacific Mutual currently offers an option under which Contract Owners may
dollar cost average their allocations in the Variable Accounts under the
Contract by authorizing Pacific Mutual to make periodic allocations of
Accumulated Value from any one Variable Account to one or more of the other
Variable Accounts, subject to the limitation on the Growth Variable Account.
Contract Owners may authorize Pacific Mutual to make periodic allocations
from the Fixed Account to one or more Variable Accounts. Dollar Cost Averaging
allocations may not be made from the Fixed Account and a Variable Account at
the same time.
An Owner may request Dollar Cost Averaging by sending a proper request to
Pacific Mutual. The Contract Owner must designate the Variable Account or
Fixed Account from which the transfers will be made, the specific dollar
amounts or percentages to be transferred, the Variable Account or Accounts to
which the transfers 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.
To elect the Dollar Cost Averaging Option, the 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 will not be
considered complete until the Contract Owner's Accumulated Value in the
Variable Account from which the transfers will be made is at least $5,000.
After Pacific Mutual has received a Dollar Cost Averaging request in proper
form, Pacific Mutual will transfer Accumulated Value in amounts designated by
the Contract Owner from the Variable Account or Fixed Account from which
transfers are to be made to the Variable Account or Accounts chosen by the
Contract Owner. (The minimum amount or percentages that may be transferred to
any one Variable Account is $50). After the Free-Look Period, the first
transfer will be effected on the Contract's Monthly, Quarterly, Semi-Annual,
or Annual Anniversary, whichever corresponds to the period selected by the
Contract Owner, coincident with or next following receipt at Pacific Mutual of
a Dollar Cost Averaging request in proper form, and subsequent transfers will
be effected on the following Monthly, Quarterly, Semi-Annual, or Annual
Anniversary for so long as designated by the Contract Owner until the total
amount elected has been transferred, or until Accumulated Value in the Fixed
Account or Variable Account from which transfers are made has been depleted.
Amounts periodically transferred under this Option will not be subject to any
transfer charges that may be imposed by Pacific Mutual in the future, except
as may be required by applicable law.
A Contract Owner may instruct Pacific Mutual at any time to terminate the
option by request to Pacific Mutual. In that event, the Accumulated Value in
the Variable Account or Fixed Account from which transfers were being made
that has not been transferred will remain in that Account unless the Contract
Owner instructs otherwise. If a Contract Owner wishes 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
or Fixed Account has been depleted, or after the Dollar Cost Averaging Option
has been cancelled, a new Dollar Cost Averaging request must be sent to
Pacific Mutual. The Variable Account from which transfers are to be made must
meet the minimum amount of Accumulated Value requirement. Pacific Mutual may
discontinue, modify, or suspend the Dollar Cost Averaging Option at any time.
1
<PAGE>
PORTFOLIO REBALANCING OPTION
Portfolio rebalancing allows Contract Owners who are not currently Dollar
Cost Averaging, to maintain the percentage of Accumulated Value allocated to
each Variable Investment Option at a pre-set level during the Accumulation
Period. For example, a Contract Owner could specify that 30% of the Contract's
Accumulated Value be allocated to the Equity Index Variable Account, 40% in
the Managed Variable Account, and 30% in the Growth LT Variable Account. Over
time, the variations in each Variable Account's investment results will shift
this balance of the Owner's Accumulated Value in the Contract. If an Owner
elects the portfolio rebalancing feature, we will automatically transfer the
Accumulated Value back to the percentages the Owner specified.
An Owner may request portfolio rebalancing by sending a proper written
request to Pacific Mutual during the Accumulation Period. The Contract Owner
must designate the percentages to allocate to each Variable Account and the
desired frequency of rebalancing, which may be on a quarterly, semi-annual or
annual basis. An Owner may specify a date for the first rebalance, or we will
treat the request as if the Owner selected the request's effective date. If
the Owner specifies a date fewer than 30 days after the Contract Date, the
first rebalance will be delayed one month, and if rebalancing was requested on
the application with no specific date, rebalancing will occur one period after
the Contract Date. A Contract Owner may instruct Pacific Mutual at any time to
terminate the portfolio rebalancing option by written request to Pacific
Mutual. We may change, terminate or suspend the portfolio rebalancing feature
at any time.
SAFEKEEPING OF ASSETS
Pacific Mutual is responsible for the safekeeping of the assets of the
Variable Accounts. These assets are held separate and apart from the assets of
Pacific Mutual's general account and its other separate accounts.
DIVIDENDS
The current dividend scale is zero and Pacific Mutual does not anticipate
that dividends will be paid. If any dividend is paid, the Contract Owner may
elect to receive the dividend in cash or to add the dividend to the Contract's
Accumulated Value. If no election is made by the Contract Owner, the dividend
will be added to the Accumulated Value. Pacific Mutual will allocate any
dividend to Accumulated Value in accordance with the Owner's most recent
premium allocation instructions, unless instructed. The Owner should consult
with his or her tax adviser before making an election.
MISSTATEMENTS
If the age or sex of an Annuitant or age of an Owner has been misstated, the
correct amount paid or payable by Pacific Mutual under the Contract shall be
such as the Accumulated Value would have provided for the correct Age or sex
(unless unisex rates apply).
DISTRIBUTION OF THE CONTRACT
PACIFIC MUTUAL DISTRIBUTORS, INC.
Pacific Mutual Distributors, Inc. ("PMD"), formerly Pacific Equities
Network, an indirect wholly-owned subsidiary of Pacific Mutual, acts as the
principal underwriter of the Contracts and offers the Contracts on a
continuous basis. Pacific Mutual and PMD enter into selling agreements with
broker-dealers whose registered representatives are authorized by state
insurance departments to sell the Contracts.
Pursuant to its selling agreement with Pacific Mutual, PMD receives
compensation in the amount of 6.5% of the aggregate Purchase Payments for
distributing the Contracts. Under certain circumstances and in exchange for
lower initial commission, certain sellers of Contracts may be paid persistency
trail commission which will take into account, among other things, the length
of time premium payments have been held under a Contract, and Contract Values.
A trail commission is not anticipated to exceed 1.00%, on an annual basis, of
the Accumulated Value considered in connection with the trail commission.
2
<PAGE>
In addition, Pacific Mutual may also pay override payments, expense
allowances, bonuses, wholesaler fees and training allowances. The aggregate
amount of underwriting commissions paid to PEN for 1995, 1994, and 1993 was
$27,712,281, $6,999,408 and $4,870,190, respectively, of which $0 was retained.
Broker-dealers may choose one of two compensation structures for sales of the
Contracts or may permit their registered representatives to choose on a
Contract-by-Contract basis. Registered representatives earn commissions from
the broker-dealers with which they are affiliated and such arrangements may
vary. In addition, registered representatives who meet certain production
levels may qualify, under sales incentive programs adopted by Pacific Mutual,
to receive non-cash compensation such as expense-paid trips, expense-paid
educational seminars and merchandise.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche llp, 695 Town Center Drive, Suite 1200, Costa Mesa,
California 92626, independent public accountants, perform certain accounting
and auditing services for Pacific Mutual and the Separate Account. The
financial statements for Pacific Mutual as of and for the periods ended
December 31, 1995 and 1994, included in this SAI, and the financial statements
for the Separate Account as of and for the periods ended December 31, 1995 and
1994, including the notes thereto, incorporated by reference in this SAI from
the Annual Report of the Separate Account, have been audited by Deloitte &
Touche LLP to the extent and for the periods indicated in their reports
thereon.
PERFORMANCE INFORMATION
Performance information for the Variable Accounts of the Separate Account,
including the yield and effective yield of the Variable Account investing in
the Fund's Money Market Portfolio ("Money Market Variable Account"), the yield
of the remaining Variable Accounts, and the total return of all Variable
Accounts, may appear in advertisements, reports, and promotional literature to
current or prospective Owners.
Current yield for the Money Market Variable Account will be based on the
change in the value of a hypothetical investment (exclusive of capital charges)
over a particular 7-day period, less a pro-rata share of the Variable Account's
expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying by 365/7,
with the resulting yield figures carried to at least the nearest hundredth of
one percent. Calculation of "effective yield" begins with the same "base period
return" used in the calculation of yield, which is then annualized to reflect
weekly compounding pursuant to the following formula:
Effective Yield = [(Base Period Return) + 1) 365/7] - 1
Quotations of yield for the remaining Variable Accounts will be based on all
investment income per Accumulation Unit earned during a particular 30-day
period, less expenses accrued during the period ("net investment income"), and
will be computed by dividing net investment income by the value of the
Accumulation Unit on the last day of the period, according to the following
formula:
YIELD = 2[(a-b + 1) (to the power of 6)] - 1
---
cd
where
a= net investment income earned during the period by the
Portfolio attributable to shares owned by the Variable
Account,
b= expenses accrued for the period (net of reimbursements),
c= the average daily number of Accumulation Units outstanding
during the period that were entitled to receive dividends,
and
d= the maximum offering price per Accumulation Unit on the last
day of the period.
3
<PAGE>
Quotations of average annual total return for any Variable Account will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a Contract over a period of one, five, and ten
years (or, if less, up to the life of the Variable Account), calculated
pursuant to the following formula: P(1 + T) (to the power of n) = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures reflect the deduction of the applicable contingent deferred sales
charge, the administrative charge, the maintenance fee, and the mortality and
expense risk charge. Performance information for Variable Accounts may also be
advertised based on the historical performance of the Fund Portfolio underlying
the Variable Account for periods beginning prior to the date each Variable
Account commenced operations. Any such performance calculation will be based on
the assumption that the Variable Account corresponding to the applicable Fund
Portfolio was in existence throughout the stated period and that the contractual
charges and expenses of the Variable Account during that period were equal to
those currently assessed under the Contract. Quotations of total return may
simultaneously be shown for the same or other periods that do not take into
account certain contractual charges such as the contingent deferred sales
charge, the administrative charge, and the maintenance fee.
Performance information for a Variable Account may be compared, in reports
and promotional literature, to the Standard & Poor's 500 Stock Index ("S&P
500"), the Dow Jones Industrial Average ("DJIA"), the Donoghue Money Market
Institutional Averages, the Lehman Brothers Government Corporate Index, the
Lehman Brothers Government Bond Index, the Salomon Brothers High Yield Bond
Indexes, the Morgan Stanley Capital International's EAFE Index or other
indices that measure performance of a pertinent group of securities so that
investors may compare a Variable Account's results with those of a group of
securities widely regarded by investors as representative of the securities
markets in general or representative of a particular type of security.
Performance information may also be compared to (i) other groups of variable
annuity separate accounts or other investment products tracked by Lipper
Analytical Services, a widely used independent research firm which ranks
mutual funds and other investment companies by overall performance, investment
objectives, and assets, or tracked by other services, companies, publications
or persons who rank such investment companies on overall performance or other
criteria; and (ii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment in the Contract. Unmanaged indices
may assume the reinvestment of dividends but generally do not reflect
deductions for administrative and management costs and expenses.
Performance information for any Variable Account reflects only the
performance of a hypothetical Contract under which an Owner's Accumulated
Value is allocated to a 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 time period, and should not be
considered as a representation of what may be achieved in the future.
Reports and promotional literature may also contain other information
including (i) the ranking of any Variable Account derived from rankings of
variable annuity separate accounts or other investment products tracked by
Lipper Analytical Services or by other rating services, companies,
publications, or other persons who rank separate accounts or other investment
products on overall performance or other criteria, (ii) the effect of tax-
deferred compounding on a Variable Account's investment returns, or returns in
general, which may be illustrated by graphs, charts, or otherwise, and which
may include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis, and (iii)
Pacific Mutual's rating or a rating of Pacific Mutual's claims paying ability
as determined by firms that analyze and rate insurance companies and by
nationally recognized statistical rating organizations.
4
<PAGE>
The following table presents the annualized total return for each Variable
Account, other than the Aggressive Equity and Emerging Markets Variable
Accounts, for the year ended December 31, 1995 and for the period from each
such Variable Account's commencement of operations through December 31, 1995.
The table is based on a Contract for which the average initial premium is
approximately $40,000. The Accumulated Value (AV) reflects the deductions for
all contractual expenses except the contingent deferred sales charge. The Full
Withdrawal Value (FWV) reflects the deduction for all contractual expenses.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1995
ALL NUMBERS ARE EXPRESSED AS A PERCENTAGE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS** 5 YEARS** 10 YEARS** SINCE INCEPTION**
----------- ----------- ----------- ----------- ------------------
VARIABLE ACCOUNTS AV FWV AV FWV AV FWV AV FWV AV FWV
- ----------------- ----- ----- ----- ----- ----- ----- ----- ----- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market 7/24/90*... 4.01 -1.39 2.45 1.00 2.66 2.17 2.93 2.93
High Yield Bond
8/16/90*............... 17.16 11.76 10.49 9.25 14.23 13.91 12.26 12.26
Managed Bond 9/5/90*.... 17.32 11.92 6.76 5.42 8.58 8.19 9.16 9.15
Government Securities
8/22/90*............... 17.09 11.69 6.14 4.79 7.90 7.50 8.54 8.54
Growth LT 1/4/94*....... 34.79 29.39 22.91 20.64
Equity Income 8/16/90*.. 29.77 24.37 10.81 9.58 12.92 12.58 11.70 11.70
Multi-Strategy 9/25/90*. 23.44 18.04 8.86 7.58 10.48 10.12 11.21 11.21
Equity 1/4/95*.......... 22.12 16.72 10.17 8.92 12.38 12.04 10.87 10.87 12.14 12.14
Bond and Income 1/4/95*. 31.80 26.40 11.88 10.67 12.83 12.49 9.81 9.81 11.75 11.75
Equity Index 2/11/91*... 34.96 29.56 13.15 11.97 12.08 11.71
International 8/16/90*.. 8.94 3.54 12.35 11.15 6.55 6.13 4.05 4.04
Donoghue MF............. 5.49 4.12 4.55
EAFE.................... 11.21 16.69 9.37 13.62
First Boston............ 17.38 11.39 18.30
LBG/Bond................ 18.33 8.16 9.36 9.38
LBG/C Bond.............. 19.24 8.51 9.80 9.65
Russell 2500............ 31.70 14.94 20.95 13.17
S & P 500............... 37.58 15.34 16.59 14.88
</TABLE>
- -------
* Date Variable Account commenced operations.
** The performance of the Equity Income, Multi-Strategy and International
Variable Accounts for a portion of this period occurred at a time when
other Portfolio Managers managed the corresponding Portfolio in which each
Variable Account invests. Effective January 1, 1994, J.P. Morgan Investment
Management, Inc. became the Portfolio Manager of the Equity Income and
Multi-Strategy Portfolio and Templeton Investment Counsel, Inc. became the
Portfolio Manager of the International Portfolio; prior to 1/1/94, some of
the investment policies of the Equity Income Portfolio and the investment
objective of the International Portfolio differed. Performance of the
Equity Portfolio and the Bond and Income Portfolio is based in part on the
performance of predecessor portfolios of Pacific Corinthian Variable Fund,
which began their first full year of operations January 1, 1984 and were
acquired by the Fund on December 31, 1994.
TAX DEFERRED ACCUMULATION
In general, individuals who own annuity contracts are not taxed on increases
in the value under an annuity contract until some form of distribution is made
under the contract. Thus, the annuity contract will benefit from tax deferral
during the accumulation period, which generally will have the effect of
permitting an investment in an annuity contract to grow more rapidly than a
comparable investment under which increases in value are taxed on a current
basis. The following chart illustrates this benefit by comparing accumulation
under a variable annuity contract versus accumulation from an investment on
which gains are taxed on a current basis. The chart portrays accumulation of a
$10,000 premium or investment, assuming hypothetical gross annual rates of
return of 0%, 4% and 8%, compounded annually, and a tax bracket of 36%. Values
for the taxable investment are presented with the assumption that annual taxes
are paid from returns of the investment and they do not reflect the deduction
of any charges or fees. Values for the variable annuity contract are shown for
Accumulated Value, assuming the contract owner does not surrender or make any
withdrawals from the contract, and after-tax Full Withdrawal value, assuming
that the owner surrenders the contract at the end of the periods shown and
pays any withdrawal fee federal income taxes due from the contractual
proceeds. The values shown for the variable annuity do not reflect the
deduction of contractual expenses, including the Mortality and Expense Risk
Charge, Administrative Charge, Maintenance Fee, Transfer Fee, or Premium Tax
Charge or the investment advisory fees and operating expenses of the Fund. For
a description of the charges and expenses under the Contract, see EXPENSE
TABLE and CHARGES AND DEDUCTIONS in the Prospectus. The rates of returns
illustrated are hypothetical and are not a guaranty of performance. Tax rates
may vary for different
5
<PAGE>
taxpayers from the 36% used in the chart, which would result in different
values than those shown on the chart and withdrawals and surrenders by
Contract Owners who have not reached age 59 1/2 may be subject to a tax
penalty.
The hypothetical rates of return used in the chart are assumptions only, and
no implication is intended that the returns are guaranteed in any way or that
they represent an average or expected rates of return over the period
depicted. The portion of Accumulated Value that exceeds the variable annuity
contract owner's investment in the contract is taxed at ordinary income tax
rates upon distribution, and a 10% tax penalty may apply to withdrawals by
owners who have not yet reached age 59 1/2.
POWER OF TAX DEFERRAL
$10,000 investment at annual rates of 0.00%, 4.00% and 8.00%, taxed @ 36%
<TABLE>
<CAPTION>
Taxable Tax-Deferred
Investment Investment
---------- ------------
<S> <C> <C>
10 Years
0% $10,000.00 $10,000.00
4% $12,875.97 $13,073.56
8% $16,476.07 $17,417.12
20 Years
0% $10,000.00 $10,000.00
4% $16,579.07 $17,623.19
8% $27,146.07 $33,430.13
30 Years
0% $10,000.00 $10,000.00
4% $21,347.17 $24,357.74
8% $44,726.05 $68,001.00
</TABLE>
6
<PAGE>
FINANCIAL STATEMENTS
The audited financial statements of the Separate Account as of December 31,
1995 and the periods ended December 31, 1995 and 1994, including the notes
thereto, are incorporated by reference in this SAI from the Annual Report of
the Separate Account dated as of December 31, 1995.
The financial statements of Pacific Mutual as of and for the years ended
December 31, 1995 and 1994 are set forth herein, starting on page 8. The
financial statements of Pacific Mutual which are included in this SAI should
be considered only as bearing on the ability of Pacific Mutual to meet its
obligations under the Contracts. They should not be considered as bearing on
the investment performance of the assets held in the Separate Account.
7
<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.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 23, 1996
8
<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
9
<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
10
<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
11
<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
12
<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.
13
<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.
14
<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
15
<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>
16
<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>
17
<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.
18
<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.
19
<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.
20
<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
21
<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
22
<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.
--------------------------------------------------------------------------
23
<PAGE>
Part C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
Condensed financial information is included in Part A.
Financial statements dated as of December 31, 1995 which are
incorporated by reference from the Annual Report include the
following for Pacific Select Variable Annuity Separate
Account:
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Financial statements dated as of December 31, 1995 included
in Part B include the following for Pacific Mutual:
Statements of Financial Position
Statements of Operations and Surplus
Statements of Cash Flow
Notes to Financial Statements
Financial Statements dated as of December 31, 1994 included
in Part B include the following:
Statements of Financial Position
Statements of Operations and Surplus
Statements of Cash Flow
Note to Financial Statements
(b) Exhibits
1. (a) Resolution of the Board of Directors of Pacific
Mutual Life Insurance Company ("Pacific Mutual")
authorizing establishment of Separate Accounts and
Memorandum establishing Pacific Select Variable
Annuity Separate Account
(b) Memorandum dated October 1, 1993 authorizing
establishment of Growth LT Variable Account
<PAGE>
(c) Memorandum dated September 16, 1994 authorizing
establishment of Equity and Bond and Income Variable
Accounts
(d) Memorandum Establishing Two New Variable Accounts -
Aggressive Equity and Emerging Markets
Portfolios
2. Not applicable
3. (a) Distribution Agreement between Pacific Mutual and
Pacific Equities Network ("PEN")
(b) Form of Selling Agreement between Pacific Mutual,
PEN and Various Broker-Dealer
4. (a) Form of Individual Flexible Premium Variable
Accumulation Deferred Annuity Contract, Form 90-53
(b) Guaranteed Death Benefit Rider
(c) Individual Retirement Annuity Rider
(d) Pension Plan Rider
(e) Required Distributions for Compliance with Section
72(S) Rider
(f) Endorsement (Preauthorized Withdrawal Feature)
(g) Endorsement (Distribution of In-Kind Securities)
(h) Free Look Sticker ST-43
(i) Minimum Guaranteed Death Benefit and Terminal
Illness Waiver Endorsement E-93-9053
(j) Changes to Contract Endorsement E1-95-9053
(k) Required Distributions for Compliance with Section
72(S) of the Internal Revenue Code of 1986, amended
(the Code) Rider R72S-9553
(l) 403(b) Tax Sheltered Annuity Rider R-403B-9553
(m) Section 457 Plan Rider R-95-457
(n) Qualified Plan Loan Endorsement (Draft)
5. Application Form for Individual Flexible Premium
Variable
<PAGE>
Accumulation Deferred Annuity Contract, Form AP9230-1
6. (a) Pacific Mutual's Articles of Incorporation
(b) By-laws
7. Not applicable
8. Fund Participation Agreement
9. Opinion and Consent of legal officer of Pacific Mutual
as to the legality of Contracts being registered
10. (a) Consent of Deloitte & Touche LLP
(b) Consent of Dechert Price & Rhoads
11. Financial Statements dated as of December 31, 1995 for
Pacific Select Variable Annuity Separate Account
12. Not applicable
13. Schedules for computation of performance quotations
14. Power of Attorney
15. Inapplicable
16. Inapplicable
17. Financial Data Schedules
3
<PAGE>
Item 25. Directors and Officers of Pacific Mutual
----------------------------------------
Positions and Offices
Name and Address with Pacific Mutual
- ---------------- -------------------
Thomas C. Sutton Director, Chairman of the Board, and
Chief Executive Officer
Glenn S. Schafer Director and President
Harry G. Bubb Director and Chairman Emeritus
Richard M. Ferry Director
Donald E. Guinn Director
Ignacio E. Lozano, Jr. Director
Charles A. Lynch Director
Dr. Allen W. Mathies, Jr. Director
Charles D. Miller Director
Donn B. Miller Director
Jacqueline C. Morby Director
J. Fernando Niebla Director
Susan Westerberg Prager Director
Richard M. Rosenberg Director
James R. Ukropina Director
Raymond L. Watson Director
Edward Byrd Vice President and Controller
David R. Carmichael Senior Vice President and General
Counsel
4
<PAGE>
Audrey L. Milfs Vice President and Corporate
Secretary
Lynn C. Miller Executive Vice President
Marilee Roller Senior Vice President
Khan T. Tran Vice President and Treasurer
___________________________________
The address for each of the persons listed above is as follows:
700 Newport Center Drive
Newport Beach, California 92660
Item 26. Persons Controlled by or Under Common Control with Pacific Mutual or
Pacific Select Variable Annuity Separate Account
Pacific Mutual life Insurance Company has a 40% ownership of American
Maturity Life Insurance Company, a 50% ownership of Pacific Mezzanine
Associates, L.L.C., and is the parent company of Pacific Financial
Asset Management Corporation, Pacific Mutual Realty Finance, Inc.,
Pacific Equities Network, PM Group Life Insurance Company (an Arizona
corporation), and Pacific Corinthian Life Insurance Company.
Subsidiaries of Pacific Financial Asset Management Corporation
include: PMRealty Advisors Inc. and PIMCO Advisors L.P. (a Delaware
Limited Partnership which is 42% owned). Subsidiaries of Pacific
Equities Network include: Mutual Service Corporation (a Michigan
corporation), along with its subsidiary Advisors' Mutual Service
Center, Inc. (a Michigan corporation); and United Planners' Group,
Inc. (an Arizona corporation which is 95.2% owned consisting of 100%
of Class A and 79.3% of Class B of the corporation's common stock),
along with its subsidiary United Planners' Financial Services of
America (an Arizona Limited Partnership). Subsidiaries of Pacific
Corinthian Life Insurance include: World-Wide Holdings Limited (a
United Kingdom corporation which is 72.4% owned), including its
subsidiaries World-Wide Reassurance Company Limited (a United Kingdom
corporation) and World-Wide Reassurance Company (BVI) Limited (a
British Virgin Islands corporation). All corporations are 100% owned
unless otherwise indicated. All entities are California corporations
unless otherwise indicated.
Item 27. Number of Contractholders
-------------------------
Approximately 20,700
5
<PAGE>
Item 28. Indemnification
---------------
(a) The Distribution Agreement between Pacific Mutual and PEN provides
substantially as follows:
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 material supplied or
approved by Pacific Mutual or the Separate Account, any untrue or
alleged untrue statement or representation is made; (2) any failure to
deliver a currently effective prospectus; (3) the use of any
unauthorized sales literature by any officer, employee or agent of PEN
or Broker; (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.
(b) The Form of Selling Agreement between Pacific Mutual, PEN and Various
Broker-Dealers provides substantially as follows:
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
6
<PAGE>
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.
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.
Item 29. Principal Underwriters
----------------------
(a) PEN also acts as principal underwriter for Pacific Select Separate
Account, Pacific Select Exec Separate Account, Separate Account A,
and Pacific Select Fund.
(b) For information regarding PEN, reference is made to Form B-D, SEC
File No. 8-15264, which is herein incorporated by reference.
7
<PAGE>
(c) PEN retains no compensation or net discounts or commissions from
the Registrant.
Item 30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company
Act of 1940 and the rules under that section will be maintained by
Pacific Mutual at 700 Newport Center Drive, Newport Beach,
California 92660.
Item 31. Management Services
-------------------
Not applicable
Item 32. Undertakings
------------
The registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement
as frequently as is necessary to ensure that the audited financial
statements in this registration statement are never more than 16
months old for so long as payments under the variable annuity
contracts may be accepted, unless otherwise permitted.
(b) to include either (1) as a part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, (2) a post
card or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a
Statement of Additional Information, or (3) to deliver a Statement
of Additional Information with the prospectus.
(c) to deliver any Statement of Additional Information and any
financial statements required to be made available under this Form
promptly upon written or oral request.
Additional Representations
- --------------------------
(a) The Registrant and its Depositor are relying upon American Council
of Life Insurance, SEC No-Action Letter, SEC Ref. No. 1P-6-88
(November 28, 1988) with respect to annuity contracts offered as
funding vehicles for retirement plans meeting the requirements of
Section 403(b) of the Internal Revenue Code, and the provisions of
paragraphs (1)-(4) of this letter have been complied with.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness and has caused this
Post-Effective Amendment No. 9 to the Registration Statement on Form N-4 to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
Newport Beach, and State of California, on this 28th day of March, 1996.
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
------------------------------------------------
(Registrant)
BY: PACIFIC MUTUAL LIFE INSURANCE COMPANY
-------------------------------------
BY: ____________________________________
Thomas C. Sutton*
Chairman & Chief Executive Officer
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 this Post Effective Amendment No. 9 to
Registration Statement for the Pacific Select Variable Annuity Separate Account,
File No. 33-32704, as Exhibit 14.)
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 9 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 __________, 1996
Thomas C. Sutton* and Chief Executive Officer
____________________ Director and President __________, 1996
Glenn S. Schafer*
____________________ Controller __________, 1996
Edward Byrd*
____________________ Director and Chairman Emeritus __________, 1996
Harry G. Bubb*
____________________ Director __________, 1996
Richard M. Ferry*
____________________ Director __________, 1996
Donald E. Guinn*
____________________ Director __________, 1996
Ignacio E. Lozano, Jr.*
____________________ Director __________, 1996
Charles A. Lynch*
____________________ Director __________, 1996
Dr. Allen W. Mathies, Jr.*
10
<PAGE>
____________________ Director __________, 1996
Charles D. Miller*
____________________ Director __________, 1996
Donn B. Miller*
____________________ Director __________, 1996
Jacqueline C. Morby
____________________ Director __________, 1996
J. Fernando Niebla*
____________________ Director __________, 1996
Susan Westerberg Prager*
____________________ Director __________, 1996
Richard M. Rosenberg
____________________ Director __________, 1996
James R. Ukropina*
____________________ Director __________, 1996
Raymond L. Watson*
*BY: /s/ DAVID R. CARMICHAEL March 28, 1996
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained in this Post Effective Amendment No. 9 to
Registration Statement for the Pacific Select Variable Annuity Separate Account,
File No. 33-32704, as Exhibit 14.)
11
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<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
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<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
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<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
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<AVG-DEBT-PER-SHARE> 0
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CONSOLIDATED SCHEDULE OF FINANCIAL DATA
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<PERIOD-START> JAN-01-1995
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<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
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<PAID-IN-CAPITAL-COMMON> 57,506
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<SHARES-COMMON-PRIOR> 2,229
<ACCUMULATED-NII-CURRENT> 56
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<EXPENSES-NET> 309
<NET-INVESTMENT-INCOME> 2,114
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<NUMBER-OF-SHARES-SOLD> 3,681
<NUMBER-OF-SHARES-REDEEMED> 608
<SHARES-REINVESTED> 209
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CONSOLIDATED SCHEDULE OF FINANCIAL DATA
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<PAID-IN-CAPITAL-COMMON> 121,763
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<SHARES-COMMON-PRIOR> 5,376
<ACCUMULATED-NII-CURRENT> 127
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 126,992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,892
<OTHER-INCOME> 4
<EXPENSES-NET> 655
<NET-INVESTMENT-INCOME> 5,241
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<APPREC-INCREASE-CURRENT> 3,716
<NET-CHANGE-FROM-OPS> 14,691
<EQUALIZATION> 1,230
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<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)
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<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
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<PER-SHARE-NAV-END> 11.10
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CONSOLIDATED SCHEDULE OF FINANCIAL DATA
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</LEGEND>
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<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> 0000858667
<NAME> PACIFIC SELECT VARIABLE ANNUITY
<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> 0000858667
<NAME> PACIFIC SELECT VARIABLE ANNUITY
<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> 0000858667
<NAME> PACIFIC SELECT VARIABLE ANNUITY
<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> 0000858667
<NAME> PACIFIC SELECT VARIABLE ANNUITY
<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> 0000858667
<NAME> PACIFIC SELECT VARIABLE ANNUITY
<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> 0000858667
<NAME> PACIFIC SELECT VARIABLE ANNUITY
<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> 0000858667
<NAME> PACIFIC SELECT VARIABLE ANNUITY
<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(a)
Resolution of the Board of Directors of
Pacific Mutual Life Insurance Company ("Pacific Mutual")
Authorizing Establishment of Separate Accounts and
Memorandum Establishing Pacific Select Variable
Annuity Separate Account
<PAGE>
OFFICE MEMORANDUM
DATE
November 28, 1989
TO
Harry G. Bubb
FROM
Clement B. Penrose
SUBJECT
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
RECOMMENDATION:
That you authorize the establishment of the Pacific Select Variable Annuity
Separate Account.
WHY RECOMMENDATION IS SUBMITTED AT THIS TIME:
Documentation of this authorization must accompany the registration filing about
to be made with the Securities and Exchange Commission for the Pacific Select
Individual Flexible Premium Deferred Variable Accumulation Annuity Contract.
BACKGROUND:
General management has approved the development of a third variable product,
Pacific Select Individual Flexible Premium Deferred Variable Accumulation
Annuity Contract. Amounts received by Pacific Mutual in connection with the
sale of this new product will be allocated to the Pacific Select Variable
Annuity Separate Account and among its nine subaccounts, at the Contract Owners'
direction.
On November 22, 1989, the Board of Directors of Pacific Mutual adopted a
resolution authorizing any Officer of the corporation to take whatever action is
necessary to establish and maintain Separate Accounts which may be required in
connection with variable life insurance policies, variable annuity contracts, or
any derivative thereof. Outside counsel for our variable life products
recommends that this authorization for the new Separate account be obtained from
the Chief Executive Officer of Pacific Mutual.
OTHERS CONSULTED:
Mr. Joanning, Mr. Carmichael and Ms. Ledger concur in this recommendation.
Clement B. Penrose
cc: Mr. Joanning
Mr. Carmichael
Ms. Ledger
<PAGE>
Establishment of
Pacific Select Variable Annuity Separate Account
Is Authorized:
/s/HARRY G. BUBB
Harry G. Bubb 11/30/89
Chief Financial Officer
<PAGE>
SECRETARY'S CERTIFICATE
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 and variable annuity contracts and any derivative thereof being herein
collectively referred to as "variable contracts"; 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 Contracts 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 Code 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 Contracts
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 Contracts 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 regulator 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 Contracts;
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 Contracts 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 any
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 Contracts 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 Board of Directors of
said corporation, held on November 22, 1989, at which a quorum was present and
voted in favor thereof, and that said resolution has not been revoked or amended
and is now in full force and effect.
Dated this 29th day of November, 1989
/s/AUDREY L. MILFS
Audrey L. Milfs
Secretary
<PAGE>
EXHIBIT 99.1(b)
Memorandum Dated October 11, 1993
Authorizing Establishment
of Growth LT Variable Account
<PAGE>
OFFICE MEMORANDUM
DATE October 11, 1993
To Mr. William D. Cvengros and Mr. Glenn S. Schafer
FROM Ms. Diane N. Ledger
SUBJECT Authorization of the Establishment of the Growth LT Variable Accounts
On behalf of Pacific Mutual Life Insurance Company, the following is hereby
authorized:
1. The establishment of an additional Variable Account within each of the
Pacific Select, Pacific Select Exec, Pacific COLI, and Pacific Select Variable
Annuity Separate Accounts. Each Variable Account is to invest exclusively in
shares of the Growth LT Series of the Pacific Select Fund.
2. The addition of the Growth LT Series to Pacific Select Fund was approved by
the Board of Trustees of the Fund on September 29, 1993. The objective of the
Growth LT Series is to seek long-term growth of capital in a manner consistent
with the preservation of capital.
3. The Board of Trustees of Pacific Select Fund also approved the appointment
of Janus Capital Corporation to serve as the portfolio manager of the Growth LT
Series.
Authorized by: /s/WILLIAM D. CVENGROS
William D. Cvengros Date: October 11, 1993
Vice-Chairman of the Board, Director
and Executive Vice President
Authorized by: /s/GLENN S. SCHAFER
Glenn S. Schafer Date: October 11, 1993
Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT 99.1(c)
Memorandum dated September 16, 1994
Authorizing Establishment of Equity and Bond
and Income Variable Accounts
<PAGE>
OFFICE MEMORANDUM
DATE September 16, 1994
TO Mr. Thomas C. Sutton and Mr. Glenn S. Schafer
FROM Ms. Diane N. Ledger
SUBJECT Authorization of the Establishment of the Equity, Bond and Income
Variable Accounts
We respectfully request that the following be authorized on behalf of Pacific
Mutual Life Insurance Company:
1. The establishment of two additional Variable Accounts within the Pacific
Select Variable Annuity Separate Account. Each Variable Account is to invest
exclusively in shares of each of the Equity and Bond and Income Series of
the Pacific Select Fund, respectively.
2. The addition of the Equity, and Bond and Income Series to the Pacific Select
Fund was approved by the Board of Trustees of the Fund on September 29,
1993. The objective of the Equity Series is to seek capital appreciation.
The objective of the Bond and Income Series is to seek a high level of
current income as is consistent with prudent investment management and
preservation of capital.
Authorized by: /s/GLENN S. SCHAFER
Glenn S. Schafer Date: September 16, 1994
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 99.1(d)
Memorandum Establishing Two New Variable Accounts -
Aggressive Equity and Emerging Markets Portfolios
<PAGE>
OFFICE MEMORANDUM [Logo of Pacific Mutual]
DATE February 8, 1996
TO Mr. Glenn S. Schafer
FROM Ms. Diane N. Ledger
SUBJECT Authorization of the Establishment of the Variable Accounts that will
each invest in corresponding underlying Emerging Markets and Aggressive
Equity Portfolios of Pacific Select Fund
The addition of the Emerging Markets Portfolio and Aggressive Equity Portfolio
to Pacific Select Fund was approved by the Board of Trustees of the Fund on
November 17, 1995. The objective of the Emerging Markets Portfolio is to seek
long-term growth of capital. The objective of the Aggressive Equity Portfolio
is to seek capital appreciation.
The Board of Trustees of Pacific Select Fund also approved the appointment of
Blairlogie Capital Management to serve as the Portfolio Manager of the Emerging
Markets Portfolio and Columbus Circle Investors to serve as the Portfolio
Manager of the Aggressive Equity Portfolio.
On behalf of Pacific Mutual Life Insurance Company, the following is hereby
authorized:
The establishment of two additional Variable accounts within each of the
Pacific Select, Pacific Select Exec, Pacific COLI, Pacific Select Variable
Annuity and Separate Account A Separate Accounts. Each of the Variable
Accounts is to invest exclusively in shares of its corresponding underlying
portfolio of the Pacific Select Fund.
Authorized by: /s/ GLENN S. SCHAFER Date: February 8, 1996
Glenn S. Schafer
President and Director
<PAGE>
EXHIBIT 99.3(a)
Distribution Agreement Between
Pacific Mutual and Pacific Equities Network ("PEN")
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made this 25th day of June, 1990, by and between Pacific Mutual Life
Insurance Company, a California company, ("Pacific Mutual") on its own behalf
and on behalf of the Pacific Select Variable Annuity 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 annuity
contracts ("Contracts") to commence after the effectiveness of the Registration
Statement relating thereto filed with the Securities and Exchange Commission on
Form N-4 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"); and
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 to 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 annuity contracts or insurance
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
annuity laws and any applicable blue sky laws of each state or other
jurisdiction in which such Contracts 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 annuity 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, retirement 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.
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 service 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 Procedures. PEN and Pacific Mutual agree to cooperate
fully in any 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
of 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 (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 agents, 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 700 Newport Center Drive, 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, at or at such other
address or to such individual as shall be specified by Pacific Mutual.
If any provisions of this Agreement shall be held or made invalid by a court
decision, statute rule or
<PAGE>
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
ATTEST: /s/AUDREY L. MILFS By: /s/TC SUTTON
Audrey L. Milfs Thomas C. Sutton
Secretary Chairman and Chief Executive Officer
PACIFIC EQUITIES NETWORK
By: /s/ARTHUR M. KESSELHAUT
Arthur M. Kesselhaut
President
WITNESS:
/s/DIANE N. LEDGER
Diane N. Ledger
Assistant Vice President
<PAGE>
EXHIBIT 99.3(b)
Form of Selling Agreement Between Pacific Mutual
and Pacific Equities Network ("PEN")
<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.
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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
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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.
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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.
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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.
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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
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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.
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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
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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:
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(Signature) (Signature)
Title: Title:
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Date: Date:
--------------------------------- -------------------------------
PACIFIC MUTUAL LIFE INSURANCE COMPANY -------------------------------------
(GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
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Date: Date:
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- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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SCHEDULE A
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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.
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REVISED SCHEDULE B
COMPENSATION SCHEDULE TO PACIFIC MUTUAL SELLING AGREEMENT
FOR PACIFIC SELECT VARIABLE ANNUITY INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
ACCUMULATION DEFERRED ANNUITY
CONTRACT FORM 90-53
EFFECTIVE DATES OF SCHEDULE
- ---------------------------
The effective date of this Revised Schedule B for Pacific Select Variable
Annuity Individual Flexible Premium Variable Accumulation Deferred Annuity
Contracts Form 90-53 ("Contract") is as follows: (a) with respect to the rules
of commissions paid under Option A and Option B, for Contracts solicited and
issued beginning July 11, 1994, and while this Revised Schedule B is in effect;
and (b) with respect to the ability of the registered representatives of a
Selling Broker-Dealer that elects both Option A and Option B to select either
Option A or Option B on a Contract by Contract basis, for Contracts solicited
and issued beginning August 1, 1994, and while this Schedule is in effect. All
compensation payable under this Schedule will be subject to the terms and
conditions contained herein when premium payments are accepted by Pacific
Mutual. Pursuant to Section VI.C of the Selling Agreement, submission of an
application for Contracts by the Selling Broker-Dealer or General Agent after
the effective date shall constitute agreement to the terms of Revised Schedule
B.
ELECTION OF SCHEDULE
- --------------------
The undersigned Selling Broker-Dealer may elect below the compensation schedule
under which commission payments will be based. Selling Broker-Dealer may elect
to be paid under Option A and/or Option B. If both Option A and Option B are
elected, compensation will be payable under the Option elected by the Registered
Representative. If the Registered Representative does not elect an Option for
compensation under an individual Contract, compensation will be paid under
default Option elected by Selling Broker-Dealer. If no Option is indicated
below, this Selling Agreement will be treated as if both Options were elected.
If no default Option is elected, Option B will be the default Option.
General Agent and/or Selling Broker-Dealer shall be paid compensation as
follows; (Check Option(s) elected)
Premium Commission Percentage
------- ---------------------
[ ] Option A: 6.00%
--------
[ ] Option B: 5.00% + 0.25% (4th - 19th quarters,
--------
inclusive)
1.00% Trail thereafter
Default Option:
--------------
[ ] Option A [ ] Option B
-------- --------
<PAGE>
NOTES
1. Commission Calculation: Commissions based on premium will be calculated
only on premium actually received and accepted by Pacific Mutual. Commissions
will be paid only on an earned basis.
2. Trail Commission: Under Option B, no trail commissions will be paid until
the end of the first Contract year. At that time, quarterly trail commissions
will be paid at the annual rate of 0.25% of the Contract's accumulated value
less any Contract debt at Contract quarter-end, beginning with the fourth
Contract quarter-end. After the Contract has been in effect for five years,
quarterly trail commissions will be paid at the annual rate of 1.00% of the
Contract's accumulated value less any Contract debt at Contract quarter-end,
beginning with the twentieth Contract quarter-end. Trail commissions will be
payable on the next commission cycle following each Contract quarter-end,
provided the Contract is in force on such commission cycle date.
3. Commission Rate Change: The commission rate on premium received will be
reduced by 0.3% for each year the annuitant's issue age exceeds age 75 (for
example, at issue age 80 the commission rate is 4.5% under Option A). If there
are joint annuitants, the younger annuitant's issue age will be used.
4. Compensation Payments: Compensation on initial premium will be due to the
General Agent and/or Selling Broker-Dealer at the time of issuance of the
Contract and for all other premium payments at the time of the receipt and
acceptance of premium by Pacific Mutual. The amount, if any, and the time of
payment of compensation on replacements, changes, exchanges and other special
cases and programs will be governed by Pacific Mutual's underwriting and
administrative rules then in effect. With respect to any Contract, or group of
Contracts, that either Pacific Mutual or Pacific Equities Network may, in its
sole discretion, determine to be a special case and for which at the time the
application is submitted, the initial purchase payment is greater than $1
million, Pacific Mutual and Pacific Equities Network may determine that the
commissions in this Revised Schedule B do not apply and establish an alternative
commission schedule for such Contract or group of Contracts.
5. Commission Chargeback: In the event that a Contract for which a commission
has been paid is surrendered by the Contract Owner, or is returned to Pacific
Equities Network or Pacific Mutual pursuant to the Free Look Right in the
Contract, or a premium for which commission has been paid is refunded by Pacific
Mutual, Pacific Equities Network will require reimbursement from General Agent
and/or Selling Broker-Dealer as follows:
. 100% if the event occurs during the first six months of the Contract; or
. 50% if the event occurs during the seventh through the twelfth month of the
Contract.
If the amount to be deducted exceeds compensation otherwise due, Selling Broker-
Dealer will promptly reimburse Pacific Equities Network before the next
commission cycle or within 10 business days from the date of mailing of a
written demand for reimbursement, whichever is later.
<PAGE>
Pacific Mutual and Pacific Equities Network reserve the right to terminate or
amend this Revised Schedule B by providing written notification to the Broker-
Dealer in accordance with Section VI.C of the Selling Agreement.
This Schedule shall be effective as of: _______________________________________.
Pacific Equities Network ____________________________________
(Selling Broker-Dealer)
By: /s/GERALD W ROBINSON
------------------------- By:____________________________________
(Signature) (Signature)
Title: President & CEO Title: ______________________________
-------------------------
Date: July 21, 1994 Date: ______________________________
-------------------------
Pacific Mutual Life Insurance Company ______________________________________
(General-Agent)
By: _________________________ By: ______________________________
Title: _________________________ Title: ______________________________
Date: _________________________ Date: ______________________________
________________________________________ ______________________________________
(General Agent) (General-Agent)
By: _________________________ By: ______________________________
Title: _________________________ Title: ______________________________
Date: _________________________ Date: ______________________________
<PAGE>
EXHIBIT 99.4(a)
Form of Individual Flexible Premium
Variable Accumulation Deferred Annuity Contract
Form 90-53
<PAGE>
[LOGO OF PACIFIC MUTUAL]
PACIFIC MUTUAL
LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ACCUMULATION DEFERRED ANNUITY CONTRACT
Investment Experience Reflected in Benefits
Variable and Fixed Accumulation Prior to Annuity Start Date; Fixed Annuity
Payments Thereafter
Death Benefit Proceeds Payable Prior to Annuity Start Date
Participating
READ YOUR CONTRACT CAREFULLY. This is a legal Contract between you, the Owner,
and us, Pacific Mutual Life Insurance Company, a mutual company.
We agree to pay the benefits of this Contract according to its provisions.
The consideration for this Contract is the application for it, a copy of which
is attached, and payment of the premiums.
Variable Account Accumulated Value may increase or decrease depending upon
Variable Account investment experience. There is no guaranteed Variable Account
Accumulated Value.
Contract loan value is less than one hundred percent (100%) of the Contract's
Accumulated Value.
Free Look Right - You may return this Contract within 10 days after you receive
it. To do so, mail it to us or our agent. This Contract will then be deemed
void from the beginning, no withdrawal charge will be imposed and we will
refund:
- any premium payment allocated to the Fixed Account; and
- any Variable Account Accumulated Value as of the Valuation Date we
receive the Contract; plus
- any Contract fees and Charges deducted from the Contract's Accumulated
Value in any Variable Account.
ST-43
Signed as our Home Office, 700 Newport Center Drive, Newport Beach, California
92660.
/s/THOMAS C. SUTTON /s/AUDREY L. MILFS
- ------------------------------------ ------------------------------
Chairman and Chief Executive Officer Secretary
Form 90-53
<PAGE>
TO OUR ILLINOIS POLICYOWNERS
At Pacific Mutual, we always strive to provide our policyowners with the best
products and services. Any business transaction, however, can be potentially
misunderstood and may end up as a complaint. Should you have a problem of that
nature, your local agent and agency will be glad to help you. You may also
contact:
Lee R. Wirthlin Consumer Services Section
Assistant Vice-President Department of Insurance
Pacific Mutual Life Insurance OR 320 W. Washington Street
700 Newport Center Drive Springfield, IL 62767
Newport Beach, CA 92660
11194
<PAGE>
CONTRACT SPECIFICATIONS
BASIC CONTRACT - INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
ACCUMULATION DEFERRED ANNUITY
ACCOUNT ALLOCATIONS AVAILABLE:
MONEY MARKET MULTI-STRATEGY GROWTH LT
MANAGED BOND INTERNATIONAL EQUITY INCOME
HIGH YIELD BOND GOVERNMENT SECURITIES EQUITY INDEX
BOND & INCOME EQUITY FIXED
AGGRESSIVE EQUITY EMERGING MARKETS
WITHDRAWAL CHARGE: AGE OF PREMIUM
IN CONTRACT YRS CHARGE PERCENT
1 6%
2 6%
3 5%
4 4%
5 3%
6 0%
ADMINISTRATIVE CHARGE: .00012500 OF THE UNLOANED ACCUMULATED VALUE.
MAINTENANCE FEE: $30.00 DEDUCTED ANNUALLY BEGINNING ON THE FIRST
CONTRACT YEAR
PAGE 3.0
CONTRACT NUMBER; VA96196500 CONTRACT DATE: 03-22-1996
ISSUE AGE AND SEX: 55 FEMALE ANNUITANT(S): TRUDY A GARDNER
INITIAL PREMIUM: $10,000.00 OWNER(S): TRUDY A GARDNER
ANNUITY START DATE: 09-17-2035
<PAGE>
VARIABLE ANNUITY CONTRACT
READ YOUR CONTRACT CAREFULLY
DEFINITIONS
PM, WE, OUR and US - refer to Pacific Mutual Life Insurance Company.
MONTHLY PAYMENT DATE - is the date each month on which certain contract charges
are deducted from the Accumulated Value. This day is shown on the Contract
Specifications pages. The first monthly payment date is the Contract Date.
HOME OFFICE - means PM's Variable Life Administration Department located at 700
Newport Center Drive, Newport Beach, California 92660. Mailing address: 700
Newport Center Drive, P.O. Box 7500, Newport Beach, California 92658-7500.
YOU, YOUR or OWNER - refers to the owner of this Contract.
CONTRACT DATE - is shown on the Contract Specifications pages. Contract Years,
Quarters and Months and quarterly, semi-annual and annual anniversaries are
measured from this date.
CONTRACT YEARS, QUARTERS, MONTHS - are twelve-month periods, three-month
periods, and one-month periods measured from the Contract Date.
ACCUMULATION PERIOD - The period commencing on the Contract Date and ending on
the Annuity Start Date or, if earlier, when the Contract is terminated, either
through a Full Withdrawal, payment of charges, or payment of the death benefit
proceeds.
AGE - means the Owner's or Annuitant's Age nearest birthday, as applicable, as
of the Contract Date, increased by the number of complete Contract Years
elapsed.
ANNUITANT - is the person you name to receive the periodic annuity payments. If
you designate two persons as Joint Annuitants, unless otherwise indicated,
Annuitant means the Joint Annuitants or the survivor Annuitant, whichever
applies. You may change the Annuitant if you send us written notice before the
Annuity Start Date. However, you should do so only on the advice of your tax
adviser, as such event may result in special tax consequences.
BENEFICIARY - is the person you name to receive the death benefit proceeds, if
any, payable on the death of the Annuitant prior to the Annuity Start Date or
any remaining guaranteed annuity benefits after the Annuity Start Date. If no
Beneficiary is named or the Beneficiary does not survive the Annuitant, then the
Annuitant's estate shall have the rights of the Beneficiary. If there is a
surviving Joint Annuitant, the death benefit proceeds are payable only on the
death of the surviving Joint Annuitant. If there is a surviving Contingent
Annuitant and the Annuitant dies prior to the Annuity Start Date, the Contingent
Annuitant replaces the Annuitant and death benefit proceeds are payable only on
the death of the Contingent Annuitant.
CONTINGENT ANNUITANT - If there is a Contingent Annuitant, that person becomes
the Annuitant upon the Annuitant's death, if death occurs before the Annuity
Start Date.
CONTINGENT OWNER - If there is a Contingent Owner, that person becomes the Owner
if you die before the Annuity Start Date.
ANNUITY START DATE - is the date you choose to have us begin periodic annuity
payments to the Annuitant. It is shown on the Contract Specifications pages.
If you do not choose an Annuity Start Date,
<PAGE>
we will make the Annuity Start Date the Contract Anniversary nearest the
Annuitant's 85th birthday. If there are Joint Annuitants, we will use the 85th
birthday of the younger Joint Annuitant. You may change the Annuity start Date
by sending us written notice before the Annuity Start Date then in effect.
However, in no event can the Annuity Start Date be later than the first day of
the month following the 95th birthday of the Annuitant or the younger Joint
Annuitant, if applicable.
OWNER - owns and controls this Contract and can exercise all contractual rights
while the Annuitant is living. You may change the Owner by sending us written
notice that is satisfactory to us. If there are Joint Owners, Owner means Joint
Owners, unless otherwise indicated.
OWNER BENEFICIARY - the person you name (other than a Joint or Contingent Owner)
to receive the death benefit proceeds, if any, if the Owner dies before the
Annuitant and before the Annuity Start Date, if living; otherwise, the Owner's
estate.
WRITTEN NOTICE - all changes or requests must be in writing and must be received
at our Home Office. Whenever written notice is required, send it to our Variable
Life Administration Department at its mailing address. The address is shown in
the Definitions Section under Home Office.
GENERAL PROVISIONS
ENTIRE CONTRACT - This Contract is between the Owner and PM. This Contract, the
attached application, all subsequent applications to change the Contract, and
any riders and endorsements make up the entire Contract. All statements made in
the application are representations and not warranties. This Contract may not
be modified, nor may any of our rights or requirements be waived, except in
writing by our President or Secretary.
INCONTESTABILITY - This Contract is not contestable.
MISSTATEMENTS - If the Age or sex of the Annuitant or the Age of the Owner is
misstated in the application, any benefits provided by this Contract prior to
the Annuity Start Date and the periodic annuity payments will be determined
using the correct Age and sex, if applicable. If the age or sex, if applicable,
is corrected after annuity payments begin, we will:
- if underpayment has occurred, pay the full amount due with the next
scheduled payment;
- if overpayment has occurred, deduct the amount due us from future
payments, spread equally over the remaining payments.
BASIS OF VALUES - A detailed statement showing how values are determined has
been filed with the state insurance departments. All values and reserves are at
least equal to those required by the laws of the state in which this Contract is
delivered.
DIVIDENDS - We do not expect dividends to become payable. At the end or each
Contract Year, we will determine your dividend, if any. You may choose to have
it paid in cash or added to your Accumulated Value. If you do not make a
choice, we will add it to your Accumulated Value. We will allocate any dividend
added to Accumulated Value in accordance with your most recent premium
allocation instructions, unless you instruct otherwise, subject to the five
investment alternatives limitation. You should consult with your tax adviser
before making any election.
ASSIGNMENT - You may assign all rights and benefits under this Contract before
the Annuity Start Date. We are not bound by any assignment until we have
received written notice satisfactory to us. We are not responsible for the
validity of any assignment. If the Contract has been absolutely assigned, the
assignee
<PAGE>
becomes the Owner. The person receiving the Contract as security does not
become the Owner. You should consult with your tax adviser before taking any
action.
REPORTS - A report will be mailed to you at your last known address at the end
of each Contract Quarter prior to the Annuity Start Date. This report will
include the following information for the Contract Quarter.
- - the Accumulated Value;
- - the Full Withdrawal Value;
- - any existing Contract Debt;
- - transactions that occurred during the Contract Quarter; 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 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 required by federal securities
law.
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
Contract to comply with, or give you the benefit of, any federal or state
statute, rule, or regulation, including, but not limited to, requirements for
annuity contracts under the Internal Revenue Code or that of any state.
We will provide you with a copy of any such change, and will also file such a
change with the insurance supervisory official of the state in which this
Contract is delivered.
WHEN THIS CONTRACT ENDS - This Contract ends when any of the following events
occur:
- You request that this Contract end; or
- If the Contract's Full Withdrawal Value is zero; or
- Payment of the death benefit proceeds has occurred.
PREMIUMS
PREMIUMS - This Contract will not be in force until the initial premium is paid.
Additional premium payments must be at least $250. Premiums may be paid at any
time prior to the Annuity Start Date, subject to the premium limitations shown
below. Premiums are payable either at our Home Office or through an Agent of
PM. Checks should be made payable to Pacific Mutual Life Insurance Company. On
written request a premium receipt signed by an officer of PM will be provided
after payment.
PREMIUM ALLOCATION - During the Free Look Period, premiums received by us at our
Home Office will be allocated to the Money Market Variable Account. We will
allocate the Accumulated Value in the Money Market Variable Account to the
Variable Accounts and Fixed Account fifteen days after the Contract is issued,
according to the premium allocation specified in the application or your most
recent instructions received by us, if any.
<PAGE>
Upon written notice, you may change the premium allocation. Subsequent premiums
credited to your Contract 15 or more days after the Contract is issued will be
allocated to the Fixed and Variable Accounts according to your most recent
instructions, subject to the following. The Accumulated Value may be allocated
to no more than five of the Fixed and Variable Accounts. If we receive a
premium from you and your most recent allocation instructions would violate this
requirement, we will allocate the premium to the Fixed and Variable Accounts in
the same proportion as the Accumulated Value in those Accounts.
PREMIUM LIMITATIONS - Our prior approval is required before we will accept a
premium if, as a result, the sum of all premiums received for the Contract would
exceed $1,000,000.
Also, our prior approval is required to allocate a premium to the Fixed Account
if immediately after the premium allocation, the Accumulated Value in the Fixed
Account would equal or exceed $250,000.
DETERMINATION OF VALUES
ACCUMULATED VALUE - The Accumulated Value on any Valuation Date is the sum of
your Contract's Accumulated Value in the Fixed and Variable Accounts plus the
amount set aside in the Loan Account to secure any Contract Debt on that date.
LOAN ACCOUNT - The amount set aside to secure any Contract Debt in the Loan
Account on each Contract Anniversary is equal to the amount of debt. During
each Contract Year, the amount in the Loan Account on any Valuation 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 including withdrawal amounts for repayment,
since the prior anniversary increased by interest.
FIXED ACCOUNT - The Accumulated Value in the Fixed Account on any Valuation Date
is:
- the Accumulated Value in the Fixed Account on the prior Monthly Payment
Date increased by interest;
- minus any maintenance fee assessed against the Fixed Account.
- plus the amount of any premiums received and allocated to the Fixed
Account since the last Monthly Payment Date increased by interest;
- minus any monthly deduction assessed against the Fixed Account, and
other deductions due, if any, that are assessed against the Fixed
Account increased by interest.
- minus any deductions caused by withdrawals or transfers 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 transfers of Accumulated Value 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 unit of measure used to calculate the value of
your allocation in a Variable Account during the
<PAGE>
Accumulation Period. We credit your Contract with accumulation units in each
Variable Account as a result of:
- any premiums received and 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 of Accumulated Value from the Variable Account, including
transfers to the Loan Account;
- any deductions caused by withdrawals from the Variable Account;
- the monthly deduction and other deductions due, if any, that are
assessed against the Variable Account; and
- any maintenance fee 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
Accumulation unit value of the affected Variable Account. The number of
Accumulation units in the Variable Account will change only if Accumulation
units are debited or credited for the transactions above.
The Accumulation 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 the Accumulation unit value.
The initial Accumulation unit value of each Variable Account was $10. To
calculate the Accumulation unit value of a Variable Account on any Valuation
Date, we divide the value of the Variable Account's net assets by the total
number of Accumulation units credited to the Variable Account on that date.
To determine the value of the Variable Account's net assets, we take into
account:
- the investment performance of the Variable Account;
- any dividends or distributions paid to the Variable Account;
- the daily Mortality and Expense Risk charge, equal to .00003424658
(1.25% annually) multiplied by the Accumulated Value in the Variable
Account, for each calendar day on or between Valuation Dates; and
- charges, if any, that may be assessed by us for income taxed
attributable to the operation of the Variable Account.
A Valuation Date is each day required by applicable law and currently includes
each day the New York Stock Exchange is open together with each day Pacific
Mutual is normally open for business.
To determine your Accumulated Value in each Variable Account, we multiply the
number of your Accumulation units in the Variable Account by the Accumulation
unit value of such Account.
<PAGE>
INTEREST - We will credit interest on the Accumulated Value in the Fixed Account
at a rate not less than .3273% per month, compounded monthly. This is
equivalent to 4% annually. At our discretion, we may credit a higher rate of
interest on the Fixed Account. If we declare a higher rate, premiums allocated
or transfers made to the Fixed Account during the time the higher rate is in
effect are guaranteed to earn that rate until the end of the Contract Year.
Thereafter, higher rates that may be declared on such premiums or transfers and
the interest thereon will be guaranteed for at least one year.
We will credit interest on the amounts in the loan Account at the Loan Credited
Interest rate. The effective annual Loan Credited Interest rate is equal to the
Loan Interest Rate charged minus 1.75%.
TRANSFER AND WITHDRAWAL BENEFITS
TRANSFERS - While the Annuitant is living and your Contract is in force prior to
the Annuity Start Date, you may, upon written notice, transfer your Accumulated
Value, or a part of it, among the Fixed and Variable Accounts subject to the
following:
Only one transfer from the Fixed Account may be made in any twelve-month
period. 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 Contract Month preceding each
Contract Anniversary. After each transfer, Accumulated Value may be
allocated to no more than five of the Fixed and Variable Accounts. No
transfer may be made until 15 days after the Contract is issued.
Also, our prior approval is required to allocate a transfer to the Fixed
Account if, immediately after the transfer, the Accumulated Value of the
Fixed Account would equal or exceed $250,000.
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.
BAILOUT PROVISION - The first time the Fixed Account interest rate credited on
any premium or transfer allocated to the Fixed Account falls 1% or more below
the initial guaranteed rate for that premium or transfer, the limitations on
transfers from the Fixed Account will be waived for 60 days for that portion of
the Accumulated Value attributable to that premium or transfer.
WITHDRAWAL BENEFITS - During the Accumulation Period and after the Free Look
Period, you may request a Full or Partial Withdrawal from your Accumulated Value
while the Annuitant is living, and while your Contract is in force by sending us
written notice. If you make a Full Withdrawal, this Contract must accompany
your written request. If the Contract is lost, we require a signed lost
Contract form. If you make a Full Withdrawal, this Contract will terminate and
any obligation we have under this Contract will be satisfied. If you make a
Partial Withdrawal, the amount withdrawn must be at least $500 and the remaining
Full Withdrawal Value must be at least $500. Any time a withdrawal is made, we
will deduct the amount of the withdrawal plus any applicable Withdrawal Charge
from the Accumulated Value proportionately to your Accumulated Value in each
Variable Account and the Fixed Account, unless otherwise requested by you.
Withdrawal proceeds less any charge for premium taxed, may be applied towards an
Annuity Option under this Contract or towards the purchase of any other annuity
option we then offer.
FULL WITHDRAWAL VALUE - This is the amount that will be paid upon a Full
Withdrawal. The Full Withdrawal Value is the Accumulated value less any
maintenance fee due, less any Withdrawal Charge, if any, and less any amount in
the Loan Account.
<PAGE>
CONTRACT LOANS
CONTRACT LOANS - If your Contract is issued on a qualified basis under Section
401 of the Internal Revenue Code and if loans are allowed under your qualified
plan, you may obtain loans upon written notice after the first Contract Year and
prior to the Annuity Start Date, while the Annuitant is living and this Contract
is in force, on the sole security of the amount in the Loan Account for this
Contract.
AMOUNT AVAILABLE - The amount available for a loan will depend on your
Contract's Accumulated Value. If the Accumulated Value is less than or equal to
$20,000, the maximum Loan Account valance immediately after any loan may not
exceed the lesser of 80% of the Contract's Accumulated value or $10,000. If the
Accumulated Value is greater than $20,000, the maximum Loan Account balance
immediately after any loan may not exceed the lesser of 50% of the Contract's
Accumulated Value, or $50,000 reduced by the excess of (a) the highest
outstanding Contract Debt within the preceding 12 month period ending on the
date the loan is made over (b) the outstanding Contract Debt on the date the
loan is effective. The amount of the loan must be at least $2,000.
LOAN INTEREST RATE - Except as described in the next paragraph, the Loan
Interest Rate is the higher of:
- the Moody's Corporate Bond Yield Average-Monthly Average Corporates, as
published by Moody's Investors Service, Inc., or its successor, for the
calendar month ending two months before the month in which each Contract
Anniversary occurs; or
- 5%.
The Loan Interest Rate applicable to your Contract will be determined annually
and will be effective for 12 months from each Contract Anniversary. Loan
Interest will accrued daily.
- The interest rate we charge may be increased if the Loan Interest Rate
increased by 1/2% or more from that charges in the preceding Contract
Year.
- The interest rate we charge will be decreased if the Loan Interest Rate
decreases by 1/2% or more from that charge in the preceding Contract
Year.
- Any change in the interest rate will be effective on the Contract
Anniversary.
- The revised interest rate will be charged on the entire outstanding loan
during the Contract Year.
We will notify you of the current Loan Interest Rate on your Contract when:
- you make a loan on your Contract; or
- we increase the interest rate on any existing Contract Debt.
In the event that the Moody's Corporate Bond Yield Average-Monthly Average
Corporates is no longer published, we will use a substantially similar average
as established by regulation within the state in which this Contract is
delivered.
LOAN ACCOUNT - When a loan is taken, an amount equal to the loan amount is
transferred out of the Accumulated Value in the Fixed and Variable Accounts int
o 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, up to the amount available. We will credit interest
monthly on amounts in the Loan
<PAGE>
Account at the Loan Credited Interest rate. The effective annual Loan Credited
Interest rate is equal to the Loan Interest Rate charged minus 1.75%. On each
Contract Anniversary, the interest credited will be transferred from the Loan
Account to the Fixed and Variable Accounts according to your most recent premium
allocation instructions.
REPAYMENT - Loans must be repaid within 5 years and before the Annuity Start
Date, except loans used to purchase the principal residence of the Annuitant
must be repaid within 20 years and before the Annuity Start Date.
Repayment of loan principal plus accrued interest is required each Contract
Quarter. Loan repayments will be due on the Contract Quarterly Anniversary next
following the date the loan is effective and on each succeeding Contract
Quarterly Anniversary thereafter. Repayment must be received at our Home office
before the end of the Contract Month in which the due date falls.
If we do not receive the repayment before the end of the Contract Month in which
the due date falls, a Partial Withdrawal equal to the repayment amount due and
any applicable Withdrawal Charge will be made from the Contract and paid to us.
The date of the partial Withdrawal will be the Monthly Payment Date next
following the last day of the Contract Month in which the repayment was due.
The portion of the Partial Withdrawal equal to the unpaid principal amount due
will be deducted from the Loan Account. The portion equal to the interest due
and any Withdrawal Charge imposed will be deducted from the Accumulated Value in
the Variable Accounts and Fixed Account on a proportionate basis.
If we receive a repayment in excess of a billed amount, the excess will be
applied first towards the principal portion of the outstanding loan and then to
any accrued interest. Payments received by us which are less than the billed
amount will be returned to you.
Prepayment of the entire outstanding Contract Debt plus any interest due may be
made at any time prior to the Annuity Start Date and while this Contract is in
force. At the time of the prepayment, we will bill you for any interest due.
We will consider the loan paid when this interest is also paid. 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 outstanding will be first
considered a loan repayment, unless you tell us in writing it is a premium
payment.
DEATH BENEFITS
DEATH OF ANNUITANT - We will pay the death benefit proceeds to the Beneficiary
if the Annuitant dies prior to the Annuity Start Date unless there is a
surviving Joint or Contingent Annuitant. In such event, the surviving Joint or
Contingent Annuitant becomes the Annuitant. If the Annuitant dies at or after
Age 76, the death benefit will be the Accumulated Value as of the Valuation Date
due proof of death and instructions regarding payment are received by PM. If
the Annuitant dies prior to Age 86, the death benefit will be the greater of (a)
the Accumulated Value as of the Valuation Date due proof of death and
instructions regarding payment are received by PM; or (b) the total premium paid
into the Contract less any deductions caused by previous partial withdrawals.
No Withdrawal Charge will be imposed. The death benefit proceeds will be the
death benefit reduced by the amount in the Loan Account, if any. Payment will
be made when we receive acceptable proof of death and instructions regarding
payment at our Home Office. Instead of a lump sum payment, the amount of the
death benefit proceeds, less any applicable charge for premium taxes, may be
applied towards an Annuity Option under this Contract or towards the purchase of
any other annuity option we then offer.
DEATH OF OWNER - If the Owner dies while the Annuitant is living and prior to
the Annuity Start Date, we will pay the death benefit proceeds to the surviving
Joint or Contingent Owner, if any. If there is no
<PAGE>
surviving Joint or Contingent Owner, the death benefit proceeds will be paid to
the Owner Beneficiary, if living, and otherwise to the Owner's estate. If the
Owner is not also the Annuitant, then, in the event the deaths of the Owner and
Annuitant are under circumstances where it cannot be determined who died first,
payment will be made to the Beneficiary, if living; otherwise to the Annuitant's
estate. If the Owner and the Annuitant are the same, payment will be made to
the Beneficiary, if living; otherwise to the Annuitant's estate.
The death benefit will be as stated above, except that the deceased Owner's Age,
instead of the Annuitant's will be used to determine the death benefit.
If the spouse of the deceased Owner is the Owner Beneficiary, or is the sole
surviving Joint or Contingent Owner, the spouse may continue this Contract in
force until the earliest of (a) the spouse's death, (b) the death of the
annuitant; or (c) the Annuity Start Date.
CHARGES
MORTALITY AND EXPENSE RISK CHARGE - We deduct daily from the net assets of each
Variable Account a Mortality and Expense Risk Charge equal to an annual rate of
1.25% of the average daily net assets. The Mortality and Expense Risk Charge is
to compensate us for the risk we assume that mortality and expenses will be
greater than estimated. This Charge is guaranteed by us and may not be
increased.
MONTHLY DEDUCTION - A Monthly Deduction is due on each Monthly Payment Date
prior to the Annuity Start Date and is equal to the sum of the following items:
- the monthly Administrative Charge, if any; and
- the monthly charge for any rider benefits.
The Monthly Deduction will be charged to each Variable Account and the Fixed
Account in proportion to the Accumulated value in these accounts on each Monthly
Payment Date.
ADMINISTRATIVE CHARGE - Beginning on the Contract Date and monthly thereafter
during the Accumulation period, there will be a charge equal to the
Administrative Charge multiplied by the Accumulated Value reduced by any
Contract Debt and any monthly charge for rider benefits. The Administrative
Charge is shown on the Contract Specifications pages. We reserve the right to
impose an Administrative Charge on any Contract on which it is currently waived,
and to increase the charge, but in no event will the Administrative Charge
imposed exceed the annual rate of 0.15%.
MAINTENANCE FEE - The maintenance fee, if any, will be deducted on each Contract
Anniversary, proportionately to the Accumulated Value in each Variable Account
and the Fixed Account during the Accumulation Period. At the time of any Full
Withdrawal or annuitization, the fee will be prorated for the portion of the
Contract Year that the Contract was in force. The annual maintenance fee is
shown on the Contract Specifications pages. We reserve the right to impose this
maintenance fee on any Contract on which it is currently waived, but in no event
will the annual fee exceed $30.00.
WITHDRAWAL CHARGE - No sales charges are deducted from the premium payments.
However a Withdrawal Charge, when applicable, may be assessed at the time of a
Partial or Full Withdrawal and, under certain instances, upon annuitization.
The amount of the Withdrawal Charge and when it is assessed is discussed below:
1. Order of withdrawal: To calculate the Withdrawal Charge, withdrawal
amounts will be applied to premiums in order the premiums are received.
Once all premiums have been
<PAGE>
deemed withdrawn, additional amounts withdrawn will be applied to the
remaining Accumulated Value.
2. Free withdrawal amount: Starting with the second Contract Year, the
first withdrawal in each Contract Year of up to 10% of the sum of the
premiums paid during the current and the preceding four Contract Years
may be withdrawn without imposition of the Withdrawal Charge. This free
withdrawal privilege is noncumulative.
The amount of the Withdrawal Charge varies according to the number of Contract
Years each premium deemed withdrawn has remained credited to the Contract. To
determine the Age of the premium, the premium is considered Age 1 in the
Contract Year the premium is received and increases in Age each Contract
Anniversary thereafter. The Withdrawal Charge percentages for each Age applied
to any premiums deemed withdrawn are shown on the Contract Specifications pages.
No charge is assessed on amounts withdrawn applied to premium payments credited
to the Contract over five Contract Years.
If a Full Withdrawal is requested, or upon annuitization except as described
below, the Contract's Accumulated Value including any amount in the Loan
Account, less any maintenance fee due, will be considered in determining any
Withdrawal Charge that may be assessed.
The amount of the withdrawal proceeds and the Withdrawal Charge, if any, will be
allocated proportionately to the Accumulated Value in each Variable Account and
the Fixed Account unless otherwise requested by you.
No Withdrawal Charge will be imposed in the event of death. Upon annuitization,
a Charge may be imposed; however, no Withdrawal Charge will be imposed after the
first two Contract Years if:
- an Annuity Option under the Contract is elected and the annuity period
is five years or longer; or
- proceeds are applied to purchase any other annuity option then offered
by us and the annuity period is five years or longer.
In no event will the Withdrawal Charge assessed, when added to prior Withdrawal
Charges, ever exceed 6% of the total premiums paid.
PREMIUM TAX CHARGE - If applicable, any charge for premium taxes that a state or
local government charges us which is not refundable, will be deducted from your
Accumulated Value on the Annuity Start Date or if you request a Full Withdrawal.
Premium taxes currently range from 0% to 3%, but may be changed by a government
entity. We reserve the right to deduct premium taxes when due.
DELAY OF PAYMENTS
VARIABLE ACCOUNTS - We will pay death benefit proceeds, Full and Partial
Withdrawal proceeds, loan amounts, and proceeds on the Annuity Start Date based
on Accumulated Value in 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
payment or transfer.
However, we may postpone the processing 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
<PAGE>
- 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 assets; or
- The SEC by order permits postponement for the protection of Contract
Owners.
FIXED ACCOUNT - As to amounts allocated to the Fixed Account, we may defer
payment of any Full or Partial Withdrawal proceeds or loan amounts, or defer
transfers from the Fixed Account for up to six months after we receive your
written request for it. We will credit interest, at a rate of at least 4%
annually, on any withdrawal proceeds or loan amounts derived from the Fixed
Account that we defer for 30 days or more. However, we will not defer payment of
any such amounts if they are to be used to pay premiums on any policies issued
by PM.
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 Contract and other variable annuity contracts. Assets may be put
in our Separate Account for other purposes, but not to support contracts other
than variable annuity contracts.
The assets of our Separate Account are our property. The portion of its assets
equal to the reserves and other Contract 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 Contract are general corporate obligations of PM. 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 Contract Specifications pages. The allocations
that you initially chose are shown on the copy of the application attached to
this Contract. 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.
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, boar or
other group;
<PAGE>
- restrict or eliminate any voting rights of Contract 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 Contract 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 the
approval of the insurance Commissioner in the State of California and without
following the filing and other procedures established by insurance regulators of
the state of issue, with whom the approval process is on file.
ANNUITY BENEFITS
If the Annuitant is living while this Contract is in force on the Annuity Start
Date, we will begin making periodic annuity payments to the Annuitant. We will
make these payments under the Annuity Option chosen by you. You may choose or
change an Annuity Option by making a written request at least 30 days prior to
the Annuity Start Date. Unless you have chosen otherwise, we will make payments
under Option 1 with payments certain for 10 years if a single Annuitant is
named. If Joint Annuitants are named, a joint and 50% last survivor annuity
under Option 3 will apply.
Before we pay any annuity benefits, we require the return of this Contract. If
the Contract is lost, we require a signed lost Contract form.
FREQUENCY - You choose the frequency of the annuity payments. This may be
monthly, quarterly, semi-annually or annually. If we do not receive written
notice from you, the payments will be made monthly. The amount of each payment
must be at least $50.00 we will change the frequency if it is less.
We may require proof that the payee is alive prior to making any payment. We
may also require proof of the payee's birthdate and sex, unless this Contract is
issued on a unisex basis, before making any payment under Options 1, 2 and 3.
While the Contrast is in force and before the Annuity Start Date, you may choose
an Annuity Option for the payment of death benefit proceeds. If, at the time of
the Annuitant's or Owner's death, no option has been chosen for paying the death
benefit proceeds, the Beneficiary, or Joint or Contingent Owner, or Owner
Beneficiary, as applicable, may choose an Annuity Option. You may also elect an
Annuity Option for payment of Partial Withdrawal or Full Withdrawal proceeds.
The proceeds, less any applicable charge for premium taxes, may also be used to
purchase any other annuity option then offered by us. We reserve the right to
pay any proceeds under the Contract in a lump sum if the proceeds are less than
$10,000.
Any proceeds applied towards an Annuity Option under the Contract, or any
annuity option then offered by us, will be transferred to our general account.
The general account contains all of our assets other than those allocated to the
Separate Account or to any other separate account of PM.
OPTION 1 - LIFE INCOME WITH GUARANTEED PAYMENT PERIOD - Proceeds may be applied
to provide payments in equal installments as long as the payee lives, with a
guaranteed payment period of 10 or 20 years, as elected. If the payee dies
during the guaranteed period chosen, payments will continue to be made to the
Beneficiary until the end of the period. The amount of the income will be based
on the payee's
<PAGE>
Age and sex, unless unisex rates are applicable, and our purchase rates then in
effect. However, the monthly income purchased per $1000 will not be less than
that shown in the following table:
<TABLE>
<CAPTION>
Payee's Age on
Birthday
Nearest Annuity Life 10 Years Certain Life 20 Years Certain
Start Date Male Female Unisex Male Female Unisex
<S> <C> <C> <C> <C> <C> <C>
30 or less 3.90 3.76 3.88 3.88 3.75 3.86
31 3.93 3.78 3.90 3.91 3.77 3.88
32 3.96 3.81 3.93 3.94 3.80 3.91
33 3.99 3.83 3.96 3.97 3.82 3.94
34 4.02 3.86 3.99 3.99 3.84 3.97
35 4.06 3.88 4.02 4.03 3.87 4.00
36 4.09 3.91 4.06 4.06 3.89 4.03
37 4.13 3.94 4.09 4.09 3.92 4.06
38 4.17 3.97 4.13 4.12 3.95 4.09
39 4.21 4.00 4.17 4.16 3.98 4.13
40 4.25 4.03 4.21 4.20 4.01 4.16
41 4.30 4.07 4.25 4.24 4.04 4.20
42 4.34 4.10 4.30 4.28 4.07 4.24
43 4.39 4.14 4.35 4.32 4.11 4.28
44 4.45 4.18 4.40 4.36 4.15 4.32
45 4.50 4.23 4.45 4.41 4.19 4.36
46 4.56 4.27 4.50 4.45 4.23 4.41
47 4.61 4.32 4.56 4.50 4.27 4.46
48 4.68 4.37 4.62 4.55 4.31 4.50
49 4.74 4.42 4.68 4.60 4.36 4.55
50 4.81 4.48 4.74 4.65 4.40 4.61
51 4.88 4.53 4.81 4.71 4.45 4.66
52 4.95 4.59 4.88 4.76 4.50 4.71
53 5.03 4.66 4.96 4.82 4.56 4.77
54 5.11 4.73 5.04 4.88 4.61 4.83
55 5.20 4.80 5.12 4.94 4.67 4.89
56 5.29 4.87 5.21 5.00 4.73 4.95
57 5.38 4.95 5.30 5.06 4.79 5.01
58 5.49 5.04 5.40 5.12 4.85 5.07
59 5.59 5.13 5.50 5.18 4.92 5.13
60 5.71 5.22 5.61 5.24 4.98 5.20
61 5.82 5.32 5.73 5.31 5.05 5.26
62 5.95 5.42 5.85 5.37 5.12 5.32
63 6.08 5.54 5.97 5.43 5.18 5.38
64 6.22 5.65 6.11 5.48 5.25 5.44
65 6.36 5.78 6.25 5.54 5.32 5.50
66 6.50 5.91 6.39 5.59 5.39 5.56
67 6.66 6.04 6.54 5.64 5.45 5.61
68 6.82 6.19 6.70 5.69 5.52 5.66
69 6.98 6.34 6.86 5.73 5.58 5.71
70 7.14 6.50 7.02 5.77 5.63 5.75
71 7.31 6.67 7.19 5.81 5.69 5.79
72 7.48 6.85 7.37 5.84 5.74 5.82
73 7.66 7.03 7.54 5.87 5.78 5.85
74 7.83 7.22 7.72 5.89 5.82 5.88
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Payee's Age on
Birthday
Nearest Annuity Life 10 Years Certain Life 20 Years Certain
Start Date Male Female Unisex Male Female Unisex
<S> <C> <C> <C> <C> <C> <C>
75 8.01 7.41 7.90 5.91 5.85 5.90
76 8.18 7.60 8.07 5.93 5.88 5.92
77 8.35 7.80 8.25 5.95 5.91 5.94
78 8.51 8.00 8.42 5.96 5.93 5.96
79 8.67 8.20 8.58 5.97 5.95 5.97
80 8.82 8.39 8.74 5.98 5.96 5.98
81 8.96 5.57 8.89 5.99 5.97 5.98
82 9.09 8.75 9.03 5.99 5.98 5.99
83 9.21 8.92 9.16 5.99 5.99 5.99
84 9.33 9.07 9.28 6.00 5.99 6.00
85 or more 9.43 9.21 9.39 6.00 6.00 6.00
</TABLE>
OPTION 2 - JOINT AND SURVIVOR - Proceeds may be applied to provide payments in
equal installments during the lifetime of the primary Annuitant and, after the
death of the primary Annuitant, in installments equal to 50%, 66-2/3%, or 100%
(as specified in the election) of the original payment to the secondary
Annuitant named in the election if and so long as such secondary Annuitant
lives. The amount of the income will be based on the Age and sex of both
Annuitants unless unisex rates are applicable, and our purchase rates then in
effect. However, the monthly income purchased per $1,000 will not be less than
that shown in the following table. The table shows monthly income amounts for
various five-year Age intervals and is based upon election of the 50%
survivorship payment option. Monthly payments for Ages, sex combinations, and
percentages not shown are available upon request.
<TABLE>
<CAPTION>
Male Age
(Primary Annuitant)
60 65 70 75 80
<S> <C> <C> <C> <C> <C> <C>
60 5.28 5.68 6.14 6.66 7.20
65 5.42 5.89 6.44 7.05 7.70
Female Age 70 5.55 6.10 6.75 7.50 8.31
75 5.66 6.28 7.06 7.97 9.00
80 5.74 6.43 7.32 8.42 9.72
<CAPTION>
Unisex Age
(Primary Annuitant)
60 65 70 75 80
<S> <C> <C> <C> <C> <C> <C>
60 5.30 5.75 6.27 6.85 7.48
65 5.43 5.94 6.54 7.24 8.01
Unisex Age 70 5.53 6.11 6.82 7.66 8.61
75 5.61 6.25 7.06 8.06 9.23
80 5.66 6.35 7.25 8.41 9.83
</TABLE>
OPTION 3 - JOINT AND LAST SURVIVOR - Proceeds may be applied to provide payments
in equal installments as long as both Joint Annuitants are living, with the
installment payments being equal to 50%, 66-2/3%, or 100% (as specified in the
election) of the original payment after one of the Joint Annuitants dies.
Payments will continue as long as the surviving Annuitant lives. The amount of
the income will be based on the age and sex of the Joint Annuitants, unless
unisex rates are applicable, and our purchase rates then in effect. However, the
monthly income purchased per $1,000 will not be less than shown in the following
table. The table shows monthly income amount for various five-year Age
intervals and is based upon election of the 50% survivorship payment option.
Monthly payments for Ages, sex combinations and percentages not shown are
available upon request.
<PAGE>
<TABLE>
<CAPTION>
Male Age
60 65 70 75 80
<S> <C> <C> <C> <C> <C> <C>
60 5.57 5.91 6.32 6.78 7.29
65 5.90 6.28 6.74 7.28 7.87
Female Age 70 6.31 6.75 7.29 7.91 8.62
75 6.82 7.34 7.98 8.74 9.60
80 7.43 8.05 8.83 9.77 10.86
<CAPTION>
Unisex Age
60 65 70 75 80
<S> <C> <C> <C> <C> <C> <C>
60 5.75 6.12 6.56 7.07 7.64
65 6.12 6.53 7.03 7.63 8.30
Unisex Age 70 6.56 7.03 7.62 8.32 9.13
75 7.07 7.63 8.32 9.17 10.15
80 7.64 8.30 9.13 10.15 11.38
</TABLE>
OPTION 4 - FIXED PAYMENT FOR SPECIFIED PERIOD - Proceeds may be applied to
provide payments in equal installments for a specified period. If the payee
dies during the specified period, the discounted value of the remaining unpaid
payments based on the interest rate that we use to determine the amount of each
payment, will be paid to the Beneficiary. The amount of the income will be
based on the period elected and our purchase rates then in effect. However, the
monthly income purchased per $1,000 will not be less than that shown in the
following table:
<TABLE>
<CAPTION>
FIXED FIXED FIXED FIXED
PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY PERIOD MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME YEARS INCOME
<S> <C> <C> <C> <C> <C> <C> <C>
3 29.40 10 10.06 17 6.71 24 5.35
4 22.47 11 9.31 18 6.44 25 5.22
5 18.32 12 8.69 19 6.21 26 5.10
6 15.56 13 8.17 20 6.00 27 5.00
7 13.59 14 7.72 21 5.81 28 4.90
8 12.12 15 7.34 22 5.64 29 4.80
9 10.97 16 7.00 23 5.49 30 4.72
</TABLE>
OPTION 5 - FIXED PAYMENT OF A SPECIFIC AMOUNT - Proceeds may be applied to
provide payments of the installment amount elected by you until the proceeds
applied and the interest thereon are exhausted. If the payee dies before all
guaranteed payments have been made, the discounted value of the remaining unpaid
payments, based on the interest rate that we use to determine the amount of each
payment, will be paid to the Beneficiary. The interest rate we use to determine
payments will be at least 4% annually.
Amounts shown for Options 1, 2 and 3 are based on the 1983 Table a, with
interest at 4%. Amounts shown for Option 4 are based on interest at 4%. You
may also choose to have proceeds paid under any other annuity option we then
offer. We will let you know what these are upon request.
<PAGE>
INDEX
<TABLE>
<CAPTION>
SUBJECT PAGE
<S> <C>
Accumulated Value.................................................. 6
Administrative Charge.............................................. 11
Age................................................................ 4
Annuitant.......................................................... 3,4
Annuity Benefits................................................... 13-17
Annuity Start Date................................................. 4
Assignment......................................................... 5
Basis of Values.................................................... 5
Beneficiary........................................................ 4
Charges............................................................ 11
Compliance......................................................... 6
Contingent Annuitant............................................... 4
Contingent Owner................................................... 4
Contract Loans..................................................... 9
Contract Specification............................................. 3
Death Benefit...................................................... 10
Definitions........................................................ 4
Dividends.......................................................... 5
General Provisions................................................. 5
Interest........................................................... 8
Maintenance Fee.................................................... 11
Misstatement....................................................... 5
Monthly Deduction.................................................. 11
Mortality and Expense Risk Charge.................................. 11
Owner.............................................................. 3,5
Premium Allocation................................................. 6
Premium Limitation................................................. 6
Premiums........................................................... 6
Reports............................................................ 5
Separate Account................................................... 12,13
Transfers.......................................................... 8
Withdrawals........................................................ 8
Withdrawal Charge.................................................. 11
</TABLE>
<PAGE>
ENDORSEMENT
PREAUTHORIZED WITHDRAWAL FEATURE
This endorsement becomes a part of the Variable Annuity Contract (Form 90-53) to
which it is attached.
PREAUTHORIZED WITHDRAWAL FEATURE - You may request preauthorized Scheduled
Partial Withdrawals from your Contract during the Accumulation Period and after
the Free look Period while it is in force. All requests must be in writing.
Withdrawal payments will be deducted from your Accumulated Value. The
Withdrawals may be made either monthly, quarterly, semiannually or annually, and
may be stopped or modified upon written request received by us at least 30 days
in advance. Scheduled partial Withdrawals will be based on the Accumulated
Value at the end of the valuation period during which the Withdrawal is
scheduled. A Withdrawal Charge may be imposed on Scheduled Partial Withdrawals.
No Withdrawal Charge will be imposed on Scheduled Partial Withdrawal payments to
the extent your total withdrawals in the Contract Year during which the
Withdrawals are made do not exceed 10% of the sum of the premiums paid during
the current and the preceding four Contract Years.
Any time a Scheduled Partial Withdrawal is made, we will deduct from the
Accumulated Value the amount of the Withdrawal plus the applicable Withdrawal
Charge, if any. The deduction from the Accumulated Value will be made
proportionately to your Accumulated Value in each Variable Account and the Fixed
Account. Any charge for premium taxes that a state or other government charges
us as a result of the Withdrawal will be deducted from the Withdrawal proceeds.
The minimum amount for any preauthorized Scheduled Partial Withdrawal is $100.
We reserve the right at a future date to increase the minimum amount for any
Scheduled Partial Withdrawals, to impose or increase minimum remaining balances,
and to limit the number and frequency of requests for stopping or modifying
Scheduled Partial Withdrawals. Any Scheduled Partial Withdrawal that equals or
exceeds the Full Withdrawal Value will be treated as a Full Withdrawal. In no
event will the payment of a Scheduled Partial Withdrawal exceed the Full
Withdrawal Value, less any charge for premium taxes. The Contract will
automatically terminate if a Scheduled Partial Withdrawal causes the resulting
Full Withdrawal Value to equal zero.
We will pay Scheduled Partial Withdrawal proceeds within seven days after the
valuation period during which the Withdrawal is scheduled. However, we may
postpone the processing or payment of such payment based on the investment
performance of the Variable Accounts and defer payment of amounts allocated to
the Fixed Account in accordance with the Delay of Payments Section of your
Contract.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer
E-9107
<PAGE>
ENDORSEMENT
THIS ENDORSEMENT IS PART OF YOUR VARIABLE ANNUITY CONTRACT (FORM 90-53) AND
SHOULD BE ATTACHED TO IT.
The Death of Annuitant provision is hereby replaced by the following:
DEATH OF ANNUITANT -- We will pay the death benefit proceeds to the Beneficiary
if the Annuitant dies prior to the Annuity Start Date unless there is a
surviving Joint or Contingent Annuitant. In such event, the surviving Joint or
Contingent Annuitant becomes the Annuitant. The death benefit will be the
greater of (a) the Accumulated Value as of the Valuation Date due proof of death
and instructions regarding payment are received by PM; or (b) the total premiums
paid into the Contract less any deductions caused by previous Partial
Withdrawals; or (c) the Minimum Guaranteed Death Benefit for Contract Years six
and later. No Withdrawal Charge will be imposed. The death benefit proceeds
will be the death benefit reduced by the amount in the Loan Account, if any.
Payment will be made when we receive acceptable proof of death and instructions
regarding payment at our Home Office. Instead of a lump sum payment, the amount
of the death benefit proceeds, less any applicable charge for premium taxes, may
be applied towards an Annuity Option under this Contract or towards the purchase
of any other annuity option we then offer.
Minimum Guaranteed Death Benefit (MGDB) -- Starting in Contract Year six to
Contract Year eleven, the MGDB is the Accumulated Value at the fifth Contract
Anniversary, less any deductions caused by Partial Withdrawals and increased by
any premium payments received since the fifth Contract Anniversary. The MGDB is
adjusted on the tenth Contract Anniversary and each succeeding fifth Contract
Anniversary to the greater of the most recent MGDB or the Accumulated Value as
of such anniversary, and during the next following five year interval is
decreased by any deductions caused by Partial Withdrawals and increase by any
premium payments since such fifth Contract Anniversary. After the Contract year
in which the Annuitant reaches age 85, the MGDB will no longer be adjusted on
each fifth Contract anniversary, but it will still be adjusted for deductions
caused by Partial Withdrawals and for premium payments.
The Withdrawal Charge provision is hereby modified by adding the following
paragraph before the last paragraph of the provision.
No Withdrawal Charge will be imposed if the Annuitant has been diagnosed with a
medically determinable condition which results in a life expectancy of 12 months
or less. The following conditions must be met on or before the Withdrawal
request is made:
-- A request can be made anytime after the first Contract Anniversary.
-- The Contract must be in force on the date the request is approved.
-- We must receive written proof satisfactory to us that the Annuitant's
life expectancy is 12 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 blood relative residing in the same household.
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 assignee must be obtained.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
<PAGE>
Chairman and Chief Executive Officer
E-93-9053
<PAGE>
EXHIBIT 99.4(b)
Guaranteed Death Benefit Rider
<PAGE>
GUARANTEED DEATH BENEFIT RIDER
BENEFIT - When we receive proof that the Annuitant's death occurred while this
rider was in force, we will pay the Benefit Amount for this rider on the
Valuation Date due proof of the Annuitant's death and instructions regarding
payment to the Beneficiary are received by PM.
BENEFIT AMOUNT - The Benefit Amount for this rider will be the difference of 1.
minus 2. where:
1. is the Accumulated Value of the Contract to which this rider is attached on
the Contract Anniversary immediately preceding the Valuation Date due proof of
death and instructions regarding payment are received by PM, decreased by any
deductions caused by partial withdrawals made since that Anniversary, and
increased by any premium payments received since that Anniversary.
2. is the death benefit as described in the Contract.
However, in no case will the Benefit Amount exceed $500,000 or be less than
zero.
GUARANTEED DEATH BENEFIT CHARGE - Beginning on the Contract Date and monthly
thereafter, there will be a charge for this rider equal to the Guaranteed Death
Benefit Charge multiplied by the result of the Accumulated Value less any
Contract debt. The Guaranteed Death Benefit Charge is shown on the Contract
Specifications pages.
MISSTATEMENT OF AGE - If the Annuitant's Age is misstated in the application,
the Benefit Amount for this rider will be adjusted. The adjusted Benefit Amount
will be equal to the Benefit Amount times 1. and divided by 2. where:
1. is the Guaranteed Death Benefit Charge shown in the Contract Specifications
pages.
2. is the Guaranteed Death Benefit Charge that would have been charged for the
Annuitant's correct Age on the Contract Date.
LIMITATION - This rider cannot be added to a Contract if the Annuitant is
already designated as the Annuitant under a contract to which this rider is
attached.
EFFECTIVE DATE - This rider is effective on the Contract Date unless otherwise
stated. This rider will terminate:
- - on our receipt of your written notice; or
- - on surrender of this Contract;
- - if the Contract's Full Withdrawal Value is zero;
- - on the Annuity Start Date as defined in the Contract; or
<PAGE>
- - on payment of death benefit proceeds under the Contract.
GENERAL CONDITIONS - This rider is part of the Contract to which it is attached.
All terms of this Contract which do not conflict with this rider's terms apply
to this rider.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Thomas C Sutton Audrey L. Milfs
Chairman and Chief Executive Officer Secretary
R90-GUAR
<PAGE>
EXHIBIT 99.4(c)
Individual Retirement Annuity Rider
<PAGE>
INDIVIDUAL RETIREMENT ANNUITY RIDER
This rider is a part of the Contract to which it is attached by PM.
The Contract under which it has been issued is hereby modified as specified
below in order to qualify as an Individual Retirement Annuity under the terms of
the Internal Revenue Code of 1986 (the Code) as amended.
DEFINITIONS
ANNUITANT - is the individual named to receive periodic annuity payments
purchased under this Contract.
ANNUITY START DATE - is the date you choose to have PM begin periodic annuity
payments to the Annuitant. The Annuity Start Date may be no later than April 1
of the Calendar Year following the year in which the Annuitant reaches Age 70
1/2.
CONTINGENT ANNUITANT - is the individual who becomes the Annuitant if the
Annuitant dies before periodic annuity payments purchased under this Contract
begin. Only the spouse of the Annuitant may be named the Contingent Annuitant.
CONTINGENT OWNER - is the individual who becomes the Owner if you die before
periodic annuity payments purchased under this Contract begin. Only the spouse
of the Annuitant may be named Contingent Owner.
DESIGNATED BENEFICIARY - is the individual designated as a beneficiary by the
Annuitant.
The provisions of this rider will control if in conflict with those of the
Contract. Notwithstanding any provisions in the Contract to the contrary:
1. THE ANNUITANT WILL AT ALL TIMES BE THE OWNER OF THE CONTRACT. The Owner's
rights under the Contract shall be nonforfeitable and for the exclusive benefit
of the Owner and his or her beneficiaries.
2. No benefits under the Contract may be transferred, sold, assigned, or
pledged as collateral for a loan, or as security for the performance of an
obligation, or for any other purpose, to any person; except that the Contract
may be transferred to a former spouse of the Owner under a divorce decree or
written instrument incident to such divorce. In the event of such transfer, the
transferee shall for all purposes be treated as the Owner under this Contract.
3. Except in the case of a "rollover contribution" as described in Sections
402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code,
or an employer contribution to a Simplified Employee Pension as defined in
Section 408(k) of the Code, the premium paid under this Contract shall not
exceed $2,000 for any taxable year, or such other maximum as the Code may allow,
and must be paid in cash.
<PAGE>
4. Additional premium payments under the Contract must be at least $50. This
limit replaces the minimum limit stated in the Premiums provision of the
Contract.
5. If this Contract is issued as part of a Simplified Employee Pension, the
premium paid under this Contract shall not exceed $30,000 or 15% of your
compensation, whichever is less, or such other maximum as the Code may allow,
and must be paid in cash.
6. Any premium refund declared by PM, other than refunds attributable to excess
contributions will be applied toward the purchase of additional benefits before
the close of the Calendar Year following the refund.
7. In accordance with Regulations prescribed by the Secretary of the Treasury,
or his delegate pursuant to the Code "Regulations", the entire interest under
the Contract must be distributed to the Owner
(a) not later than the April 1st next following the close of the Calendar Year
in which the Owner attains age 70-1/2 (the Required Beginning Date), or
(b) commencing not later than the Required Beginning Date in equal or
substantially equal amounts, in annual or more frequent installments, over
(i) the Owner's life or the lives of the Owner and his or her Designated
Beneficiary, or
(ii) a period not exceeding the Owner's life expectancy or the joint and last
survivor life expectancy of the Owner and his or her Designated Beneficiary,
(c) If the Owner's entire interest is to be distributed in other than a lump
sum, then the amount to be distributed each year, commencing with the Required
Beginning Date and then for each succeeding Calendar Year, shall not be less
than the quotient obtained by dividing the Owner's entire interest by the lesser
of
(i) the applicable life expectancy; or
(ii) if the Owner's spouse is not the Designated Beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of
the proposed Income Tax Regulations. Distributions after the death of the Owner
shall be calculated using the applicable life expectancy as the relevant divisor
without regard to the proposed Regulation Section 1-401(a)(9)-2.
The preceding paragraph shall not apply if distribution is in the form of an
annuity with non-increasing payments.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Unless otherwise
elected by the Owner by the time distributions are required to begin, life
expectancy shall be recalculated annually. Such election shall be irrevocable
as to the Owner and shall apply to all subsequent years. The life expectancy of
a non-
<PAGE>
spouse Beneficiary may not be recalculated. Instead, life expectancy will
be calculated using the attained age of such Beneficiary during the Calendar
year in which distributions are required to begin pursuant to this section, and
payments for subsequent years shall be calculated based on such life expectancy
reduced by one for each Calendar Year which has elapsed since the Calendar Year
life expectancy was first calculated.
(d) If the Owner's spouse is not the Designated Beneficiary, the form of Annuity
elected must assure that at least 50% of the value of the Contract available for
distribution is payable within the Owner's life expectancy.
(e) The method of distribution shall be made in accordance with the requirements
of Section 401(a)(9) of the Code and the Regulations thereunder. Further the
method selected must meet the "minimum distribution incidental benefit" rule of
Code Section 401(a)(9), and the proposed Regulation Section 1.401(a)(9)-2. This
includes the following;
(i) where the Owner's only Designated Beneficiary is the spouse, the minimum
amount that must be distributed in a distribution Calendar Year is the amount
determined under the regular minimum distribution requirements in this Section
7.
(ii) where the distributions are not made as annuity payments under an annuity
Contract and where the Owner's spouse is not the Designated Beneficiary, the
minimum amount that must be distributed in a distribution Calendar Year is the
quotient obtained by dividing the Owner's entire interest by the joint and last
survivor expectancy described in the proposed Regulation Section 1.401(a)(9)-2.
(iii) where distribution is to be made under an annuity Contract purchased on or
before the Owner's Required Beginning Date and the Owner's spouse is not the
Designated Beneficiary, the minimum amount that must be distributed is
determined as follows:
- - Period certain annuity without a life contingency: The period certain may not
exceed the appropriate joint and last survivor expectancy described in the
proposed Regulation Section 1.401(a)(9)-2.
- - Life annuity or a joint and survivor annuity: A life annuity on the Owner's
life which satisfies the regular minimum distribution requirements satisfies the
"minimum distribution incidental benefit" rule. The periodic annuity payment to
the survivor under a joint and survivor annuity may not exceed the applicable
percentage of the annuity payment to the Owner. These percentages are defined
in the proposed Regulation Section 1.401(a)(9)-2.
- - Life annuity with period certain: The distribution must satisfy the
requirements for a single life (or joint and survivor) annuity and the period
certain may not exceed the period determined for nonannuity distributions.
Only a method of distribution offered by PM that satisfies these conditions can
be selected. You must make this selection before the end of the Calendar Year
in which you attain age 70-1/2.
<PAGE>
8. On the death of the Owner, distribution shall be made in accordance with the
annuity options described in the Contract. However, selection of an annuity
option which does not satisfy the conditions of this Section 8 shall not be
permitted.
If the Owner dies before distribution of his or her interest in the Contract
commences, the entire interest should be distributed by December 31st of the
fifth full year which follows the Owner's death unless (i) such interest is paid
in equal or substantially equal installments over a period not exceeding the
lifetime, or the life expectancy, of the Designated Beneficiary, and (ii)
payments begin by December 31st of the Calendar Year which follows the Owner's
death.
If the Designated Beneficiary of the Owner is the Owner's surviving spouse, the
spouse may elect to receive equal or substantially equal payments over the life
or life expectancy of the surviving spouse commencing at any date prior to the
later of (1) December 31 of the Calendar Year immediately following the Calendar
Year in which the Owner died and (2) December 31 of the Calendar Year in which
the Owner would have attained age 70-1/2. Such election must be made no later
than the earlier of December 31 of the Calendar Year containing the fifth
anniversary of the Owner's death or the date distributions are required to begin
pursuant to the preceding sentence. The surviving spouse may accelerate these
payments at any time i.e., increase the frequency or amount of such payments.
If the surviving spouse is the Designated Beneficiary, the spouse may convert
this Individual Retirement Annuity to the spouse's own Individual Retirement
Annuity by requesting that he or she be made the Annuitant. If the spouse so
requests, the spouse shall be Owner and Annuitant for purposes of applying the
restrictions contained in this rider.
For purposes of the above, life expectancy is computed by use of the expected
return multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations. For purposes of distributions beginning after the Owner's death,
unless otherwise elected by the surviving spouse by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the surviving spouse and shall apply to all
subsequent years. In the case of any other Designated Beneficiary, life
expectancies shall be calculated using the attained age of such Beneficiary
during the Calendar Year in which distributions are required to begin pursuant
to this section, and payments for any subsequent Calendar Year shall be
calculated based on such life expectancy reduced by one for each Calendar Year
which has elapsed since the Calendar Year life expectancy was first calculated.
Any amount paid to a child of the Owner will be treated as if it had been paid
to the surviving spouse if the remainder of the interest becomes payable to the
surviving spouse when the child reaches the age of majority.
If the Owner dies after distribution of his or her interest in the Contract has
commenced, the remaining interest will be distributed at least as rapidly as
under the method of distribution being used prior to the Owner's death.
If the Owner dies before his or her entire interest has been distributed to him
or her, no additional
<PAGE>
cash contributions or "rollover contributions" shall be accepted.
9. No one other than the spouse of the Owner may be named as the Contingent
Annuitant and or the Contingent Owner. If the Owner dies, the Contingent
Annuitant shall be treated as the Annuitant for purposes of applying the
restrictions contained in this rider.
If, despite the restrictions contained in this rider, someone other than the
spouse is named as a Contingent Annuitant, such person shall be treated as the
Primary Beneficiary under the Contract.
10. PM shall furnish annual Calendar Year reports concerning the status of the
Contract.
11. PM reserves the right to amend this rider to comply with future changes in
the Internal Revenue Code and any regulations or rulings issued under the
provisions of the Code. PM shall provide the Owner of the Contract with a copy
of any such amendment.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Thomas C Sutton Audrey L. Milfs
Chairman and Chief Executive Officer Secretary
90-IRA-V-1
<PAGE>
EXHIBIT 99.4(d)
Pension Plan Rider
<PAGE>
QUALIFIED PENSION PLAN RIDER
This rider is a part of the Contract to which it is attached by PM.
The Contract is hereby modified as specified below in order to comply with the
requirements for Qualified Pension and Profit Sharing Plans, as described in
Section 401(a)(9) of the Internal Revenue Code of 1986 (The Code) as amended.
THE PROVISIONS OF SECTIONS 1-9 OF THIS RIDER SHALL TAKE EFFECT ONLY IF THE
ANNUITANT IS, OR BECOMES, THE OWNER.
DEFINITIONS
ANNUITANT - is the individual named to receive periodic annuity payments
purchased under this Contract.
ANNUITY START DATE - is the date you choose to have PM begin periodic annuity
payments to the Annuitant. The Annuity Start Date may be no later than April 1
of the calendar year following the year in which the Annuitant reaches age 70
1/2.
DESIGNATED BENEFICIARY - is any individual designated as a beneficiary under the
Plan by the Annuitant. If a person other than an individual (but not a trust
that satisfies the conditions stated in 1.401(a)(9)-1 of the Code) is designated
a Beneficiary, or if the plan permits any person to change the Annuitant's
beneficiaries after his or her death, other than a designation made by the
surviving spouse for distributions after the spouse's death, the Annuitant will
be treated as having no Designated Beneficiary.
PLAN - means the qualified employee benefit plan under which this Contract is
issued.
The provisions of this rider will control if in conflict with those of the
Contract. Notwithstanding any provisions of the Contract to the contrary:
1. Automatic Form of Payment at the Annuity Start Date.
If the Annuitant is legally married at the Annuity Start Date, unless an
optional form of benefit is selected in accordance with Section 2 below,
payments will be made in the form of a Joint and 50% Survivor Annuity, with the
Annuitant's spouse as the joint annuitant. Under this form, payments will be
made during the lifetime of the Annuitant and, following the Annuitant's death,
payments equal to 50% of the original payment amount will continue to the spouse
for life. The Annuitant may choose without the consent of any other individual,
from the options offered by PM, the amount of the payment continuing to the
Annuitant's spouse. The amount of each payment to the spouse will be not less
than one half of, nor greater than, the periodic annuity benefit paid to the
Annuitant.
If the Annuitant is not legally married at the Annuity Start Date, payments will
be made in the form of a life annuity with a 10 year period certain unless an
optional form of payment is selected in
<PAGE>
accordance with Section 2 below. Under this form, payments will be made to the
Annuitant for life. If the Annuitant dies before the end of the Guaranteed
Period, payments will continue to the Designated Beneficiary until the end of
the Guaranteed Period.
2. Optional Forms of Annuity Payment.
The Annuitant can elect an optional form of payment as provided in the Contract,
provided:
(a) the Annuitant files a Qualified Election with the Company within the 90 day
period ending on the date income commences;
(b) the form selected ensures that the present value of payments PM expects to
pay over the lifetime of the Annuitant is not less than 51% of the present value
of all payments we expect to make under the Contract. To determine whether 51%
of the present value of benefits will be paid during the Annuitant's lifetime,
his or her life expectancy will be measured from either the Annuitant's Normal
Retirement Date, or the actual retirement date, whichever is later, but in no
event later than the Annuity Start Date; and
(c) the option selected satisfies the requirements of Section 4 below.
Life expectancies will be calculated using the expected return multiples
contained in Section 1.72 9 of the Income Tax Regulations.
3. Qualified Election
In the case of a married Annuitant, "Qualified Election" means a written
statement by the Annuitant waiving the Joint and Survivor Annuity option and
specifying the form of payment desired, and a written statement from the spouse
consenting to the Annuitant's election. The form of payment chosen cannot be
changed without spousal consent unless the spouse consents to future
designations by the Annuitant without spousal consent. The spouse's consent
must be witnessed by a notary public. If the spouse's consent cannot be
obtained because the spouse cannot be located, the Annuitant's election will
still be deemed to be a Qualified Election.
In the case of an unmarried Annuitant, "Qualified Election" means a written
statement by the Annuitant attesting to the fact that he or she is not married,
and which specifies the optional form of payment desired.
4. Required Beginning Date and Minimum Distribution Requirements
In accordance with the requirements of the Code, distribution of the entire
interest should be made not later than the April 1 following the close of the
calendar year in which the Annuitant attains age 70 1/2. (The Required
Beginning Date.)
Alternatively, if distribution of the entire interest commences not later than
the Required Beginning Date, such distribution may be made in equal or
substantially equal amounts, in annual or more
<PAGE>
frequent installments, over
(a) the Annuitant's life or the lives of the Annuitant and his or her Designated
Beneficiary, or
(b) a period not extending beyond the Annuitant's life expectancy or the joint
and last survivor life expectancy of the Annuitant and his or her Designated
Beneficiary.
The method of distribution selected must also meet the "minimum distribution
incidental benefit" rule of Code Section 401(a)(9) and Regulation Section
1.401(a)(9)-2 of the Code. This requires that:
(a) where the Annuitant's only Designated Beneficiary is the spouse, the minimum
amount that must be distributed in a distribution calendar year is the amount
determined under the regular minimum distribution requirements above in this
Section 4.
(b) where payments are to be made under an annuity Contract purchased on or
before the Annuitant's Required Beginning Date and the Annuitant's spouse is not
the Designated Beneficiary, the minimum amount that must be distributed is
determined as follows:
- - Period certain annuity without a life contingency: The period certain may not
exceed the appropriate joint and last survivor expectancy described in
Regulation Section 1.401(a)(9)-2 of the Code.
- - Life annuity: A life annuity on the Annuitant's life which satisfies the
regular minimum distribution requirements satisfies the "minimum distribution
incidental benefit" rule.
- - Joint and survivor annuity: The periodic annuity payment to the survivor under
a joint and survivor annuity, may not exceed the applicable percentage of the
annuity payment to the Annuitant. These percentages are defined in Regulation
Section 1.401(a)(9)-2.
- - Life annuity with period certain: The distribution must satisfy the
requirements for a single life (or joint and survivor) annuity as well as for a
period certain annuity without a life contingency.
Only a method of distribution offered by PM that satisfies these conditions can
be selected. You must make this selection before the end of the calendar year
in which you attain age 70 1/2.
5. Beneficiary for Death Benefit Proceeds Prior to Annuity Start Date
If the Annuitant dies prior to the Annuity Start Date and is married at the date
of death, the Death Benefit Proceeds will be paid to the surviving spouse,
unless the Annuitant names another beneficiary and the spouse consents in
writing to such designation. The spouse's consent must be witnessed by a notary
public. For this purpose, the consent of an individual who was married to the
Annuitant at the time consent was given but is not married to the Annuitant at
the date of death will not be considered the consent of the spouse.
If the Annuitant is not legally married at the date of death, or designates (as
provided above)
<PAGE>
someone other than the spouse as beneficiary, the Death Benefit Proceeds shall
be paid to the Designated Beneficiary.
6. Payment of Death Benefit
On the death of the Annuitant, payment shall be made in accordance with the
Annuity option provisions described in the Contract or as provided for by the
Plan. However, selection of an annuity option that does not satisfy the
conditions of this Section 6 shall not be permitted.
(a) Death Before the Annuity Start Date
If the Annuitant dies before distribution of his or her interest in the Contract
commences, the entire interest must be distributed by December 31st of the fifth
full year which follows the Annuitant's death unless (i) such interest is paid
in equal or substantially equal installments over a period not exceeding the
lifetime or life expectancy of the Designated Beneficiary, and (ii) payments
begin by December 31st of the calendar year which follows the Annuitant's death.
If the Designated Beneficiary of the Annuitant is the Annuitant's surviving
spouse, the spouse may elect to receive equal or substantially equal payments
over the life or life expectancy of the surviving spouse commencing at any date
prior to the close of the calendar year in which the deceased Annuitant would
have attained age 70 1/2, if later. The surviving spouse may accelerate these
payments at any time, i.e., increase the frequency or amount of such payments.
However, if the spouse elects to receive the entire interest as a lump sum, such
amount must be received by December 31st of the fifth full year which follows
the Annuitant's death.
If the surviving spouse dies before payments begin, subsequent distributions
shall be made as if the spouse had been the Annuitant. In such event, the rules
in this Section 6 apply using the date of death of the surviving spouse rather
than that of the Annuitant.
(b) Death After the Annuity Start Date
If the Annuitant dies after distribution of his or her interest in the plan has
commenced, the remaining interest will be distributed at least as rapidly as
under the method of distribution in effect at the time of the Annuitant's death.
7. Withdrawal or Loan of Annuity Value Before the Annuity Start Date
If the Annuitant is married, withdrawal or loan of all or a portion of the
annuity value prior to the Annuity Start Date will be permitted subject to the
consent of the spouse. Such consent must be in writing and must be witnessed by
a notary public.
If the Annuitant is not married, withdrawal will be permitted subject to written
notice to PM that the Annuitant is not married. The Term Annuity Value as used
in this rider shall mean the appropriate value described in the Contract that
the Contract Owner is entitled to withdraw or borrow.
8. Nontransferable
<PAGE>
No benefits under this Contract may be transferred, sold, alienated, assigned,
discounted, subject to garnishment or execution, or pledged as collateral for a
loan, or as security for the performance of an obligation or for any other
purpose, to any person other than to PM, except as may be provided by a
Qualified Domestic Relations Order within the meaning of Section 414 of the
Code.
9. Change of Annuitant
The Owner shall not be permitted to change the Annuitant.
10. Trustee Owned Contracts
While this Contract is owned by the trustee of a plan described in section
401(a) of the Code, the Death Before the Annuity Start Date provision of Section
6 may not apply.
11. Amendment
PM reserves the right to amend this rider to comply with future changes in the
Internal Revenue Code and any regulations or rulings issued under the provisions
of the Code. PM shall provide the Owner of the Contract with a copy of any such
amendment.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Thomas C Sutton Audrey L. Milfs
Chairman and Chief Executive Officer Secretary
<PAGE>
EXHIBIT 99.4(e)
Required Distribution for Compliance
with Section 72(s) Rider
<PAGE>
REQUIRED DISTRIBUTIONS FOR COMPLIANCE WITH SECTION 72(s) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE)
RULES APPLICABLE UPON OWNER'S DEATH
This rider is part of your Contract and should be attached to it.
It is the intent of the Owner and Pacific Mutual that this rider be interpreted
in such a manner as to have the Contract comply with Section 72(s) of the Code.
The provisions of this rider will control if in conflict with those of the
Contract.
HOLDER - is deemed to be you, the Owner of the Contract, or as interpreted by
the Internal Revenue Service (IRS) for compliance with the Code.
DESIGNATED BENEFICIARY - is the individual selected by the Owner to succeed to
the Owner's interest in the Contract after the death of any holder of this
Contract for purposes of Section 72(s) of the Code, and which includes an Owner
Beneficiary and a Joint or Contingent Owner, if any.
However, if the aforementioned designation is contradictory to the
interpretations of the IRS, those of the IRS shall apply.
Upon any holder's death, the Designated Beneficiary shall be required to elect
the method under which the required distributions shall be made as defined in
paragraph (1), unless the conditions described by paragraph (3) are met.
ANNUITY START DATE - is the date periodic annuity/monthly income payments are to
begin.
The following is a statement of Section 72(s) of the Code in all material
respects:
REQUIRED DISTRIBUTIONS WHERE HOLDER DIES BEFORE ENTIRE INTEREST IS DISTRIBUTED:
(1) THIS CONTRACT, IN ORDER TO BE TREATED AS AN ANNUITY CONTRACT FOR PURPOSES
OF THE CODE, PROVIDES THAT:
(A) if any holder of this Contract dies on or after the annuity starting date
(the Annuity Start Date) and before the entire interest in this Contract has
been distributed, the remaining portion of such interest will be distributed to
the Annuitant at least as rapidly as under the method of distributions being
used as of the date of his death, and
(B) if any holder of this Contract dies before the annuity starting date, the
entire interest in this Contract will be distributed within 5 years after the
death of such holder.
(2) EXCEPTION FOR CERTAIN AMOUNTS PAYABLE OVER LIFE OF DESIGNATED
<PAGE>
BENEFICIARY - if
(A) Any portion of the holder's interest is payable to (or for the benefit of)
a Designated Beneficiary, and
(B) such portion is distributed (in accordance with applicable IRS regulations)
over the life of such Designated Beneficiary (or over a period not extending
beyond the life expectancy of such Designated Beneficiary),
(C) such distributions must begin not later than 1 year after the date of the
holder's death or such later date as the Secretary of the U.S. Treasury may by
regulations prescribe,
and for purposes of paragraph (1), the portion referred to in subparagraph (A)
shall be treated as distributed on the day on which such distributions begin.
(3) SPECIAL RULE WHERE SURVIVING SPOUSE BENEFICIARY - if the Designated
Beneficiary referred to in paragraph (2)(A) is the surviving spouse of the
holder of the Contract, paragraphs (1) and (2) shall be applied by treating such
spouse as the holder of the Contract.
(4) DESIGNATED BENEFICIARY - means any individual designated a beneficiary by
the holder of the Contract.
(5) EXCEPTION FOR ANNUITY CONTRACTS WHICH ARE PART OF QUALIFIED PLANS -This
rider shall not apply if this annuity Contract is funding:
(A)(i) a plan described in section 401(a) which includes a trust exempt from
tax under section 501, or
(ii) a plan described in section 403(a),
(B) a plan which is described in section 403(b), or
(C) a plan which is an individual retirement annuity.
(6) SPECIAL RULE WHERE HOLDER IS CORPORATION OR OTHER NON-INDIVIDUAL -
(A) if the holder of the Contract is not an individual, the primary annuitant
shall be treated as the holder of the Contract.
(B) Primary Annuitant - the term "primary annuitant" means the individual, the
events in the life of whom are of primary importance in affecting the timing or
amount of the payout under the Contract.
(7) TREATMENT OF CHANGES IN PRIMARY ANNUITANT WHERE HOLDER OF CONTRACT IS NOT
AN INDIVIDUAL - In the case of a holder of an annuity Contract which is
not an individual, if there is a change in a primary annuitant, such change
shall be treated as the death
<PAGE>
of the holder.
We reserve the right to amend the provisions of this rider in order to comply
with changes in the Code or changes in interpretations of The Code.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Thomas C Sutton Audrey L. Milfs
Chairman and Chief Executive Officer Secretary
<PAGE>
EXHIBIT 99.4(f)
Endorsement
(Preauthorized Withdrawal Feature)
<PAGE>
ENDORSEMENT
PREAUTHORIZED WITHDRAWAL FEATURE
This endorsement becomes a part of the contract to which it is attached.
PREAUTHORIZED WITHDRAWAL FEATURE - You may request preauthorized Scheduled
Partial Withdrawals from your Contract during the Accumulation Period and after
the Free Look Period while it is in force. All requests must be in writing.
Withdrawal payments will be deducted from your Accumulated Value. The
Withdrawals may be made either monthly, quarterly, semiannually or annually, and
may be stopped or modified upon written request received by us at least 30 days
in advance. Scheduled Partial Withdrawals will be based on the Accumulated
Value at the end of the valuation period during which the Withdrawal is
scheduled. A Withdrawal Charge may be imposed on Scheduled Partial Withdrawals.
No Withdrawal Charge will be imposed on Scheduled Partial Withdrawal payments to
the extent your total withdrawals in the Contract Year during which the
Withdrawals are made do not exceed 10% of the sum of the premiums paid during
the current and the preceding four Contract Years.
Any time a Scheduled Partial Withdrawal is made, we will deduct from the
Accumulated Value the amount of the Withdrawal plus the applicable Withdrawal
Charge, if any. The deduction from the Accumulated Value will be made
proportionately to your Accumulated Value in each Variable Account and the Fixed
Account. Any charge for premium taxes that a state or other government charges
us as a result of the Withdrawal will be deducted from the Withdrawal proceeds.
The minimum amount for any preauthorized Scheduled Partial Withdrawal is $100.
We reserve the right at a future date to increase the minimum amount for any
Scheduled Partial Withdrawals, to impose or increase minimum remaining balances,
and to limit the number and frequency of requests for stopping or modifying
Scheduled Partial Withdrawals. Any Scheduled Partial Withdrawal that equals or
exceeds the Full Withdrawal Value will be treated as a Full Withdrawal. In no
event will the payment of a Scheduled Partial Withdrawal exceed the Full
Withdrawal Value, less any charge for premium taxes. The Contract will
automatically terminate if a Scheduled Partial Withdrawal causes the resulting
Full Withdrawal Value to equal zero.
We will pay Scheduled Partial Withdrawal proceeds within seven days after the
valuation period during which the Withdrawal is scheduled. However, we may
postpone the processing or payment of such payment based on the investment
performance of the Variable Accounts and defer payment of amounts allocated to
the Fixed Account in accordance with the Delay of Payments Section of your
Contract.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Thomas C Sutton
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 99.4(g)
Endorsement
(Distribution of In-Kind Securities)
<PAGE>
ENDORSEMENT
The TRANSFER AND WITHDRAWAL BENEFITS section of this Contract is amended:
o by adding the following sentence before the last sentence of the first
paragraph of the "Transfers" provision.
No transfer of your Accumulated Value from any Variable Account may be made that
would exceed $5 million without our prior approval. No more than $25 million
may be transferred from any Variable Account in any 30 day period without our
prior approval. For purposes of this limitation all Contracts owned by you
shall be treated as one Contract.
and
o by inserting the following before the last sentence of the first paragraph of
the "Withdrawal Benefits" provision:
We reserve the right to make payment of any Full or Partial Withdrawal in whole
or in part by distribution of securities in kind, rather than cash, if
securities are received by the Variable Account from the corresponding series of
the underlying mutual fund upon redemption of shares of such series and to the
extent that, on any Valuation Date, any withdrawal, together with any transfer,
of your Accumulated Value in a Variable Account would result in the reduction of
your Accumulated Value in the Variable Account in an amount that would exceed
the lesser of $10 million or an amount equal to 25% of such series' net assets
as of the end of such Valuation Date. For purposes of this limitation all
Contracts owned by you shall be treated as one Contract.
The DEATH BENEFIT section is amended by replacing the third and fourth sentences
of the "Death of Annuitant" provision with the following:
The death benefit will be the Accumulated Value as of the Valuation Date due
proof of death and instructions regarding payment are received by PM.
<PAGE>
EXHIBIT 99.4(h)
Free Look Sticker ST-43
<PAGE>
Free Look Right - You may return this Contract within 10 days after you receive
it. To do so, mail it to us or our agent. This Contract will then be deemed
void from the beginning, no Withdrawal Charge will be imposed and we will
refund:
- any premium payment allocated to the Fixed Account; and
- any Variable Account Accumulated Value as of the Valuation Date we
receive the Contract;
plus
- any Contract fees and Charges deducted from the Contract's Accumulated
Value in any Variable Account.
ST-43
<PAGE>
EXHIBIT 99.4(i)
Minimum Guaranteed Death Benefit and
Terminal Illness Waiver Endorsement
E-93-9053
<PAGE>
ENDORSEMENT
THIS ENDORSEMENT IS PART OF YOUR VARIABLE ANNUITY CONTRACT (FORM 90-53) AND
SHOULD BE ATTACHED TO IT.
The Death of Annuitant provision is hereby replaced by the following:
Death of Annuitant - We will pay the death benefit proceeds to the Beneficiary
if the Annuitant dies prior to the Annuity Start Date unless there is a
surviving Joint or Contingent Annuitant. In such event, the surviving Joint or
Contingent Annuitant becomes the Annuitant. The death benefit will be the
greater of (a) the Accumulated Value as of the Valuation Date due proof of death
and instructions regarding payment are received by PM; or (b) the total premiums
paid into the Contract less any deductions caused by previous Partial
Withdrawals; or (c) the Minimum Guaranteed Death Benefit for Contract Years six
and later. No Withdrawal Charge will be imposed. The death benefit proceeds
will be the death benefit reduced by the amount in the Loan Account, if any.
Payment will be made when we receive acceptable proof of death and instructions
regarding payment at our Home Office. Instead of a lump sum payment, the amount
of the death benefit proceeds, less any applicable charge for premium taxes, may
be applied towards an Annuity Option under this Contract or towards the purchase
of any other annuity option we then offer.
Minimum Guaranteed Death Benefit (MGDB) - Starting in Contract Year six to
Contract Year eleven, the MGDB is the Accumulated Value at the fifth Contract
Anniversary, less any deductions caused by Partial Withdrawals and increased by
any premium payments received since the fifth Contract Anniversary. The MGDB is
adjusted on the tenth Contract Anniversary and each succeeding fifth Contract
Anniversary to the greater of the most recent MGDB or the Accumulated Value as
of such anniversary, and during the next premium payments since such fifth
Contract Anniversary. After the Contract year in which the Annuitant reaches
age 85, the MGDB will no longer be adjusted on each fifth Contract anniversary,
but it will still be adjusted for deductions caused by Partial Withdrawals and
for premium payments.
The Withdrawal Charge provision is hereby modified by adding the following
paragraph before the last paragraph of the provision.
No Withdrawal Charge will be imposed if the Annuitant has been diagnosed with a
medically determinable condition which results in a life expectancy of 12 months
or less. The following conditions must be met on or before the Withdrawal
request is made:
- A request can be made anytime after the first Contract Anniversary.
- The Contract must be in force on the date the request is approved.
- We must receive written proof satisfactory to us that the Annuitant's
life expectancy is 12 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 blood relative residing in the same household.
Such proof should include documentation supported by
<PAGE>
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 assignee must be obtained.
Pacific Mutual Life Insurance Company
Chairman and Chief Executive Officer
E-93-9053
<PAGE>
EXHIBIT 99.4(j)
Change to Contract Endorsement E1-95-9053
<PAGE>
Endorsement
Changes to Contract
This endorsement becomes part of your Variable Annuity Contract and should be
attached to it.
1. The policy specification pages are modified to add the following Variable
accounts that are currently available to you:
Growth LT, equity, and Bond and Income
2. Under the DEFINITIONS section of the Contract:
o The definition of "Home Office" is modified to read as follows:
Home Office - Home office means PM's Variable Annuities Service Center. The
mailing address for changes and requests is: P.O. Box 7187, Pasadena,
California 91109-7187. The Mailing address for Premium Payments and
Applications is P.O. Box 100060, Pasadena, California 91109-0060. We will
notify you if there are any changes in our mailing address.
o The following definitions are added before the last paragraph:
Separate Account - The Pacific Select Variable Annuity Separate Account. A
separate account of PM that consists of subaccounts, referred to as Variable
Accounts. Each Variable Account may invest in a separate class of shares of
a designated investment company or companies.
Variable Account - A separate account of PM or a subaccount of a PM separate
account in which assets of PM are segregated from assets in its general
account and other separate accounts and to which premiums and Accumulated
Value under the Contract may be allocated for variable accumulation.
o The definition of "Written Notice" is modified to read as follows:
Written Notice - all changes or requests must be in writing and must be
received at our Variable Annuities Service Center. Whenever written notice
is required, send it to our Variable Annuities Service Center at its mailing
address. The address is shown in the Definitions section under Home Office.
3. Under the GENERAL PROVISIONS section in the Contract:
o The following replaces the third sentence in the "Dividends" provision:
<PAGE>
We will allocate any dividend added to your Accumulated Value in accordance
with your most recent premium allocation instructions, unless you instruct
otherwise, subject to any investment alternatives limitations.
o The following replaces the first paragraph in the "Reports" provision:
Reports - A report will be mailed to you at your last known address
quarterly prior to the Annuity Start Date. This report will include the
following information for the quarter:
- the Accumulated Value;
- the Full Withdrawal Value;
- any existing Contract Debt;
- transactions that occurred during the quarter; and
- any information required by law.
o The following replaces the "Ownership of Assets" provision:
We have the exclusive and absolute control of our assets, including all
assets in each Variable Account.
4. Under the PREMIUMS section of the Contract:
o The following replaces the "Premium Allocation" provision:
Premium Allocation - Premiums received by us at our Home Office will be
allocated to the Fixed and Variable Accounts according to the premium
allocation specified in the application or your most recent instructions
received by us, if any, except as follows. If you reside in a state that
requires us to refund premium if you exercise your Free Look Right,
premiums received during the Free Look Period will initially be allocated
to the Money market Variable Account. The Accumulated Value will be
transferred automatically to the Variable Accounts and the Fixed Account
you elected in your application, or your more recent allocation
instructions received by us, if any, 15 days after the Contract is issued.
o The "Premium Limitation" provision is modified by replacing the first
sentence with the following:
Premium Limitations - Our prior approval is required before we will accept
a premium if, as a result, the sum of all premiums received for the
Contract would exceed $5,000,000.
5. Under the TRANSFER AND WITHDRAWAL BENEFITS section of the contract:
o The "Transfer" provision is modified by:
- replacing the first subparagraph of the first paragraph with the
following:
<PAGE>
If you reside in a state that requires refund of premium if you exercise
your Free Look Right, no transfer may be made until 15 days after the
Contract is issued. Only one transfer from the Fixed Account may be made in
any twelve-month period. If the Accumulated Value in the Fixed Account will
be limited to 20% of the Accumulated Value in the Fixed Account.
and
- replacing the second paragraph with the following:
A transfer fee of $10 per transfer will be assessed on the thirteenth and
any subsequent transfer in a Contract Year. We reserve the right at a
future date to limit the size of transfers and remaining balances and to
limit the number and frequency of transfers. We reserve the right to waive
the transfer fee.
o The "Withdrawal Benefits" section is modified by replacing the first
sentence with the following:
During the Accumulation Period, you may request a Full or Partial
Withdrawal from your Accumulated Value while the Annuitant is living, and
while your Contract is in force, by sending us written notice.
6. Under the CONTRACT LOANS section of the Contract:
o replacing the first sentence of the paragraph with the following:
- The amount available for a loan will depend on your Contract's
Accumulated Value. If the Accumulated Value is less than or equal to
$20,000, the maximum Loan Account balance immediately after any loan may
not exceed 50%of the Contract's Accumulated Value.
and
- by replacing the last sentence with the following:
The amount of the loan must be at least $1000.
o The "Loan Interest Rate" provision is modified to read as follows:
Loan Interest Rate - Loan Interest will accrue daily, the Loan Interest
Rate if the higher of:
- the Moody's Corporate Bond Yield Average-Monthly Average Corporates, as
published by Moody's Investors Service, Inc., or its successor, for the
calendar month immediately before the month in which the loan is taken;
<PAGE>
- 5%.
We will notify you of the current Loan Interest Rate on your Contract when
you make a loan on your Contract. In the event that the Moody's Corporate
Bond Yield Average-Monthly Average Corporates is no longer published, we
will use a substantially similar average established by regulation within
the state in which this Contract is delivered.
o The "Loan Account" provision is modified by replacing the third sentence
with the following;
We will credit interest daily on amounts in the Loan Account at the Loan
Credited Interest rate.
o The "Repayment" provision is modified by replacing the second, third, and
fourth paragraphs with the following:
Repayment of loan principal plus accrued interest is required quarterly.
Loan repayments will be due on your quarterly loan anniversary next
following the date the loan is effective and on each succeeding quarterly
loan anniversary thereafter. Repayment must be received at our Variable
Annuity Department before the end of the Contract Month in which the due
date falls.
If we do not receive the repayment by its due date, a Partial Withdrawal
equal to the repayment amount due and any applicable Withdrawal Charge will
be made from the Contract and paid to us. The portion of the Partial
Withdrawal equal to the unpaid principal amount due will be deducted from
the Loan Account. The portion equal to the interest due and any Withdrawal
Charge imposed will be deducted from the Accumulated Value in the Variable
Account and Fixed Account on a proportionate basis up to the amount
available.
If we receive a repayment in excess of a billed amount, the excess will be
applied first towards the principal portion of the outstanding loan and
then to any accrued interest. If we receive a payment which is less than
the amount due, we will effect a Partial Withdrawal of the remaining amount
due as described in the preceding paragraph.
7. Under the CHARGES section of your Contract:
o The "Withdrawal Charge" provision is modified by:
- replacing the clause numbered 2 in the second paragraph with the
following:
2. Free Withdrawal Amount. No Withdrawal Charge will be imposed on
Withdrawals to the extent that total free Withdrawals during the Contract
Year do not exceed 10% of the sum of the premiums paid during the current
Contract Year up to the Valuation Date of the Withdrawal and the preceding
four Contract Years. This free withdrawal privilege is noncumulative.
<PAGE>
o The "Premium Tax Charge" provision is replaced with the following:
Charge for Premium Taxes and Other Taxes - We will deduct a charge for
premium taxes on your Accumulated Value on the Annuity Start Date or if you
request a Full Withdrawal if a state or local government charges us a
premium tax. We will also deduct a charge from your Accumulated Value for
premium taxes on a Partial Withdrawal if we incur a premium tax as a result
of the partial Withdrawal. Premium tax rates currently range from 0% to
3.5%, but may be changed by a government entity. We reserve the right to
deduct premium taxes when incurred by us. If there is a material change in
any applicable federal, state or local law, the imposition of any taxes
incurred by us that are attributed to a Variable Account or to the
operations of Pacific Mutual with respect to the Contract or a Variable
Account, or attributable to payment or premiums or acquisition costs under
the Contract may result in a corresponding charge against the Contract or
the Variable Account.
<PAGE>
EXHIBIT 99.4(k)
Required Distributions for Compliance with Section 72(S)
of the Internal Revenue Code of 1986, amended (the code)
Rider R72S-9553
<PAGE>
REQUIRED DISTRIBUTIONS FOR COMPLIANCE WITH SECTION 72(s) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE CODE)
Rules Applicable Upon Owner's Death
This rider is part of your Contract, and should be attached to it.
It is the intent of the Owner and Pacific Mutual that this rider be interpreted
in such a manner as to have the Contract comply with Section 72(s) of the Code.
The provisions of this rider will control if in conflict with those of the
Contract.
Holder - is deemed to be you, the Owner of the Contract, or as interpreted by
the Internal Revenue Service (IRS) for compliance with the Code.
Designated Beneficiary - is the individual selected by the Owner to succeed to
the Owner's interest in the Contract after the death of any holder of this
Contract for purposes of Section 72(s) of the Code, and which includes an Owner
Beneficiary and Joint or Contingent Owner, if any.
However, if the aforementioned designation is contradictory to the
interpretations of the IRS, those of the IRS shall apply.
Upon any holder's death, the Designated Beneficiary shall be required to elect
the method under which the required distributions shall be made as defined in
paragraph (1), unless the conditions described by paragraph (3) are met.
Annuity Start Date - is the date periodic annuity/monthly income payments are to
begin.
The following is a statement of Section 72(s) of the Code in all material
respects:
REQUIRED DISTRIBUTIONS WHERE HOLDER DIES BEFORE ENTIRE INTEREST IS DISTRIBUTED:
(1) THIS CONTRACT, IN ORDER TO BE TREATED AS AN ANNUITY CONTRACT FOR PURPOSES
OF THE CODE, PROVIDES THAT:
(A) if any holder of this Contract dies on or after the annuity starting
date ("the Annuity Start Date") and before the entire interest in this
Contract has been distributed, the remaining portion of such interest will
be distributed at least as rapidly as under the method of distributions
being used as of the date of his death, and
(B) if any holder of this Contract dies before the Annuity Starting Date,
the entire interest in this Contract will be distributed within 5 years
after the death of such holder.
<PAGE>
(2) EXCEPTION FOR CERTAIN AMOUNTS PAYABLE OVER LIFE OF DESIGNATED BENEFICIARY -
if
(A) any portion of the holder's interest is payable to (or for the benefit
of) a Designated Beneficiary, and
(B) such portion is distributed (in accordance with applicable IRS
regulations) over the life of such Designated Beneficiary (or over a period
not extending beyond the life expectancy of such Designated Beneficiary),
(C) such distributions must begin not later than 1 year after the date of
the holder's death or such later date as the Secretary of the U.S. Treasury
may by regulations prescribe.
and for purposes of paragraph (1), the portion referred to in subparagraph
(A) shall be treated as distributed on the day on which such distributions
begin.
(3) SPECIAL RULE WHERE SURVIVING SPOUSE BENEFICIARY - if the Designated
Beneficiary referred to in paragraph (2)(A) is the surviving spouse of the
holder of the Contract, paragraphs (1) and (2) shall be applied by treating
such spouse as the holder of such Contract.
(4) DESIGNATED BENEFICIARY - means any individual Designated a beneficiary by
the holder of the Contract.
(5) EXCEPTION FOR CERTAIN ANNUITY CONTRACTS WHICH ARE PART OF QUALIFIED PLANS -
This rider shall not apply if this annuity Contract is funding:
(A) (i) a plan described in section 401(a) which includes a trust exempt
from tax under section 501, or
(ii) a plan described in section 403(a),
(B) a plan which is described in section 403(b),
(C) a plan which is an individual retirement annuity, or provided under an
individual retirement account or annuity, or
(D) which is a qualified funding assets (as defined in section 130(d)),
but without regard to whether there is a qualified assignment.
(6) SPECIAL RULE WHERE HOLDER IS CORPORATION OR OTHER NON-INDIVIDUAL -
(A) if the holder of the Contract is not an individual, the primary
annuitant shall be treated as the holder of the Contract.
<PAGE>
(B) primary annuitant - the term "primary annuitant" means the
individual, the events in the life of whom are of primary importance
in affecting the timing or amount of the payout under the Contract.
(7) TREATMENT OF CHANGES IN PRIMARY ANNUITANT WHERE HOLDER OF CONTRACT IS NOT
AN INDIVIDUAL - In the case of a holder of an annuity Contract which is not
an individual, if there is a change in a primary annuitant, such change
shall be treated as the death of the holder.
We reserve the right to amend the provisions of this rider in order to comply
with changes in the Code or changes in interpretations of The Code.
Pacific Mutual Life Insurance Company
Chairman and Chief Executive Officer Secretary
<PAGE>
EXHIBIT 99.4(l)
403(b) Tax Sheltered Annuity Rider R-403B-9553
<PAGE>
403(b) TAX-SHELTERED ANNUITY RIDER
This rider is a part of the Contract to which it is attached by PM.
The contract under which it has been issued is hereby modified as specified
below in order to qualify as a Tax-Sheltered Annuity ("TSA") under Section
403(b) of the Internal Revenue Code of 1986, as amended (the "Code").
The provisions of this rider will take precedence over any contrary provisions
of the Contract.
Definitions
Annuitant -- is the individual named to receive periodic annuity payments
purchased under this Contract. The Annuitant will at all times be the Owner of
this Contract.
Annuity Start Date -- is the date you choose to have PM begin periodic annuity
payments to the Annuitant. The Annuity Start Date may be no later than April 1,
of the calendar year following the year in which the Annuitant reaches Age
70-1/2.
Contingent Annuitant -- is the individual who becomes the annuitant if the
Annuitant dies before periodic annuity payments begin under this Contract. Only
the spouse of the Annuitant may be named the Contingent Annuitant.
Contingent Owner -- is the individual who becomes the Owner if the Owner dies
before periodic annuity payments begin under this Contract. Only the spouse of
the Owner may be named the Contingent Owner.
Designated Beneficiary -- is the individual designated as a beneficiary by the
Owner.
Tax-Sheltered Annuity Provisions
To ensure treatment as a TSA, this Contract will be subject to the requirements
of Code Section 403(b), which are briefly summarized below:
1. The Owner's rights under this Contract shall be nonforfeitable except
for failure to pay future premiums.
2. The Contract may not be transferred, sold, assigned, or pledged as
collateral for a loan, or as security for the performance of an
obligation, or for any other purpose, to any person other than PM.
3. Premiums paid pursuant to a salary reduction agreement and applied to
this Contract under a "plan" (within the meaning of Code Section
403(b)) are subject to the annual
<PAGE>
limitation on "elective deferral" contributions under Section
401(a)(30) of the Code. Such amount is periodically adjusted for
inflation.
4. Premiums applied to this Contract which exceed the applicable
"exclusion allowance" (within the meaning of Code Section 403(b)(2))
shall not be excludable from gross income.
5. Except if this Contract is purchased by a "church" (within the meaning
of Code Section 3121(w)), if this Contract is purchased under a "plan"
(within the meaning of Code Section 403(b)), the "plan must satisfy the
nondiscrimination requirements of Code Section 403(b)(12).
6. Distributions attributable to premiums made pursuant to a salary
reduction agreement may be made only when the Owner attains age 59-1/2,
separates from service, dies, becomes "disabled" (within the meaning of
Code Section 72(m)(7)) or incurs a hardship. A distribution made due to
a hardship may not include income attributable to such premiums.
7. Distributions from this Contact must comply with the minimum
distribution and incidental death benefit rules of Code Section
401(a)(9). Accordingly, the entire interest under the Contract must be
distributed:
(a) not later than the April 1 next following the close of the calendar
year in which the Owner attains age 70 1/2 (the "Required Beginning
Date"), or
(b) commencing not later than the Required Beginning Date over the
life of the Owner or over the lives of the Owner and his or her
Designated Beneficiary (or over a period not extending beyond the life
expectancy of the Owner or the life expectancy of the Owner and his or
her Designated Beneficiary).
In addition, if the Owner dies before distribution of his or her
interest in the Contract has begun in accordance with paragraph (b)
above, the Owner's entire interest must be distributed within five
years, unless (i) such interest is distributed to a Designated
Beneficiary over his or her life (or over a period not extending beyond
such Designated Beneficiary's life expectancy) and (ii) such
distribution begins not later than one year after the Owner's death. If
the Designated Beneficiary is the Owner's surviving spouse, the date on
which the distributions are required to begin shall not be earlier than
the date on which the Owner would have attained age 70-1/2.
If the Owner dies after distribution of his or her interest in the
Contract has begun in accordance with paragraph (b) above but before
his or her entire interest has been distributed, the remaining interest
will be distributed at least as rapidly as under the method of
distribution being used prior to the Owner's death.
<PAGE>
All distributions must comply with a method of distribution offered by
PM under this Contract. In addition, all minimum distributions required
under Code Section 401(a)(9) must comply with the proposed Treasure
Regulation section 1.403(b)-2.
8. If the Owner or Annuitant receives a distribution from this Contract
that qualifies as an "eligible rollover distribution" (within the
meaning of Code Section 402(f)(2)(A)) and elects to have such
distribution paid directly to an "eligible retirement plan" (within the
meaning of Code Section 402 (c)), such distribution shall be made in
the form of a direct transfer to the eligible retirement plan. PM may
establish reasonable administrative rules applicable to such direct
transfers.
Miscellaneous Provisions
1. PM reserves the right to amend this rider to comply with future changes
in the Code and any regulations or rulings issued thereunder. PM shall
provide the Owner with a copy of any such amendment.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
R-403B-9553
<PAGE>
EXHIBIT 99.4(m)
Section 457 Plan Rider R-95-457
<PAGE>
SECTION 457 PLAN RIDER
This rider is part of the Contract to which it is attached by PM.
The Contract to which this rider is attached is hereby modified as specified
below in order that it may be utilized under the deferred compensation plan of a
State or local government or tax-exempt organization established under Section
457 of the Internal Revenue Code of 1986, as amended (the "Code").
The provisions of this rider will take precedence over any contrary provisions
of the Contract
Definitions
Annuity Start Date - is the date you chose to have PM begin periodic annuity
payments to the Annuitant. The Annuity Start Date may be no later than April 1
of the calendar year following the year in which the Annuitant reaches age 70
1/2.
Owner - means the State, political subdivision of a state, any agency or
instrumentality of a State or political subdivision of a State or other
organization exempt from tax under Subtitle A of the Code (other than a "church"
or "qualified church-controlled organization" as defined in Code Section
3121(w)(3)) that has purchased this Contract. The Owner shall control this
Contract and may exercise all contractual rights hereunder.
Section 457 Plan Provisions
This Contract shall be subject tot he requirements of Code Section 457, which
are briefly summarized below:
1. This Contract may only be purchased under an "eligible deferred compensation
plan" (within the meaning of Code Section 457(b)) that has been established
and maintained by a State, political subdivision of a State, any agency or
instrumentality of a State or a political subdivision of a State or any
other organization exempt from tax under Subtitle A of the Code (other than
a "church" or "qualified church-controlled organization" as defined in Code
Section 3121(w)(3)).
2. All amounts of compensation deferred under an "eligible deferred
compensation plan" (within the meaning of Code Section 457(b)), all property
and rights purchased with such amounts and all income attributable to such
amounts, property or rights shall remain (until made available to the
annuitant or other Beneficiary) solely the property and rights of the Owner
(without being restricted to the provision of benefits under the plan),
subject only to the claims of the Owner's general creditors.
<PAGE>
3. Only individuals who perform service for the Owner, either as an employee of
the Owner or as an independent contractor, may participate under the
"eligible deferred compensation plan" (within the meaning of Code Section
457(b)).
4. Premiums applied to this Contract may not exceed the maximum deferral amount
permitted under Code Section 457(b)(2) and (3) or Code Section 457(c).
5. Premiums paid pursuant to a salary reduction agreement may be applied to
this Contract for any calendar month only if an agreement providing for
such salary reduction was entered into before the beginning of such month.
However, with respect to t anew employee of the Owner, premiums may be paid
for the calendar month during which the individual first becomes an
employee, if a salary reduction agreement is entered into on or before the
first day on which the individual becomes an employee.
6. Distributions shall not be made under this Contract earlier than (i) the
calendar year in which the Annuitant attains age 70 1/2, (ii) when the
annuitant is separated from service with the Owner, or (iii) when the
Annuitant is faced with an "unforeseeable emergency" (within the meaning of
Treasury Regulation Section 1.457-2(h)).
7. Distributions from this Contract must comply with the minimum distribution
rules of Code Section 401(a)(9), including the incidental death benefit rule
of Code Section 401(a)(9)(G). Accordingly, the entire interest under the
Contract must be distributed:
(a) not later than April 1 next following the close of the calendar year in
which the Annuitant attains age 70 1/2 (the "Required Beginning Date"),
or
(b) commencing not later than the Required Beginning Date over the life of
the Annuitant or over the lives of the Annuitant and his or her
Beneficiary (or over a period not extending beyond the life expectancy
of the Annuitant or the life expectancy of the Annuitant and his or her
Beneficiary).
In addition, if the Annuitant dies before distribution of his or her
interest in the Contract has begun in accordance with paragraph (b) above,
the Annuitant's entire interest must be distributed within five years,
unless (i) such interest is distributed to a Beneficiary over his or her
life (or over a period not extending beyond such Beneficiary's life
expectancy) and (ii) such distribution begins not later than one year after
the Annuitant's death. If the Beneficiary is the Annuitant's surviving
spouse, the date on which the distributions are required to begin shall not
be earlier than the date on which the Owner would have attained age 70 1/2.
However, in all cases where the Annuitant dies before distribution of his or
her interest in the Contract has begun, the Annuitant's entire interest must
be paid over a period not to exceed 15 years (or the life expectancy of the
surviving spouse if such spouse is the Beneficiary).
If the Annuitant dies after distribution of his or her interest in the
Contract has begun in accordance with paragraph (b) above but before his or
her entire interest has been distributed,
<PAGE>
the remaining interest will be distributed at least as rapidly as under the
method of distribution being used prior to the Annuitant's death.
All distributions must comply with a method of distribution offered by PM
under this Contract.
8. Distributions from this Contract payable over a period of more than one year
shall be made in substantially nonincreasing amounts (paid not less
frequently than annually).
Miscellaneous Provisions
1. PM reserves the right to amend this rider to comply with future changes
in the Code and any regulations or rulings issued thereunder. PM shall
provide the Owner with a copy of any such amendment.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
R-95-457
<PAGE>
EXHIBIT 99.4(n)
Qualified Plan Loan Endorsement
(Draft)
<PAGE>
QUALIFIED PLAN LOAN ENDORSEMENT
This Endorsement is part of your Contract and should be attached to it. All
terms of the base Contract which do not conflict with this Endorsement's terms
apply to this Endorsement. In the event of any conflict between the terms of
this Endorsement and the terms of the Contract, the terms of this Endorsement
shall prevail over the terms of the base policy.
Adverse tax consequences may result if you fail to meet the repayments
requirements for your loan. The tax and ERISA rules relating to Contract loans
are complex and in many cases unclear. For these reasons, and because the rules
vary depending on the individual circumstances of each Contract, WE STRONGLY
-----------
ADVISE THAT YOU CONSULT WITH A QUALIFIED TAX ADVISER before exercising the loan
- ----------------------------------------------------
provisions of your Contract.
CONTRACT LOANS
If your Contract is issued under a Qualified Plan under code Section 401 or 403
and your Qualified Plan permits, you may request a loan using your Contract
Value as the only security.
LOAN PROCEDURES - Your loan request must be submitted on our Loan Request Form.
You may submit a loan request at any time after your first Contract Anniversary
and before your Annuity Date. If approved, your loan will be effective as of
the end of the Business Day on which we receive the Loan Request Form. We will
normally forward proceeds of your loan to you within seven days after the
effective date of your loan.
LOAN ACCOUNT - On the effective date of your loan, we will transfer an amount
equal to the principal amount of your loan into an account called the Loan
Account. We will transfer amounts to the Loan Account proportionately from your
Investment Options based on your Account Value in each. We will credit interest
on amounts in the Loan Account at a rate equal to an annual rate that is 1.75
percentage points lower than the annual loan interest rate charged on your loan.
Interest earned will accrue daily beginning on the day following the effective
day of the loan. The interest credited will be transferred from the Loan
Account to the Investment Options on your Contract Anniversary according to your
most recent allocation instructions.
As your loan is repaid, the amount of the repayment will be transferred back to
your Investment Options in the same proportion as your most recent allocation
instructions.
LOAN TERMS - You may have only one loan outstanding at any time. The minimum
loan amount is $1,000 and the maximum loan amount for Contracts with Accumulated
Value of $20,000 or less is 50% of the Accumulated Value. For Contracts with
Accumulated Value in excess of $20,000, the maximum loan amount is the lessor
of:
. 50% of your Contract's Accumulated Value; or
. $50,000 reduced by the result of (A / B), where (A) is your highest
outstanding Contract Debt during the 12-month period immediately
preceding the effective date of your loan and (B) is the outstanding
loan balance on the date of the loan.
You should refer to the terms of your particular Qualified Plan for any
additional loan restrictions. If you have other loans outstanding pursuant to
other Qualified Plans, the amount you may borrow may be further restricted.
LOAN INTEREST RATE - You will be charged interest on your loan at an annual
rate, set at the time the loan is made, equal to the higher of 5% or the Moody's
Corporate Bond Yield Average-
<PAGE>
Monthly Corporates, as published by Moody's Investors Service, Inc., or its
successor, for the most currently available calendar month. In the event that
the Moody's Corporate Bond Yield Average Monthly Corporates is no longer
published, we will use a substantially similar average as established by
regulation within the state in which this Contract is delivered.
Interest charged will accrue daily beginning on the day your loan is effective.
We will notify you of the current Loan Interest Rate when you make a Contract
loan.
REPAYMENT TERMS - You must repay principal and interest of any loan within five
years after its effective date. If you have certified to us that your loan
proceeds will be used to acquire a principal residence for yourself, you may
request a loan for thirty years. In either case, you must repay your loan prior
to your Annuity Date.
Your loan, including principal and accrued interest, must be repaid in quarterly
installments. An installment will be due each quarter on the date corresponding
to your loan effective date, beginning with the first such date following the
effective date of your loan. You may prepay your loan at any time. If you
prepay your entire outstanding principal, we will bill you for any accrued
interest. You loan will be considered repaid only when the interest due has
also been paid.
Subject to any necessary approval of state insurance authorities, we will treat
all payments you send us as premium payments unless you specifically indicate
that your payment is a loan repayment. Any repayments in excess of the amount
then due will be refunded, unless the loan is repaid in full.
If a loan payment is not made when due, interest will continue accrue to and we
will declare the entire remaining loan balance in default. At that time, we will
send written notification of the amount needed to bring the loan back to a
current status. You will have sixty (60) days from the date on which the loan
was declared in default (the "grace period") to make the required payment. If
the required payment is not received by the end of the grace period, the
defaulted loan balance plus accrued interest will be withdrawn from your
Contract Value, if amounts under your Contract are eligible for distribution.
If those amounts are not eligible for distribution, the defaulted loan balance
plus accrued interest will be considered a Deemed Distribution and will be
withdrawn when such values become eligible. In either case, the Distribution or
the Deemed Distribution will be considered a currently taxable event, will be
subject to the mandatory 20% federal withholding and may be subject to the early
withdrawal tax penalty.
If there is a Deemed Distribution under your Contract and to the extent allowed
by law, any future withdrawals will first be applied as repayment of the
defaulted Contract Debt including accrued interest.
Any amounts withdrawn and applied as repayment of loan principle will be
withdrawn from the Loan Account. Any amounts withdrawn and applied as repayment
of interest due will be withdrawn from your Fixed and Variable Accounts on a
proportionate basis relative to the Accumulated Value in each account.
We reserve the right to amend the provisions of this rider in order to comply
with changes in the Code or changes in interpretations of the code.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer Secretary
<PAGE>
EXHIBIT 99.5
Variable Annuity Application
AP9230-1
<PAGE>
VP NEWBS - - - - -
PACIFIC MUTUAL
Pacific Mutual Life Insurance Company
700 Newport Center Drive, P.O. Box 7500
Newport Beach, California 92658-7500
PACIFIC SELECT VARIABLE ANNUITY APPLICATION
VARIABLE ACCUMULATION ANNUITY
ANNUITANT
NAME
SOCIAL SECURITY NUMBER - -
ADDRESS
TELEPHONE
SEX MALE FEMALE
DATE OF BIRTH / /
JOINT OR CONTINGENT ANNUITANT
NAME
DATE OF BIRTH / /
SEX MALE FEMALE
SOCIAL SECURITY NUMBER - -
CONTRACT OWNER (If other than the Annuitant(s) named above)
NAME
ADDRESS
TELEPHONE
SOCIAL SECURITY NUMBER - -
JOINT OR CONTINGENT OWNER
NAME
ADDRESS
SOCIAL SECURITY NUMBER - -
BENEFICIARY DESIGNATION
PRIMARY BENEFICIARY
NAME
RELATIONSHIP
CONTINGENT BENEFICIARY
NAME
RELATIONSHIP
OWNER BENEFICIARY
NAME
RELATIONSHIP
PREMIUM ALLOCATIONS: Select up to five accounts and indicate allocations
<PAGE>
The total of the percentages must be 100% (use whole number only)
BANKERS TRUST CO.
____% Equity Index
JANUS
____% Growth LT
JP MORGAN INVESTMENT
____% Equity Income
____% Multi-Strategy
PACIFIC INVESTMENT MGMT. CO.
____% Government Securities
____% Managed Bond
PACIFIC MUTUAL
____% High Yield Bond
____% Money Market
____% Fixed Account
TEMPLETON
____% International
____% OTHER
PREMIUM AMOUNT:
Amount Submitted With Application
Yes __________$No (Check only if 1035 Exchange) Estimated Amount $__________
OPTIONAL:
Annuity Start Date:______/______/______ Guaranteed Death Benefit Rider Yes
No
REPLACEMENT:
Will this Annuity applied for replace any existing Life Insurance or Annuity?
Yes No
If Yes, give company, amount, type of policy and termination date:
TAX STATUS OF ANNUITY: Certain tax qualifications require the submission of
additional forms with application.
Non-qualified IRA: Tax Yr. 19__ SEP-IRA: Tax Yr. 19__ 401(a) Pension
Keogh/HR10 IRA Rollover 403(b) Transfer 401(k) Profit Sharing
PROSPECTUS RECEIPT:
I have received the Prospectus Brochure, which includes the Separate Account
Prospectus and Statement of Additional Information, and Pacific Select Fund
Prospectus dated _______________ (Use date on the Prospectus Brochure Cover)
I have received the Statement of Additional Information for Pacific Select Fund
dated __________.
REMARKS:
HOME OFFICE ENDORSEMENTS: (NOT APPLICABLE IN KENTUCKY, PENNSYLVANIA
<PAGE>
AND WEST VIRGINIA)
AGREEMENT:
To the best of my knowledge the statements and answers given in this application
are true, complete and correct. I agree that:
1. This application is the basis of any contract issued as a result of it.
2. No agent has the authority to waive or complete any answer to any question
in the application, make or alter any contract or waive any of PM's other rights
or requirements.
3. If there are Joint Applicants, the contract if issued will be owned by the
Joint Applicants as joint tenants with the right of survivorship and not as
tenants in common. If there is a Contingent Owner named, the Contingent Owner
will become the Owner if the Owner dies prior to the Annuity Start Date.
4. I/WE BELIEVE THIS CONTRACT WILL MEET MY/OUR FINANCIAL OBJECTIVES.
5. I/WE UNDERSTAND THAT CONTRACT VALUES MAY INCREASE OR DECREASE DEPENDING ON
THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNTS.
6. ACCUMULATED VALUES UNDER THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNTS.
Dated by Annuitant/Owner at: _____________ this _____ Day of __________19 _____
City State
______________________ ______________________________________________________
Signature of Annuitant Signature of Applicant/Owner (if other than Annuitant)
______________________ ______________________________________________________
Signature of Joint or Signature of Joint or Contingent Applicant/Owner
Contingent Annuitant
______________________ ______________________________________________________
Agent's Signature Agent's Name (Print)
______________________
Florida License I.D. Number
To your knowledge or belief, will replacement of life insurance or annuities be
involved? Yes No
AGENT INFORMATION:
Agent Name % Agent Code Agency or Broker/Dealer
Broker/Dealer Code Name
<PAGE>
EXHIBIT 99.6(a)
Pacific Mutual's Articles of Incorporation
<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 99.6(b)
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
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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.
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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
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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.
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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
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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
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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 99.8
Fund Participation Agreement
<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
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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
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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
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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
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<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
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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
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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
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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.
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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
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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 99.9
Opinion and Consent of Legal Officer
of Pacific Mutual as to the Legality
of Contracts being Registered
<PAGE>
[Letterhead of Pacific Mutual Insurance Company]
March 15, 1990
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Post Office Box 9000
Newport Beach, California 92660
Dear Sirs:
In my capacity as Vice President and Investment Counsel of Pacific Mutual Life
Insurance Company ("Pacific Mutual"), I have supervised the establishment of
Pacific Select Variable Annuity Separate Account of Pacific Mutual Life
Insurance Company on November 22, 1989, by resolution of the Board of Directors
of Pacific Mutual and Memorandum dated November 28, 1989 concerning Pacific
Select Variable Annuity Separate Account as the separate account for assets
applicable to Pacific Select Variable Annuity Contracts, 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 N-4 ("Registration Statement") filed by Pacific Mutual and
Pacific Select Variable Annuity Separate Account with the Securities and
Exchange Commission (File No. 33-32704) under the Securities Act of 1933, as
amended, for the registration of interests in the variable annuity contracts to
be issued with respect to Pacific Select Variable Annuity 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 Variable Annuity 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 Variable Annuity
Separate Account equal to the reserves and other liabilities under the Pacific
Select Variable Annuity Contracts is not chargeable with liabilities arising out
of any other business Pacific Mutual may conduct.
4. The Pacific Select Variable Annuity Contracts 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,
except as limited by bankruptcy or insolvency laws affecting the rights of
creditors generally.
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
Vice President and Investment Counsel
<PAGE>
DRC/rb
<PAGE>
EXHIBIT 99.10(a)
Consent of Deloitte & Touche LLP
<PAGE>
DELOITTE & TOUCHE LLP
Suite 1200 (714) 436-7100
695 Town Center Drive (714) 436-7200
Costa Mesa, California 92626-1924
CONSENT OF INDEPENDENT ACCOUNTANTS
Pacific Mutual Life Insurance Company:
We hereby consent to the use in Post-Effective Amendment No. 9 under the
Securities Act of 1933 and Amendment No. 10 under The Investment Company Act of
1940 to Registration Statement No. 33-32704 on Form N-4 of our reports dated
February 16, 1996 related to Pacific Select Variable Annuity Separate Account
for the year ended December 31, 1995 which is incorporated by reference in such
Registration Statement and our report dated February 23, 1996, related to
Pacific Mutual Life Insurance Company's Financial Statements for the years ended
December 31, 1995 and 1994 which is included in the Statement of Additional
Information of such Registration Statement, and to references to us under the
heading "Financial Highlights" appearing in the prospectus of Pacific Select
Variable Annuity and under the heading "Independent Accountants" in the
Statement of Additional Information for Pacific Select Variable Annuity which
are part of such Registration Statement.
March 26, 1996
______________________________
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
______________________________
<PAGE>
EXHIBIT 99.10(b)
Consent of Dechert Price & Rhoads
<PAGE>
Law Offices of
DECHERT PRICE & RHOADS
1500 K STREET, N.W.
WASHINGTON, D.C. 20005
TELEPHONE: (202) 626-3300
TELEX: 897 122 BARDEP WASH
TELECOPIER: (202) 626-3334
March 16, 1990
The Board of Directors
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Re: Pacific Select Variable Annuity
Separate Account, File No. 33-32704
Dear Sirs or 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 99.11
Financial Statements dated as of December 31, 1995 for
Pacific Select Variable Annuity Separate Account
<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 Variable Annuity Separate Account (comprised of the Money Market,
Managed Bond, Government Securities, High Yield Bond, Growth, Equity Income,
Multi-Strategy, International, Equity Index, Growth LT, Equity, and Bond and
Income 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 Variable Annuity Separate Account at
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
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENTS OF ASSETS & LIABILITIES
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>
ASSETS
Investments in Pacific Select Fund:
Money Market Portfolio (6,229 shares; cost $62,510)........... $ 62,375
Managed Bond Portfolio (5,966 shares; cost $63,939)........... $ 66,211
Government Securities Portfolio (4,549 shares; cost $47,409).. $ 49,321
High Yield Bond Portfolio (6,729 shares; cost $63,907)........ $ 65,851
Growth Portfolio (1,539 shares; cost $25,479)................. $ 28,574
Equity Income Portfolio (7,162 shares; cost $116,389)......... $ 130,395
Multi-Strategy Portfolio (3,875 shares; cost $49,299).........
International Portfolio (9,217 shares, cost $116,439).........
Equity Index Portfolio (4,183 shares; cost $65,584)...........
Growth LT Portfolio (10,074 shares; cost $134,923)............
Equity Portfolio (1,661 shares; cost $28,054).................
Bond and Income Portfolio (1,410 shares; cost $17,139)........
Receivables:
Due from Pacific Mutual Life Insurance Company................ 932 35 215 121 3 491
--------- --------- --------- --------- --------- ---------
TOTAL ASSETS.................................................... 63,307 66,246 49,536 65,972 28,577 130,886
--------- --------- --------- --------- --------- ---------
LIABILITIES
Payables:
Fund shares purchased......................................... 932 35 215 121 3 491
--------- --------- --------- --------- --------- ---------
TOTAL LIABILITIES............................................... 932 35 215 121 3 491
--------- --------- --------- --------- --------- ---------
NET ASSETS...................................................... $ 62,375 $ 66,211 $ 49,321 $ 65,851 $ 28,574 $ 130,395
========= ========= ========= ========= ========= =========
<CAPTION>
Multi- Inter- Equity Growth Bond &
Strategy national Index LT Equity Income
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investments in Pacific Select Fund:
Money Market Portfolio (6,229 shares; cost $62,510)...........
Managed Bond Portfolio (5,966 shares; cost $63,939)...........
Government Securities Portfolio (4,549 shares; cost $47,409)..
High Yield Bond Portfolio (6,729 shares; cost $63,907).......
Growth Portfolio (1,539 shares; cost $25,479).................
Equity Income Portfolio (7,162 shares; cost $116,389).........
Multi-Strategy Portfolio (3,875 shares; cost $49,299)......... $ 55,029
International Portfolio (9,217 shares, cost $116,439)......... $ 119,245
Equity Index Portfolio (4,183 shares; cost $65,584)........... $ 72,991
Growth LT Portfolio (10,074 shares; cost $134,923)............ $ 142,226
Equity Portfolio (1,661 shares; cost $28,054)................. $ 29,099
Bond and Income Portfolio (1,410 shares; cost $17,139)........ $ 18,346
Receivables:
Due from Pacific Mutual Life Insurance Company................ 159 367 204 667 316 71
--------- --------- --------- --------- --------- ---------
TOTAL ASSETS.................................................... 55,188 119,612 73,195 142,893 29,415 18,417
--------- --------- --------- --------- --------- ---------
LIABILITIES
Payables:
Fund shares purchased......................................... 159 367 204 667 316 71
--------- --------- --------- --------- --------- ---------
TOTAL LIABILITIES............................................... 159 367 204 667 316 71
--------- --------- --------- --------- --------- ---------
NET ASSETS...................................................... $ 55,029 $ 119,245 $ 72,991 $ 142,226 $ 29,099 $ 18,346
========= ========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY 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.................................................. $ 3,199 $ 2,742 $ 1,647 $ 3,271 $ 242 $ 1,155
EXPENSES
Mortality and expense risk fee............................. 701 543 350 470 340 858
--------- --------- --------- --------- --------- ---------
NET INVESTMENT INCOME (LOSS)................................. 2,498 2,199 1,297 2,801 (98) 297
--------- --------- --------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions........ (140) (95) (222) 487 (1,783) 27
Net unrealized appreciation (depreciation) on investments.. (10) 4,750 3,263 2,449 7,708 16,440
--------- --------- --------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS...................................... (150) 4,655 3,041 2,936 5,925 16,467
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. $ 2,348 $ 6,854 $ 4,338 $ 5,737 $ 5,827 $ 16,764
========= ========= ========= ========= ========= =========
<CAPTION>
Multi- Inter- Equity Growth Bond &
Strategy national Index LT Equity Income
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.................................................. $ 1,324 $ 2,225 $ 765 $ 9,470 $ 14 $ 451
EXPENSES
Mortality and expense risk fee............................. 469 916 397 976 114 74
--------- --------- --------- --------- --------- ---------
NET INVESTMENT INCOME (LOSS)................................. 855 1,309 368 8,494 (100) 377
--------- --------- --------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions........ (23) 309 1,229 6,574 1 (6)
Net unrealized appreciation (depreciation) on investments.. 6,951 4,662 7,194 6,191 1,045 1,206
--------- --------- --------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS...................................... 6,928 4,971 8,423 12,765 1,046 1,200
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. $ 7,783 $ 6,280 $ 8,791 $ 21,259 $ 946 $ 1,577
========= ========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY 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 (loss)............................... $ 2,498 $ 2,199 $ 1,297 $ 2,801 $ (98) $ 297
Net realized gain (loss) from security transactions........ (140) (95) (222) 487 (1,783) 27
Net unrealized appreciation (depreciation) on investments.. (10) 4,750 3,263 2,449 7,708 16,440
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. 2,348 6,854 4,338 5,737 5,827 16,764
--------- --------- --------- --------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums................................... 261,308 20,349 18,216 22,854 688 42,780
Transfers--policy charges and deductions................... (2,480) (1,677) (1,715) (1,647) (1,790) (2,704)
Transfers in (from other variable accounts)................ 95,496 21,953 20,465 53,916 12,132 53,482
Transfers out (to other variable accounts)................. (337,675) (8,318) (6,494) (29,696) (15,335) (10,459)
Transfers--other........................................... (42) 27 7 10 (19) 27
--------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS........................... 16,607 32,334 30,479 45,437 (4,324) 83,126
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS................................... 18,955 39,188 34,817 51,174 1,503 99,890
NET ASSETS
Beginning of year.......................................... 43,420 27,023 14,504 14,677 27,071 30,505
--------- --------- --------- --------- --------- ---------
End of year................................................ $ 62,375 $ 66,211 $ 49,321 $ 65,851 $ 28,574 $ 130,395
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Multi- Inter- Equity Growth Bond &
Strategy national Index LT Equity 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 (loss)............................... $ 855 $ 1,309 $ 368 $ 8,494 (100) $ 377
Net realized gain (loss) from security transactions........ (23) 309 1,229 6,574 1 (6)
Net unrealized appreciation (depreciation) on investments.. 6,951 4,662 7,194 6,191 $ 1,045 1,206
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. 7,783 6,280 8,791 21,259 946 1,577
--------- --------- --------- --------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums................................... 12,463 36,739 30,757 45,013 13,229 9,770
Transfers--policy charges and deductions................... (1,662) (2,891) (1,339) (3,392) (293) (130)
Transfers in (from other variable accounts)................ 15,539 64,987 37,983 102,932 17,251 8,647
Transfers out (to other variable accounts)................. (5,516) (28,833) (13,200) (59,032) (2,040) (1,524)
Transfers--other........................................... 6 17 29 (8) 6 6
--------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS........................... 20,830 70,019 54,230 85,513 28,153 16,769
--------- --------- --------- --------- --------- ---------
NET INCREASE IN NET ASSETS................................... 28,613 76,299 63,021 106,772 29,099 18,346
NET ASSETS
Beginning of year.......................................... 26,416 42,946 9,970 35,454
--------- --------- --------- --------- --------- ---------
End of year................................................ $ 55,029 $ 119,245 $ 72,991 $ 142,226 $ 29,099 $ 18,346
========= ========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY 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...................................... $ 781 $ 988 $ 506 $ 799 $ 1,939
Net realized gain (loss) from security transactions........ 50 (642) (640) (577) (398)
Net unrealized appreciation (depreciation)
on investments............................................ (85) (1,841) (924) (251) (5,338)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................................. 746 (1,495) (1,058) (29) (3,797)
--------- --------- --------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums................................... 121,385 1,957 620 882 1,158
Transfers--policy charges and deductions................... (1,884) (1,117) (976) (367) (1,510)
Transfers in (from other variable accounts)................ 87,254 15,793 5,939 19,375 25,943
Transfers out (to other variable accounts)................. (178,819) (12,103) (6,689) (14,544) (30,173)
Transfers--other........................................... 4 (1) (2) 1 (32)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS........................... 27,940 4,529 (1,108) 5,347 (4,614)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS........................ 28,686 3,034 (2,166) 5,318 (8,411)
NET ASSETS
Beginning of year.......................................... 14,734 23,989 16,670 9,359 35,482
--------- --------- --------- --------- ---------
End of year................................................ $ 43,420 $ 27,023 $ 14,504 $ 14,677 $ 27,071
========= ========= ========= ========= =========
<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...................................... $ 2,467 $ 1,236 $ 1,397 $ 127 $ 371
Net realized gain (loss) from security transactions........ 55 (2) 1,741 24 (97)
Net unrealized appreciation (depreciation)
on investments............................................ (2,978) (1,876) (3,276) (161) 1,112
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................................. (456) (642) (138) (10) 1,386
--------- --------- --------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums................................... 1,569 1,343 2,860 600 2,468
Transfers--policy charges and deductions................... (1,154) (778) (963) (366) (356)
Transfers in (from other variable accounts)................ 15,775 11,263 50,644 3,811 44,351
Transfers out (to other variable accounts)................. (4,366) (3,693) (25,259) (1,309) (12,397)
Transfers--other........................................... (4) (4) 46 2
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS........................... 11,820 8,131 27,328 2,736 34,068
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS........................ 11,364 7,489 27,190 2,726 35,454
NET ASSETS
Beginning of year.......................................... 19,141 18,927 15,756 7,244
--------- --------- --------- --------- ---------
End of year................................................ $ 30,505 $ 26,416 $ 42,946 $ 9,970 $ 35,454
========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Pacific Select Variable Annuity 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 twelve subaccounts called
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 (not offered to new
contractholders beginning January 1, 1994), the Equity Income Variable Account,
the Multi-Strategy Variable Account, the International Variable Account, the
Equity Index Variable Account, the Growth LT Variable Account, the Equity
Variable Account, and the Bond and Income 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 30, 1989 and commenced operations on
July 24, 1990. 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 annuities, are obligations of Pacific Mutual.
The Separate Account held by Pacific Mutual represents funds from
individual flexible premium variable accumulation deferred annuity contracts.
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 basis of identified cost.
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 the related portfolio.
3. CHARGES AND EXPENSES
Pacific Mutual charges the Separate Account daily for mortality and expense
risks assumed with respect to variable annuity contracts funded by the Separate
Account at an annual rate of 1.25% of the average daily net assets of each
Variable Account. Under the contracts, Pacific Mutual makes certain deductions
from the net assets of each Variable Account for administrative expenses,
contract maintenance, any state premium taxes, optional death benefits and any
sales surrender charges. 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 annuity contracts funded by interests in
the Separate Account, and is compensated by Pacific Mutual.
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY 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 Equity
Market Bond Securities Bond Growth Income
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- --------- --------- ---------
Commencement of Operations 7/24/90 9/05/90 8/22/90 8/16/90 08/16/90 08/16/90
ACCUMULATION UNIT
VALUE:
<S> <C> <C> <C> <C> <C> <C>
Beginning $ 11.36 $ 13.70 $ 13.37 $ 16.03 $ 16.07 $ 14.09
======= ======= ======= ======= ======== ========
Ending $ 11.84 $ 16.11 $ 15.68 $ 18.82 $ 19.95 $ 18.32
======= ======= ======= ======= ======== ========
Number of Units Outstanding at
End of Period 5,268,194 4,110,672 3,144,652 3,499,795 1,431,985 7,116,753
<CAPTION>
Multi- Inter- Equity Growth Bond &
Strategy national Index LT Equity Income
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- --------- --------- ---------
Commencement of Operations 9/25/90 8/16/90 2/11/91 1/04/94 1/04/95 1/04/95
ACCUMULATION UNIT
VALUE:
<S> <C> <C> <C> <C> <C> <C>
Beginning $ 14.29 $ 11.47 $ 13.03 $ 11.19 $ 10.00 $ 10.00
======== ======== ======== ======== ======== ========
Ending $ 17.68 $ 12.52 $ 17.62 $ 15.11 $ 12.24 $ 13.21
======== ======== ======== ======== ======== ========
Number of Units Outstanding at
End of Period 3,112,558 9,523,524 4,142,024 9,411,999 2,377,743 1,389,028
</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.
<PAGE>
EXHIBIT 99.13
Schedules for Computation of
Performance Quotations
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
ANNUAL TO DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Growth Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94
Beginning AUV 11.358460 13.700259 13.366147 16.025676 16.066728 14.089958
Ending AUV (12/31/95) 11.840003 16.107165 15.683960 18.815680 19.954357 18.322250
Days 364 364 364 364 364 364
Admin Charge (0.0125%) $ 1.53 $ 1.62 $ 1.62 $ 1.63 $ 1.69 $ 1.70
Contract Charge ($30.00) $ 0.75 $ 0.75 $ 0.75 $ 0.75 $ 0.75 $ 0.75
Surrender Charge $ 54.00 $ 54.00 $ 54.00 $ 54.00 $ 54.00 $ 54.00
Ending ERV $ 986.08 $1,119.17 $1,116.90 $1,117.59 $1,185.36 $1,243.68
AATR Surrender* -1.39% 11.92% 11.69% 11.76% 18.54% 24.37%
AATR Account Value** 4.01% 17.32% 17.09% 17.16% 23.94% 29.77%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94
Beginning AUV 14.292222 13.030324 11.468573 11.187808 10.000000 10.000000
Ending AUV (12/31/95) 17.679694 17.622037 12.521112 15.111188 12.238202 13.207670
Days 364 364 364 364 364 364
Admin Charge (0.0125%) $ 1.67 $ 1.75 $ 1.56 $ 1.75 $ 1.68 $ 1.72
Contract Charge ($30.00) $ 0.75 $ 0.75 $ 0.75 $ 0.75 $ 0.75 $ 0.75
Surrender Charge $ 54.00 $ 54.00 $ 54.00 $ 54.00 $ 54.00 $ 54.00
Ending ERV $1,180.41 $1,295.61 $1,035.39 $1,293.91 $1,167.24 $1,264.04
AATR Surrender* 18.04% 29.56% 3.54% 29.39% 16.72% 26.40%
AATR Account Value** 23.44% 34.96% 8.94% 34.79% 22.12% 31.80%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
*Average Annual Total Return upon Surrender=[(ERV/1000) (to the power of
(1/Years))]-1
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(to the power of (1/Years))]-1
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
LAST THREE YEARS ENDING DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Growth Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/31/92 12/31/92 12/31/92 12/31/92 12/31/92 12/31/92
Beginning AUV 10.938652 13.152108 13.030534 13.859645 15.096417 13.378137
Ending AUV (12/31/95) 11.840003 16.107165 15.683960 18.815680 19.954357 18.322250
Days 1,093 1,093 1,093 1,093 1,093 1,093
Admin Charge (0.0125%) $ 4.62 $ 4.87 $ 4.82 $ 5.24 $ 5.11 $ 4.94
Contract Charge ($30.00) $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50
Surrender Charge $ 45.00 $ 45.00 $ 45.00 $ 45.00 $ 45.00 $ 45.00
Ending ERV $1,030.21 $1,171.72 $1,150.78 $1,303.99 $1,268.36 $1,315.74
AATR Surrender* 1.00% 5.42% 4.79% 9.25% 8.25% 9.58%
AATR Account Value** 2.45% 6.76% 6.14% 10.49% 9.51% 10.81%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/31/92 12/31/92 12/31/92 12/31/92 12/31/92 12/31/92
Beginning AUV 13.615030 12.085700 8.774107 11.187808 9.094796 9.371730
Ending AUV (12/31/95) 17.679694 17.622037 12.521112 15.111188 12.238202 13.207670
Days 1,093 1,093 1,093 364 1,093 1,093
Admin Charge (0.0125%) $ 4.90 $ 5.04 $ 5.71 $ - $ 5.13 $ 5.14
Contract Charge ($30.00) $ 1.50 $ 1.50 $ 1.50 $ - $ 1.50 $ 1.50
Surrender Charge $ 45.00 $ 45.00 $ 45.00 $ - $ 45.00 $ 45.00
Ending ERV $1,245.14 $1,403.77 $1,373.25 $ 0.0 $1,292.04 $1,355.35
AATR Surrender* 7.58% 11.97% 11.15% -100.00% 8.92% 10.67%
AATR Account Value** 8.86% 13.15% 12.35% -100.00% 10.17% 11.88%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
*Average Annual Total Return upon Surrender=[(ERV/1000) (to the power of
(1/Years))]-1
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(to the power of (1/Years))]-1
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
LAST FIVE YEARS ENDING DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Growth Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/28/90 12/28/90 12/28/90 12/28/90 12/28/90 12/28/90
Beginning AUV 10.269173 10.561534 10.612560 9.578431 9.108273 9.880550
Ending AUV (12/31/95) 11.840003 16.107165 15.683960 18.815680 19.954357 18.322250
Days 1,827 1,827 1,827 1,827 1,827 1,827
Admin Charge (0.0125%) $ 8.01 $ 9.40 $ 9.23 $ 11.23 $ 12.45 $ 10.33
Contract Charge ($30.00) $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ 3.00
Surrender Charge $ 27.00 $ 27.00 $ 27.00 $ 27.00 $ 27.00 $ 27.00
Ending ERV $1,113.39 $1,482.33 $1,435.52 $1,918.00 $2,142.76 $1,808.75
AATR Surrender* 2.17% 8.19% 7.50% 13.91% 16.46% 12.58%
AATR Account Value** 2.66% 8.58% 7.90% 14.23% 16.76% 12.92%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/28/90 n/a 12/28/90 n/a 12/31/90 12/31/90
Beginning AUV 10.629947 9.020251 6.759885 7.151146
Ending AUV (12/31/95) 17.679694 12.521112 12.238202 13.207670
Days 1,827 1,827 1,824 1,824
Admin Charge (0.0125%) $ 9.75 $ 8.65 $ 10.46 $ 10.23
Contract Charge ($30.00) $ 3.00 $ 3.00 $ 3.00 $ 3.00
Surrender Charge $ 27.00 $ 27.00 $ 27.00 $ 27.00
Ending ERV $1,619.21 $1,346.33 $1,765.29 $1,801.32
AATR Surrender* 10.12% 6.13% 12.04% 12.49%
AATR Account Value** 10.48% 6.55% 12.38% 12.83%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
*Average Annual Total Return upon Surrender=[(ERV/1000) (to the power of
(1/Years))]-1
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(to the power of (1/Years))]-1
EXI
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
LAST TEN YEARS ENDING DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Growth Income
<S> <C> <C> <C> <C> <C> <C>
Start Date n/a n/a n/a n/a n/a n/a
Beginning AUV
Ending AUV (12/31/95)
Days
Admin Charge (0.0125%)
Contract Charge ($30.00)
Surrender Charge
Ending ERV
AATR Surrender*
AATR Account Value**
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date n/a n/a n/a n/a 12/31/85 12/31/85
Beginning AUV 4.276812 5.080573
Ending AUV (12/31/95) 12.238202 13.207670
Days 3,650 3,650
Admin Charge (0.0125%) $ 26.58 $ 23.28
Contract Charge ($30.00) $ 6.75 $ 6.75
Surrender Charge $ - $ -
Ending ERV $2,806.48 $2,548.41
AATR Surrender* 10.87% 9.81%
AATR Account Value** 10.87% 9.81%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
*Average Annual Total Return upon Surrender=[(ERV/1000) (to the power of
(1/Years))]-1
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(to the power of (1/Years))]-1
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
FROM INCEPTION TO DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Growth Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 7/24/90 9/5/90 8/22/90 8/16/90 8/16/90 8/16/90
Beginning AUV 10.000000 10.000000 10.000000 10.000000 10.000000 10.000000
Ending AUV (12/31/95) 11.840003 16.107165 15.683960 18.815680 19.954357 18.322250
Days 1,984 1,941 1,955 1,961 1,961 1,961
Admin Charge (0.0125%) $ 8.99 $ 10.45 $ 10.46 $ 11.41 $ 11.97 $ 10.85
Contract Charge ($30.00) $ 3.75 $ 3.75 $ 3.75 $ 3.75 $ 3.75 $ 3.75
Surrender Charge $ 0.32 $ 0.24 $ 0.27 $ 0.28 $ 0.28 $ 0.28
Ending ERV $1,169.94 $1,593.20 $1,551.00 $1,861.16 $1,974.00 $1,812.11
AATR Surrender* 2.93% 9.15% 8.54% 12.26% 13.49% 11.70%
AATR Account Value** 2.93% 9.16% 8.54% 12.26% 13.50% 11.70%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 9/25/90 2/11/91 8/16/90 1/4/94 1/3/84 1/3/84
Beginning AUV 10.000000 10.000000 10.000000 10.000000 3.027990 3.406200
Ending AUV (12/31/95) 17.679694 17.622037 12.521112 15.111188 12.238202 13.207670
Days 1,921 1,782 1,961 724 4,378 4,378
Admin Charge (0.0125%) $ 10.91 $ 9.23 $ 8.41 $ 3.55 $ 40.72 $ 38.02
Contract Charge ($30.00) $ 3.75 $ 3.00 $ 3.75 $ 0.75 $ 8.25 $ 8.25
Surrender Charge $ 0.20 $ 27.66 $ 0.28 $ 54.74 $ 0.74 $ 0.74
Ending ERV $1,748.99 $1,717.42 $1,237.20 $1,450.84 $3,952.31 $3,791.42
AATR Surrender* 11.21% 11.71% 4.04% 20.64% 12.14% 11.75%
AATR Account Value** 11.21% 12.08% 4.05% 22.91% 12.14% 11.75%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
*Average Annual Total Return upon Surrender=[(ERV/1000) (to the power of
(1/Years))]-1
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(to the power of (1/Years))]-1
<PAGE>
EXHIBIT 99.14
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
