<PAGE>
As filed with the Securities and Exchange Commission on October 19, 1995
Registration No. 33-88458
811-8946
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. 1 [X]
Post Effective Amendment No. [_]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 1 [X]
(Check appropriate box or boxes)
SEPARATE ACCOUNT A
(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 Offices)(Zip Code)
(714) 640-3743
(Depositor's Telephone Number, including Area Code)
Diane N. Ledger
Assistant Vice President
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
(Name and address of agent for service)
Copies of all communications to:
John F. Hartigan, Esq. Jennifer L. Sawin, Esq.
Morgan, Lewis & Bockius Morgan, Lewis & Bockius
801 South Grand Avenue 2000 One Logan Square
Los Angeles, CA 90017-4615 Philadelphia, PA 19103-6993
Approximate Date of Commencement of Proposed Public Offering: As soon as
practical after the effective date of the Registration Statement.
Title of securities being registered: interests in individual flexible premium
variable annuity contracts.
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, the Registrant hereby declares that an indefinite number or amount of
securities is hereby being registered under the Securities Act of 1933. The
Securities Act Registration filing fee is $500.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SEPARATE ACCOUNT A
FORM N-4
CROSS REFERENCE SHEET
PART A
Item No. Prospectus Heading
1. Cover Page Cover Page
2. Definitions SPECIAL DEFINITIONS
3. Synopsis SUMMARY; FEE TABLE
4. Condensed Financial Information YOUR INVESTMENT OPTIONS--Variable
Investment Option Performance;
ADDITIONAL INFORMATION--Financial
Statements
5. General Description of Registrant,
Depositor and Portfolio Companies SUMMARY--What are My Investment
Options?: PACIFIC MUTUAL AND THE SEPARATE
ACCOUNT--Pacific Mutual,--Separate
Account A; YOUR INVESTMENT OPTIONS--Your
Variable Investment Options; ADDITIONAL
INFORMATION--Voting Rights
6. Deductions SUMMARY--What Charges Will I Pay?,--
Can I Change My Investment Options?; FEE
TABLE; HOW YOUR PAYMENTS ARE INVESTED--
Transfers; CHARGES, FEES AND DEDUCTIONS;
WITHDRAWALS--Withdrawal Transaction
Fees; ADDITIONAL INFORMATION--Sales
Commissions
7. General Description of
Variable Annuity
Contracts SPECIAL DEFINITIONS; SUMMARY; WHY BUY A
CONTRACT; PURCHASING YOUR CONTRACT--How
to Apply for your Contract; HOW YOUR
PAYMENTS ARE INVESTED; RETIREMENT
BENEFITS AND OTHER PAYOUTS--
Annuitization, Fixed and Variable
Annuities,--Annuity Periods, Your Annuity
Payments,--Death Benefits; ADDITIONAL
INFORMATION--Voting Rights,--Changes to
Your Contract,--Changes to ALL
Contracts,--Investor Inquiries and
Submitting Forms and Requests,--Timing of
Payments
8. Annuity Period RETIREMENT BENEFITS AND OTHER PAYOUTS
9. Death Benefit RETIREMENT BENEFITS AND OTHER PAYOUTS--
Death Benefits; WITHDRAWALS--Mandatory
Distribution on Death
10. Purchases and Contract Value SUMMARY--How Do I Purchase a Contract;
PURCHASING YOUR CONTRACT; HOW YOUR
PAYMENTS ARE INVESTED; PACIFIC MUTUAL AND
THE SEPARATE ACCOUNT--Pacific Mutual
11. Redemptions SUMMARY--Can I Withdraw My Investment?,
--Can I Return My Contract?; CHARGES,
FEES AND DEDUCTIONS; WITHDRAWALS;
ADDITIONAL INFORMATION--Timing of
Payments
12. Taxes SUMMARY; CHARGES, FEES AND DEDUCTIONS--
Premium Taxes; WITHDRAWALS--Optional
Withdrawals,--Tax Consequences of
Withdrawals; FEDERAL TAX STATUS
13. Legal Proceedings Not Applicable
14. Table of Contents of the
Statement of Additional
Information CONTENTS OF THE STATEMENT OF ADDITIONAL
INFORMATION
PART B
Item No. Statement of Additional Information
Heading
15. Cover Page Cover Page
16. Table of Contents TABLE OF CONTENTS
17. General Information and History Not Applicable
18. Services Not Applicable
19. Purchase of Securities
Being Offered THE CONTRACTS AND THE SEPARATE ACCOUNT--
Calculating Subaccount Unit Values,--
Systematic Transfer Programs
20. Underwriters DISTRIBUTION OF THE CONTRACTS--Pacific
Equities Network
21. Calculation of Performance Data PERFORMANCE
22. Annuity Payments THE CONTRACTS AND THE SEPARATE ACCOUNT--
Variable Annuity Payment Amounts
23. Financial Statements FINANCIAL STATEMENTS
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
FOR
PACIFIC ONE
ISSUED BY
PACIFIC MUTUAL LIFE INSURANCE COMPANY
DATED , 1995
--------------
PROSPECTUS
FOR
PACIFIC SELECT FUND
DATED , 1995
<PAGE>
PACIFIC ONE
AN INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACT
ISSUED BY PACIFIC MUTUAL LIFE INSURANCE COMPANY
MAILING ADDRESS: P.O. BOX 7187
PASADENA, CALIFORNIA 91109-7187
1-800-722-2333
This Prospectus describes Pacific One (the "Contract") offered by Pacific
Mutual Life Insurance Company ("Pacific Mutual"). The Contracts provide
purchasers with flexibility in long-term financial planning, including planning
for retirement. Contracts are available both to individuals and under certain
tax-qualified retirement plans. Payout options under the Contracts include
variable annuities funded through Pacific Mutual's Separate Account A (the
"Separate Account") and fixed annuities funded by Pacific Mutual's General
Account.
Twelve Investment Options are currently available. Each of the eleven
Variable Investment Options now in effect is a subaccount of the Separate
Account, and provides variable returns by investing in shares of a
corresponding Portfolio of Pacific Select Fund:
Money Market Portfolio Multi-Strategy Portfolio
High Yield Bond Portfolio Equity Portfolio
Managed Bond Portfolio Bond and Income Portfolio
Government Securities Portfolio Equity Index Portfolio
Growth LT Portfolio International Portfolio
Equity Income Portfolio
A Fixed Option is also available; it provides a fixed rate of return and is
funded by Pacific Mutual's General Account.
THIS PROSPECTUS PROVIDES INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW
BEFORE INVESTING IN A CONTRACT. IN ADDITION, THIS PROSPECTUS IS ACCOMPANIED BY
A CURRENT PROSPECTUS FOR THE PACIFIC SELECT FUND. YOU SHOULD READ BOTH OF THESE
PROSPECTUSES CAREFULLY AND RETAIN THEM FOR YOUR FUTURE REFERENCE.
Additional information about the Contract and the Separate Account has been
filed with the Securities and Exchange Commission in a Statement of Additional
Information, dated , 1995. You may obtain a free copy of the Statement of
Additional Information by writing or calling Pacific Mutual. The information
contained in the Statement of Additional Information is incorporated by
reference into this Prospectus. The table of contents for the Statement of
Additional Information appears on page 36 of this Prospectus.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK. IT IS NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN A CONTRACT INVOLVES RISK, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
---------------
THE CONTRACT IS NOT AVAILABLE IN ALL STATES AND THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY JURISDICTION IN WHICH SUCH AN OFFER MAY NOT BE
MADE LAWFULLY. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE RELATED STATEMENT OF
ADDITIONAL INFORMATION (OR ANY SALES LITERATURE APPROVED BY PACIFIC
MUTUAL), AND ANY SUCH UNAUTHORIZED INFORMATION OR REPRESENTATION IS, IF
GIVEN OR MADE, NOT TO BE RELIED UPON.
DATED : , 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPECIAL DEFINITIONS........................................................ 4
SUMMARY.................................................................... 7
FEE TABLE.................................................................. 8
WHY BUY A CONTRACT......................................................... 10
YOUR INVESTMENT OPTIONS.................................................... 10
Your Variable Investment Options......................................... 10
Variable Investment Option Performance................................... 12
Your Fixed Option........................................................ 12
PURCHASING YOUR CONTRACT................................................... 12
How to Apply for Your Contract........................................... 12
Making Your Purchase Payments............................................ 13
HOW YOUR PAYMENTS ARE INVESTED............................................. 13
Investing in Variable Investment Options................................. 13
When Your Investment is Effective........................................ 14
Choosing Your Investment Options......................................... 14
Transfers................................................................ 14
CHARGES, FEES AND DEDUCTIONS............................................... 15
Premium Taxes............................................................ 15
Annual Fee............................................................... 15
Waivers and Reduced Charges.............................................. 16
Mortality and Expense Risk Charge........................................ 16
Administrative Fee....................................................... 16
Expenses of Pacific Select Fund.......................................... 16
RETIREMENT BENEFITS AND OTHER PAYOUTS...................................... 17
Selecting Your Annuitant................................................. 17
Annuitization............................................................ 17
Choosing Your Annuity Date ("Annuity Start Date")........................ 17
Annuity Option........................................................... 18
Default Annuity Date and Options......................................... 19
Your Annuity Payments.................................................... 19
Age Limitations.......................................................... 20
Death Benefits........................................................... 20
WITHDRAWALS................................................................ 21
Optional Withdrawals..................................................... 21
Mandatory Distribution on Death.......................................... 22
Tax Consequences of Withdrawals.......................................... 23
Short-Term Cancellation Right ("Free Look").............................. 23
PACIFIC MUTUAL AND THE SEPARATE ACCOUNT.................................... 23
Pacific Mutual........................................................... 23
Separate Account A....................................................... 23
FEDERAL TAX STATUS......................................................... 24
Taxes Payable by Contract Owners: General Rules.......................... 25
Qualified Contracts...................................................... 26
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Loans.................................................................... 27
Withholding.............................................................. 29
Impact of Federal Income Taxes........................................... 29
Taxes on Pacific Mutual.................................................. 29
ADDITIONAL INFORMATION..................................................... 30
Voting Rights............................................................ 30
Changes to Your Contract................................................. 30
Changes to ALL Contracts................................................. 31
Investor Inquiries and Submitting Forms and Requests..................... 32
Telephone Transactions................................................... 32
Timing of Payments....................................................... 33
Confirmation Statements and Other Reports to Contract Owners............. 33
Sales Commissions........................................................ 33
Financial Statements..................................................... 33
THE FIXED OPTION........................................................... 34
General Information...................................................... 34
Guarantee Terms.......................................................... 34
Withdrawals and Transfers................................................ 34
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........................ 35
APPENDIX A: STATE LAW VARIATIONS........................................... 36
</TABLE>
3
<PAGE>
SPECIAL DEFINITIONS
In this Prospectus, "we," "our" and "us" refer to Pacific Mutual Life Insurance
Company ("Pacific Mutual"); "you" and "your" refer to the Contract Owner.
Account Value--The amount of your Contract Value allocated to a specified
Subaccount or to the Fixed Option.
Annual Fee--A $40 fee charged each year on your Contract Anniversary and at the
time of a full withdrawal, if your Contract Value is less than $100,000 on that
date.
Annuitant--A person on whose life annuity payments may be determined. An
Annuitant's life may also be used to determine certain increases in death
benefits, and to determine the Annuity Date. A Contract may name a single
("sole") Annuitant or two ("Joint") Annuitants, and may also name a
"Contingent" Annuitant. If you name Joint Annuitants or a Contingent Annuitant,
"the Annuitant" means the sole surviving Annuitant, unless otherwise stated.
Annuity Date--Also called the "Annuity Start Date." The date specified in your
Contract for the commencement of annuity payments if your Annuitant (or Joint
Annuitants) is (or are) still living and your Contract is in force. You may
change your Annuity Date by notifying us as described in this Prospectus.
Annuity Option--A set of characteristics of a series of payments after your
Annuity Date.
Beneficiary--A person who may have a right to receive the death benefit payable
upon the death of the Annuitant or a Contract Owner prior to the Annuity Date,
or has a right to receive remaining guaranteed annuity payments, if any, upon
the death of the Annuitant following the Annuity Date.
Business Day--Any day on which the value of the amount invested in a Subaccount
is determined. In this Prospectus, "day" or "date" means Business Day unless
otherwise specified. If any transaction or event called for under a Contract is
scheduled to occur on a day that is not a Business Day, such transaction or
event will be deemed to occur on the next following Business Day unless
otherwise specified. Special circumstances such as leap years and months with
fewer than 31 days are discussed in the Statement of Additional Information.
Determinations of values are made at or about 4:00 p.m. Eastern time on each
day that the New York Stock Exchange is open, provided that Pacific Mutual's
offices are also open that day. Any calculation or determination of value
called for on or as of any day is effected as of the end of that day.
Code--The Internal Revenue Code of 1986, as amended.
Contingent Annuitant--A person, named in your Contract, who will become your
sole surviving Annuitant if your existing sole Annuitant (or both Joint
Annuitants) should die before your Annuity Date.
Contingent Owner--A person, named in your Contract, who may succeed to the
rights of a Contract Owner of your Contract if all named Contract Owners die
before your Annuity Date.
Contract Anniversary--The same date, in each subsequent year, as your Contract
Date.
Contract Date--The date we issue your Contract.
Contract Debt--As of the end of any given Business Day, the principal amount
you have outstanding on any loan under your Contract, plus any accrued and
unpaid interest. Loans are available only on certain Qualified Contracts.
4
<PAGE>
Contract Owner--Generally, a person who purchases a Pacific One Contract and
makes the Purchase Payments. A Contract Owner has all rights in the Contract
before the Annuity Date, including the right to make withdrawals, designate and
change beneficiaries, transfer amounts among Investment Options, and designate
an Annuity Option. If your Contract names Joint Owners, both Joint Owners are
Contract Owners and share all such rights.
Contract Value--At the end of any given Business Day, your Variable Account
Value, plus your Fixed Option Value, plus the amount held in the Loan Account
to secure your Contract Debt.
Contract Year--A year that starts on the Contract Date or on a Contract
Anniversary.
Fixed Option--If you allocate all or a part of your Purchase Payments or
Contract Value to the Fixed Option, such amounts are held in Pacific Mutual's
General Account and receive interest at rates declared periodically, but not
less than an annual rate of 3%.
Fixed Option Value--The aggregate amount under your Contract in the Fixed
Option.
Fund--Pacific Select Fund.
General Account--Pacific Mutual's General Account consists of all assets of
Pacific Mutual other than those assets allocated to Separate Account A or to
any of our other separate accounts.
Guaranteed Interest Rate--The interest rate guaranteed, from time to time, for
amounts allocated to the Fixed Option.
Guarantee Term--The period during which amounts you allocate to the Fixed
Option earn a Guaranteed Interest Rate.
Investment Option--A Subaccount or the Fixed Option.
Joint Annuitant--If your Contract is a Non-Qualified Contract, you may name two
Annuitants, called "Joint Annuitants," in your Application for your Contract.
Special restrictions apply for Qualified Contracts.
Non-qualified Contract--A Contract other than a qualified Contract.
Portfolio--A separate series or portfolio of the Fund.
Primary Annuitant--The individual, named in your Contract, the events in the
life of whom are of primary importance in affecting the timing or amount of the
payment under the contract.
Purchase Payment--An amount paid to Pacific Mutual by or on behalf of a
Contract Owner, as consideration for the benefits provided under the Contract.
Qualified Contract--A Contract that qualifies under the Code as an individual
retirement annuity ("IRA"), or a Contract purchased by a Qualified Plan,
qualifying for special tax treatment under the Code.
Qualified Plan--A retirement plan that receives favorable tax treatment under
Section 401, 408, 403(a), 403(b) or 457 of the Code.
SEC--Securities and Exchange Commission.
Separate Account A (the "Separate Account")--A separate account of Pacific
Mutual registered as a unit investment trust under the Investment Company Act
of 1940.
5
<PAGE>
Subaccount--An investment division of the Separate Account. Each Subaccount
invests its assets in shares of a corresponding Portfolio.
Subaccount Annuity Unit--Subaccount Annuity Units (or "Annuity Units") are used
to measure variation in variable annuity payments. To the extent you elect to
convert all or some of your Contract Value into variable annuity payments, the
amount of each annuity payment (after the first payment) will vary with the
value and number of Annuity Units in each Subaccount attributed to any variable
annuity payments. At annuitization (after any applicable premium taxes and or
other taxes are paid) the amount annuitized to a variable annuity determines
the amount of your first variable annuity payment and the number of Annuity
Units credited to your annuity in each Subaccount. The value of Subaccount
Annuity Units, like the value of Subaccount Units, should be expected to
fluctuate daily, as described in the definition of "Unit Value."
Subaccount Unit--Before your Annuity Date, each time you allocate an amount to
a Subaccount, your Contract is credited with a number of Subaccount Units in
that Subaccount; these Units are used, for accounting purposes, to measure your
balance in that Subaccount. The value of Subaccount Units should be expected to
fluctuate daily, as described in the definition of Unit Value.
Unit Value--The value of a Subaccount Unit ("Subaccount Unit Value") or
Subaccount Annuity Unit ("Subaccount Annuity Unit Value"). Unit Value of any
Subaccount is subject to change on any Business Day in much the same way that
the value of a mutual fund share changes each day; the fluctuations in value
reflect the investment results, expenses of and charges against the Portfolio
in which the Subaccount invests its assets, and also reflect charges against
the Separate Account. Changes in Subaccount Annuity Unit Values also reflect an
additional factor that adjusts Subaccount Annuity Unit Values to offset our
Annuity Option table's implicit assumption of an annual investment return of
5%; the effect of this assumed investment return is explained in detail in the
Statement of Additional Information. Unit Value of a Subaccount Unit or
Subaccount Annuity Unit on any Business Day is measured at or about 4:00 p.m.,
Eastern time, on that Business Day.
Variable Account Value--The aggregate amount of your Contract Value allocated
to all Subaccounts.
Variable Investment Option--A Subaccount.
6
<PAGE>
SUMMARY
This brief description is only an overview of the more significant features of
your Contract. More detailed information may be found in subsequent sections of
this Prospectus, in the Statement of Additional Information, and in the
Contract itself. Endorsements to your Contract may contain variations from the
standardized information in this Prospectus. In addition, any variations due to
requirements particular to your state or jurisdiction are set forth in
supplements attached to or accompanying this Prospectus. IF ANY CONTRACT
ENDORSEMENTS OR SUPPLEMENTAL VARIATIONS TO THIS PROSPECTUS CONFLICT WITH OTHER
INFORMATION IN THE CONTRACT FORM OR IN THIS PROSPECTUS, THE ENDORSEMENTS AND
SUPPLEMENTS CONTROL YOUR CONTRACT.
WHAT IS THE CONTRACT? Pacific One (the "Contract") is designed to be a long-
term financial planning device, permitting you to invest on a tax-deferred
basis for retirement or other long-range goals, and to receive a series of
regular payments for life or a period of years. See FEDERAL TAX STATUS.
HOW DO I PURCHASE A CONTRACT? You must invest at least $25,000 to buy a
Contract. After this initial investment you may make additional investments but
you are not required to do so. Your initial investment may be payable in
automatic installments over your first Contract Year. See PURCHASING YOUR
CONTRACT.
WHAT ARE MY INVESTMENT OPTIONS? You select your own Investment Options. Eleven
of the twelve Investment Options are Variable Investment Options available
through Separate Account A. Each Variable Investment Option invests in a
corresponding Portfolio of the Fund. Pacific Mutual is the investment adviser
to the Fund, and Pacific Mutual and the Fund have retained other portfolio
managers for nine of the Portfolios. You bear the investment risk associated
with the Variable Investment Options, and you should expect your Contract Value
allocated to these Investment Options and the value of any Subaccount Annuity
Units attributed to any variable annuity payments to fluctuate. See HOW YOUR
PAYMENTS ARE INVESTED. The twelfth option is a Fixed Option, providing a fixed
annual interest rate of at least 3%; the portion of your Purchase Payments or
Contract Value allocated to Fixed Option is held in Pacific Mutual's General
Account. Additional Investment Options may be available in the future.
You may select as many Investment Options as you wish. Prior to your Annuity
Date, this selection is made by the Contract Owner(s); after your Annuity Date,
if you choose variable-dollar annuity payments, this selection is made by the
Annuitant(s).
CAN I CHANGE MY INVESTMENT OPTIONS? You may transfer amounts (subject to
certain restrictions) from one Investment Option to another at any time on or
prior to your Annuity Date; after your Annuity Date, up to four exchanges of
Subaccount Annuity Units may be made in any twelve-month period. You may
transfer amounts automatically using dollar cost averaging, automatic portfolio
rebalancing, or an earnings sweep. See TRANSFERS in this Prospectus and
SYSTEMATIC TRANSFER PROGRAMS in the Statement of Additional Information.
Transaction fees may be imposed in the future for excessive transfers.
WHAT CHARGES WILL I PAY? An Administrative Fee equal to an annual rate of
0.0015, and a mortality and expense risk charge equal to an annual rate of
0.0125, are charged against assets held in the Variable Investment Options.
Amounts invested in the Variable Investment Options are also subject to the
operating expenses imposed on the corresponding Portfolio of the Fund. Before
you annuitize, an Annual Fee of $40 a year is charged if your Contract Value is
less than $100,000.
You may also be subject to other fees. See CHARGES, FEES AND DEDUCTIONS.
CAN I WITHDRAW MY INVESTMENT? Generally, you may withdraw all or part of your
Contract Value at any time on or prior to your Annuity Date. Restrictions are
imposed on withdrawals from certain Qualified Contracts. Withdrawals may be
subject to tax and, in certain circumstances, a tax penalty. See WITHDRAWALS
and FEDERAL TAX STATUS.
7
<PAGE>
CAN I RETURN MY CONTRACT? For a limited time, usually about 10 days after you
receive it, you may return your Contract for a refund in accordance with the
terms of its "free look" provision. See SHORT-TERM CANCELLATION RIGHT ("FREE
LOOK").
HOW DO I REACH PACIFIC MUTUAL? You can reach our service representatives
between 6:00 a.m. and 5:00 p.m., Pacific time, at 1-800-722-2333. To send
payments, forms, or requests, see INVESTOR INQUIRIES AND SUBMITTING FORMS AND
REQUESTS.
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly under your
Contract. The table reflects expenses of the Separate Account as well as
expenses of Pacific Select Fund. In addition to the charges and expenses
described below, premium taxes may apply. See PREMIUM TAXES in this Prospectus
and the discussion under ORGANIZATION AND MANAGEMENT OF THE FUND in the Pacific
Select Fund Prospectus and under INVESTMENT ADVISER AND PORTFOLIO MANAGEMENT
AGREEMENTS in the Pacific Select Fund Statement of Additional Information.
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchase Payments........................ None
Deferred Sales Charge............................................ None
Withdrawal Transaction Fee/1/.................................... None
Transfer Fee/2/.................................................. None
ANNUAL FEE/3/.................................................... $40.00
SEPARATE ACCOUNT A ANNUAL EXPENSES
(as a percentage of average daily net asset value)
Mortality and Expense Risk Charge................................ 1.25%
Administrative Fee............................................... 0.15%
------
Total Separate Account A Annual Expenses......................... 1.40%
======
</TABLE>
- --------
/1/ We reserve the right to impose a transaction fee of up to $15 in the future
on excess partial withdrawals. See OPTIONAL WITHDRAWALS.
/2/ We reserve the right to impose a transaction fee of up to $15 in the future
on excess transfers. See TRANSFERS.
/3/ This fee will be charged on each Contract Anniversary prior to your Annuity
Date and at the time of a full withdrawal of any Contract Value unless your
Contract Value is at least $100,000 on that date.
8
<PAGE>
PACIFIC SELECT FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
OTHER EXPENSES
ADVISORY (AFTER TOTAL
FEE REIMBURSEMENTS) EXPENSES
-------- -------------- --------
<S> <C> <C> <C>
Money Market.................................. .40% .15% .55%
High Yield Bond............................... .60% .23% .83%
Managed Bond.................................. .60% .16% .76%
Government Securities......................... .60% .24% .84%
Growth LT..................................... .75% .24% .99%
Equity Income................................. .65% .22% .87%
Multi-Strategy................................ .65% .22% .87%
Equity........................................ .65% .15% .80%
Bond and Income............................... .60% .15% .80%
Equity Index.................................. .25% .18% .43%
International................................. .85% .26% 1.11%
</TABLE>
Example: If, at the end of the applicable time period, you withdraw your
entire Variable Account Value or your entire Contract Value, you annuitize,
or you do not withdraw or annuitize, you would pay the following cumulative
expenses on each $1,000 invested, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Money Market..................................................... $20 $63
High Yield Bond.................................................. $23 $71
Managed Bond..................................................... $22 $69
Government Securities............................................ $23 $72
Growth LT........................................................ $25 $76
Equity Income.................................................... $24 $72
Multi-Strategy................................................... $24 $72
Equity........................................................... $23 $70
Bond and Income.................................................. $23 $70
Equity Index..................................................... $19 $59
International.................................................... $26 $80
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES INCURRED IN ANY GIVEN YEAR MAY BE MORE OR LESS THAN
THOSE SHOWN IN THE EXAMPLES. The expenses listed for the Pacific Select Fund
Portfolios have been restated to reflect current expenses. Total Expenses for
the fiscal year December 31, 1994 were equal to the following annual rates (of
average daily net assets). Money Market: 0.0064; High Yield Bond: 0.0088;
Managed Bond: 0.0084; Government Securities: 0.0088; Growth LT (which began
operations January 4, 1994): 0.0108 (annualized); Equity Income: 0.0094; Multi-
Strategy: 0.0094; Equity Index: 0.0051; and International 0.0122. The Equity
and Bond and Income Portfolios did not begin operations until December 31,
1994. These Total Expenses for the Portfolios 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) are
no greater than 0.0025 of average daily net assets per year. Pacific Mutual
intends to continue this policy in effect until at least December 31, 1996, but
may discontinue it after that time. If this policy had not been in effect
during the fiscal year ended December 31, 1994, Total Expenses for that year
would have been equal to the following annual rates (of average daily net
assets). Money Market: 0.0064; High Yield Bond: 0.0097; Managed Bond: 0.0084;
Government Securities: 0.0095; Growth LT: 0.0122 (annualized); Equity Income:
0.0100; Multi-Strategy: 0.0094; Equity Index: 0.0054; and International:
0.0122.
The Annual Fee is reflected in the examples, using an assumed Contract Value of
$80,000. No Annual Fee is deducted from annuitized amounts on or after full or
partial annuitization or if your Contract Value is at least $100,000.
9
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WHY BUY A CONTRACT
Your Pacific One Contract (your "Contract") provides you with flexibility in
tax-deferred retirement planning or other long-term financial planning. You may
select among a variety of Variable Investment Options and a Fixed Option. You
may choose to add to your Contract Value at any time, and your additional
investments may be in any amount you choose (subject to certain limitations).
When you annuitize, your Annuitant(s) will receive a series of variable and/or
fixed payments for life or for a specified period of years.
If you purchase a Contract with after-tax dollars, your Contract is called a
"Non-Qualified Contract". If your Contract is purchased through a Qualified
Plan, it is called a "Qualified Contract". Either way, your earnings on your
Contract are not subject to tax until amounts are withdrawn or distributed
(including annuity payments).
YOUR INVESTMENT OPTIONS
You may choose among twelve different Investment Options.
YOUR VARIABLE INVESTMENT OPTIONS
Separate Account A, a newly-organized separate account of Pacific Mutual,
currently offers you eleven "Variable Investment Options" (also called
"Subaccounts"). Each Variable Investment Option invests in a separate Portfolio
of the Fund. Your Variable Investment Options are:
. Money Market Subaccount
. High Yield Bond Subaccount
. Managed Bond Subaccount
. Government Securities Subaccount
. Growth LT Subaccount
. Equity Income Subaccount
. Multi-Strategy Subaccount
. Equity Subaccount
. Bond and Income Subaccount
. Equity Index Subaccount
. International Subaccount
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What Are Each of These Options?
For your convenience, the following chart summarizes some basic data about each
Portfolio. THIS CHART IS ONLY A SUMMARY. FOR MORE COMPLETE INFORMATION ON EACH
PORTFOLIO, INCLUDING A DISCUSSION OF THE PORTFOLIO'S INVESTMENT TECHNIQUES AND
THE RISKS ASSOCIATED WITH ITS INVESTMENTS, SEE THE ACCOMPANYING FUND
PROSPECTUS. NO ASSURANCE CAN BE GIVEN THAT A PORTFOLIO WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. YOU SHOULD READ THE FUND PROSPECTUS CAREFULLY BEFORE
INVESTING.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PRIMARY INVESTMENTS
(UNDER NORMAL
PORTFOLIO INVESTMENT OBJECTIVE CONDITIONS) PORTFOLIO MANAGER
===========================================================================================
<S> <C> <C> <C>
Money Market Current income Highest quality money Pacific Mutual
consistent with market securities.
preservation of
capital.
- -------------------------------------------------------------------------------------------
High Yield Bond High level of current Intermediate--and Pacific Mutual
income. long-term high-
yielding lower and
medium quality ("high
risk") fixed income
securities.
- -------------------------------------------------------------------------------------------
Managed Bond Maximize total return Investment grade Pacific Investment
consistent with marketable debt Management Company
prudent investment securities.
management.
- -------------------------------------------------------------------------------------------
Government Securi- Maximize total return Securities that are Pacific Investment
ties consistent with obligations of or Management Company
prudent investment guaranteed by the U.S.
management. Government, its
agencies or
instrumentalities
(including futures
contracts and options
thereon).
- -------------------------------------------------------------------------------------------
Growth LT Long-term growth of Equity securities. Janus Capital
capital consistent Corporation
with preservation of
capital.
- -------------------------------------------------------------------------------------------
Equity Income Long-term growth of Dividend-paying common J.P. Morgan Investment
capital and income. stock. Management, Inc.
- -------------------------------------------------------------------------------------------
Multi-Strategy High total return. Equity and fixed J.P. Morgan Investment
income securities. Management Inc.
- -------------------------------------------------------------------------------------------
Equity Capital appreciation. Common stocks and Greenwich Street
securities convertible Advisors Division of
into or exchangeable Smith Barney Mutual
for common stocks. Fund Management Inc.
- -------------------------------------------------------------------------------------------
Bond and Income High level of current Investment grade debt Greenwich Street
income consistent securities. Advisors Division of
with prudent Smith Barney Mutual
investment Fund Management, Inc.
management and
preservation of
capital.
- -------------------------------------------------------------------------------------------
Equity Index Investment results Stocks included in Bankers Trust Company
that correspond to the Standard & Poor's
the total return 500 Composite Stock
performance of common Price Index (the "S&P
stocks publicly 500").
traded in the U.S.
- ------------------------------------------------------------------------------------------
International Long-term capital Equity securities of Templeton Investment
appreciation. corporations Counsel, Inc.
domiciled outside
the U.S.
- ------------------------------------------------------------------------------------------
</TABLE>
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The Investment Adviser
Pacific Mutual is the investment adviser for the Fund. Pacific Mutual and the
Fund have retained other portfolio managers, supervised by Pacific Mutual, for
nine of the Portfolios.
VARIABLE INVESTMENT OPTION PERFORMANCE
Historical performance information can help you understand how investment
performance can affect your investment in the Variable Investment Options.
Although the Subaccounts are newly-established and have no historical
performance, each Subaccount will be investing in shares of a Portfolio of the
Fund, and the majority of these Portfolios do have historical performance data.
Performance data include total returns, current and effective yields for the
Money Market Subaccount, and yields for the other Subaccounts. Calculations are
in accordance with standard formulas prescribed by the SEC. Yields do not
reflect any charge for premium taxes and or other taxes; this exclusion may
cause yields to show more favorable performance. Total returns may or may not
reflect Annual Fees or any charge for premium and or other taxes; data that do
not reflect these charges may show more favorable performance.
The Statement of Additional Information presents some hypothetical performance
data, showing what the performance of each Subaccount would have been if it had
been investing in the corresponding Portfolio since that Portfolio's inception.
The Statement of Additional Information also presents some performance
benchmarks, based on unmanaged market indices, such as the S&P 500, and on
"peer groups", which use other managed funds with similar investment
objectives. These benchmarks may give you a broader perspective when you
examine hypothetical or actual Subaccount performance.
In addition, Pacific Mutual may provide you with reports of our ratings both as
an insurance company and as to our claims-paying ability. The Statement of
Additional Information presents more details about these ratings.
YOUR FIXED OPTION
The Fixed Option offers you a guaranteed minimum interest rate on the amounts
you allocate to this Option. Amounts you allocate to the Fixed Option, and your
earnings credited to your Fixed Option Value, are held in Pacific Mutual's
General Account. For more detailed information about the Fixed Option, see THE
FIXED OPTION section in this Prospectus.
PURCHASING YOUR CONTRACT
HOW TO APPLY FOR YOUR CONTRACT
To purchase a Contract, fill out an Application and submit it along with your
initial Purchase Payment to Pacific Mutual Life Insurance Company at P.O. Box
100060, Pasadena, California 91189-0060. If your Application and payment are
complete when received, or once they have become complete, Pacific Mutual will
issue your Contract within the next two Business Days. If some information is
missing from your Application, we may delay issuing your Contract while we
obtain the missing information; however, we will not hold your initial Purchase
Payment for more than five Business Days without your permission.
If you already own a variable annuity product, you may purchase a Contract by
exchanging your existing contract. You must submit all contracts to be
exchanged when you submit your Application. Call your representative, or call
us at 1-800-722-2333, if you are interested in this option.
We reserve the right to reject any Application or Purchase Payment for any
reason, subject to any applicable nondiscrimination laws and to our own
standards and guidelines.
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MAKING YOUR PURCHASE PAYMENTS
Making Your Initial Payment
Your initial Purchase Payment must be at least $25,000. You may pay this entire
amount when you submit your Application, or you may choose our pre-authorized
checking plan ("PAC") which allows you to pay in equal monthly installments
over one year (at least $2,000 per month). If you choose the PAC, you must make
your first installment payment when you submit your Application. Further
requirements for the PAC are discussed in the PAC form.
You must obtain our consent before making an initial or additional Purchase
Payment that will bring your aggregate Purchase Payments over $500,000.
Making Additional Payments
You may choose to invest additional amounts in your Contract at any time. Each
additional Purchase Payment must be at least $1,000.
Forms of Payment
Your initial and additional Purchase Payments may be sent by personal or bank
check or by wire transfer. You may also make additional PAC Purchase Payments
via electronic funds transfer. All checks must be drawn on U.S. funds. If you
make Purchase Payments by check other than a cashier's check, your withdrawal
requests and any refund under the "free look" may be delayed until your check
has cleared.
HOW YOUR PAYMENTS ARE INVESTED
INVESTING IN VARIABLE INVESTMENT OPTIONS
Each time you allocate your investment to a Variable Investment Option, your
Contract is credited with a number of "Subaccount Units" in that Subaccount.
The number of Subaccount Units credited is equal to the amount you have
allocated to that Subaccount, divided by the "Unit Value" of one Unit of that
Subaccount.
Example: You allocate $3,000 to the Government Securities Subaccount. At
the end of the Business Day your investment allocation is effective, the
value of one Unit in the Government Securities Subaccount is $15. As a
result, 200 Units are credited to your Contract for your $3,000.
Your Variable Account Value Will Change
After we credit your Contract with Subaccount Units, the value of those Units
will usually fluctuate. This means that, from time to time, your investment
allocated to the Variable Investment Options may be worth more or less than the
original Purchase Payments to which those amounts can be attributed.
Fluctuations in Subaccount Unit Value will not change the number of Units
credited to your Contract.
Subaccount Unit values will vary in accordance with the investment performance
of the corresponding Portfolio. For example, the value of Units in the Managed
Bond Subaccount will change to reflect the performance of the Managed Bond
Portfolio (including that Portfolio's investment income, its capital gains and
losses, and its expenses). Subaccount Unit Values are also adjusted to reflect
the Administrative Fee and Risk Charge imposed on the Separate Account.
We calculate the value of all Subaccount Units at or about 4:00 p.m., Eastern
time on each Business Day. The Statement of Additional Information contains a
detailed discussion of these calculations.
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WHEN YOUR INVESTMENT IS EFFECTIVE
The day your investment is effective determines the Unit Value at which
Subaccount Units are attributed to your Contract. In the case of transfers or
withdrawals, the effective day determines the Unit Value at which affected
Subaccount Units are debited and/or credited under your Contract. That value is
the value of the Subaccount Units next calculated after your transaction is
effective. Your Variable Account Value begins to reflect the investment
performance results of your new allocations on the day after your transaction
is effective.
Your initial Purchase Payment is ordinarily effective on the day we issue your
Contract. Any additional investment is effective on the day we receive your
Purchase Payment in good form.
CHOOSING YOUR INVESTMENT OPTIONS
You may allocate your Purchase Payments among the eleven Subaccounts and the
Fixed Option. Allocations of your initial Purchase Payment to the Investment
Options you selected will be effective either on your Contract Date or on your
Free Look Transfer Date. See SHORT-TERM CANCELLATION RIGHT ("FREE LOOK"). Each
additional Purchase Payment will be allocated to the Investment Options
according to your allocation instructions in your Application, or most recent
instructions, if any. We reserve the right, in the future, to require that your
allocation to any particular Investment Option meet a certain minimum amount.
TRANSFERS
Once your payments are allocated to the Investment Options you selected, you
may transfer your Contract Value from any Investment Option to any other at any
time and as often as you like. Transfer requests are normally effective on the
Business Day we receive them in good form. If you reside in a state that
requires refund of Purchase Payments under your Free Look Right, transfers may
be made only on or after your Free Look Transfer Date. See Short Term
Cancellation Right ("Free Look").
No charge is currently imposed for transfers among the Investment Options, but
we reserve the right to impose a transaction fee for transfers in the future; a
fee of up to $15 may apply to transfers in excess of 15 in any Contract Year.
Transfers under the dollar cost averaging, portfolio rebalancing, and earnings
sweep options are counted toward your total transfers in a contract year. Any
such fee would be charged against your Investment Options, including the Fixed
Option, proportionately based on your relative Account Value in each
immediately after the transfer.
We have the right, at our option, to require certain minimums in the future in
connection with transfers; these may include a minimum transfer amount and a
minimum Account Value, if any, for the Investment Option from which the
transfer is made or to which the transfer is made. If your transfer request
results in your having a remaining Account Value in an Investment Option that
is less than such minimum amount, we may transfer that remaining amount to your
other Investment Options in the proportions specified in your current
allocation instructions. We also reserve the right to limit the size of
transfers, to limit the number and frequency of transfers, to restrict
transfers, and to suspend transfers. We reserve the right to reject any
transfer request. Currently, the only restriction is that we will not accept
instructions from agents acting under a power of attorney or otherwise on
behalf of multiple Contract Owners.
Exchanges of your Annuity Units in any Subaccount(s) to any other Subaccount(s)
after annuitization are limited to four in any twelve-month period. See
RETIREMENT BENEFITS AND OTHER PAYOUTS.
Dollar Cost Averaging
Dollar cost averaging is a method in which investors buy securities in a series
of regular purchases instead of in a single purchase. This allows the investor
to average the securities' price over time, and may permit a
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"smoothing" of abrupt peaks and drops in price. Prior to your Annuity Date, you
may use dollar cost averaging to transfer amounts, over time, from any
Investment Option with an Account Value of at least $10,000 to one or more
other Investment Options. Detailed information appears in the Statement of
Additional Information.
Portfolio Rebalancing
You may instruct us to maintain a specific balance of Variable Investment
Options under your Contract (e.g., 30% in the Equity Index Subaccount, 40% in
the Managed Bond Subaccount, and 30% in the Growth LT Subaccount) prior to your
Annuity Date. Periodically, we will "rebalance" your investment to the
percentages you have specified. Rebalancing may result in transferring amounts
from a Subaccount earning a relatively higher return to one earning a
relatively lower return. The Fixed Option is not available for rebalancing.
Detailed information appears in the Statement of Additional Information.
Earnings Sweep
You may instruct us to make automatic periodic transfers of your earnings from
the Money Market Subaccount or from the Fixed Option to one or more Variable
Investment Options (other than the Money Market Subaccount). Detailed
information appears in the Statement of Additional Information.
CHARGES, FEES AND DEDUCTIONS
PREMIUM TAXES
Depending on (among other factors) your state of residence, a tax may or may
not be imposed on your Purchase Payments at the time your payment is made, at
the time of partial or total withdrawal, at the time any death benefit proceeds
are paid, at annuitization, or at such other time as taxes may be imposed. Tax
rates ranging from 1% to 3.5% are currently in effect, but may change in the
future. Some local jurisdictions also impose a tax.
If we pay any taxes attributable to payments ("premium taxes") on your behalf,
we will be reimbursed through a charge imposed against your Contract Value. We
normally will charge you when you annuitize some or all of your Contract Value.
We reserve the right to impose this charge for applicable premium taxes when
you make a full or partial witdrawal, at the time any death benefit proceeds
are paid, or those taxes are incurred. For these purposes, "premium taxes"
include any state or local premium taxes and, where approval has been obtained,
federal premium taxes and any federal, state or local income, excise, business
or any other type of tax (or component thereof) measured by or based upon,
directly or indirectly, the amount of payments Pacific Mutual has received. We
will base this charge on the Contract Value, the amount of the transaction, the
aggregate amount of purchase payments we receive under your Contract, or any
other amount, at our sole discretion we deem appropriate.
Pacific Mutual may also charge the Separate Account or your Contract Value for
taxes attributable to the Separate Account or the Contract, including income
taxes attributable to the Separate Account or to Pacific Mutual's operations
with respect to the Contract, or taxes attributable, directly or indirectly, to
Purchase Payments. Currently, we do not impose any such charges.
ANNUAL FEE
Pacific Mutual will charge you an Annual Fee of $40 on each Contract
Anniversary prior to the Annuity Date, and at the time you withdraw your entire
Contract Value, if your Contract Value is less than $100,000 on that date. The
fee is not imposed on amounts you annuitize. The fee reimburses certain of our
costs in administering the Contracts and the Separate Account; we do not intend
to realize a profit from this fee or the Administrative Fee. This fee is
guaranteed not to increase for the life of the Contract.
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Your Annual Fee will be charged proportionately against your Investment
Options, including the Fixed Option. Assessments against your Variable
Investment Options are made by debiting some of the Subaccount Units previously
credited to your Contract; that is, assessment of the Annual Fee does not
change the Unit Value for those Subaccounts.
No Annual Fee is charged on payment of a death benefit or on annuitization.
WAIVERS AND REDUCED CHARGES
Pacific Mutual may reduce or waive the Annual Fee in situations that reduce
Contract administrative expenses, such as a sale of several Contracts to the
same Contract Owner(s), sales of large Contracts, and sales to groups.
MORTALITY AND EXPENSE RISK CHARGE
Pacific Mutual assesses a charge against the assets of each Subaccount to
compensate for certain mortality and expense risks that we assume under the
Contracts (the "Risk Charge"). The risk that a Contract Annuitant will live
longer (and therefore receive more annuity payments) than we predict through
our actuarial calculations at the time the Contract is issued is "mortality
risk." Pacific Mutual also bears mortality risk in connection with death
benefits payable under the Contracts. The risk that the expense charges and
fees under the Contracts and Separate Account are less than our actual
administrative and operating expenses is called "expense risk."
This Risk Charge is assessed daily at an annual rate of 0.0125 of each
Subaccount's assets; this charge may not be increased for the duration of your
Contract. Of this amount, 0.0045 is for assuming expense risk, and 0.0080 is
for assuming mortality risk.
Risk Charges will stop at annuitization if you select a fixed annuity; Risk
Charges will continue after annuitization if you choose any variable annuity,
even though we do not bear mortality risk if your Annuity Option is Period
Certain Only.
Pacific Mutual will realize a gain if the Risk Charge exceeds our actual cost
of expenses and benefits, and will suffer a loss if actual costs exceed the
Risk Charge. Any gain will become part of Pacific Mutual's General Account; we
may use it for any reason, including covering sales expenses on the Contracts.
ADMINISTRATIVE FEE
Pacific Mutual charges an Administrative Fee as compensation for costs we incur
in operating the Separate Account and issuing and administering the Contracts,
including processing Applications and payments, and issuing reports to Contract
Owners and to regulatory authorities.
The Administrative Fee is assessed daily at an annual rate of 0.0015 of the
assets of each Subaccount. This fee may not be increased for the life of your
Contract. A relationship will not necessarily exist between the actual
administrative expenses attributable to a particular Contract and the
Administrative Fee paid in respect of that particular Contract.
EXPENSES OF PACIFIC SELECT FUND
Your Variable Account Value reflects advisory fees and other expenses incurred
by the various Portfolios of Pacific Select Fund, net of any applicable
reimbursements. These fees and expenses may vary. The Fund is governed by its
own Board of Trustees, and your Contract does not fix or specify the level of
expenses of any Portfolio. The Fund's fees and expenses are described in detail
in the Fund's Prospectus and in its Statement of Additional Information.
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RETIREMENT BENEFITS AND OTHER PAYOUTS
SELECTING YOUR ANNUITANT
When you submit the Application for your Contract, you must choose a sole
Annuitant or two Joint Annuitants. The Annuitant(s) will receive annuity
payments under your Contract when you annuitize. If you are buying a Qualified
Contract, you must be your own sole Annuitant or your Primary Joint Annuitant;
if you are buying a Non-Qualified Contract you may choose yourself and/or
another person. In either case, you may choose a Contingent Annuitant; more
information on these options is set out in the Statement of Additional
Information. Except in the case of certain Qualified Contracts, you will not be
able to add or change a sole or Joint Annuitant after your Contract is issued.
You will be able to add or change a Contingent Annuitant until your Annuity
Date or the death of your sole Annuitant or both Joint Annuitants, whichever
occurs first; however, once your Contingent Annuitant has become the Annuitant
under your Contract, no additional Contingent Annuitant may be named. If you
have a Non-Qualified Contract and wish to name a Joint Annuitant, your younger
Annuitant must be your Primary Annuitant.
ANNUITIZATION
You may choose both your Annuity Date (or "Annuity Start Date") and your
Annuity Option. At the Annuity Date, you may elect to annuitize some or all of
your Contract Value, less any Contract Debt, any transaction fee, and any
charge for premium taxes and/or other taxes, so long as the net amount you
annuitize is at least $5,000. If you annuitize only a portion of this available
Contract Value, you may have the remainder distributed, less any applicable
charge for premium taxes and/or other taxes, any transaction fee, and any
applicable Annual Fee. We will distribute your Contract Value, less any
Contract Debt and any applicable charge for premium taxes and/or other taxes,
any transaction fee, and any Annual Fee to you in a single sum if the net
amount of your Contract Value available to convert to an annuity is less than
$5,000 on your Annuity Date. Distributions under your Contract will have tax
consequences. You should consult a qualified tax adviser for information on
full or partial annuitization.
CHOOSING YOUR ANNUITY DATE ("ANNUITY START DATE")
You should choose your Annuity Start Date when you submit your Application or
we will apply your default Annuity Date to your Contract.
You may change your Annuity Date by notifying us in writing. We must have
received your written notice at least 10 Business Days prior to your old
Annuity Date or your new Annuity Date, whichever is earlier.
Your Annuity Date cannot be earlier than your first Contract Anniversary and
must occur on or before a certain date: If you have a sole Annuitant, your
Annuity Date cannot be later than his or her 100th birthday; if you have Joint
Annuitants and a Non-Qualified Contract, your Annuity Date cannot be later than
your younger Joint Annuitant's 100th birthday; if you have Joint Annuitants and
a Qualified Contract, your Annuity Date cannot be later than your own 100th
birthday. Different requirements may apply in some states. See APPENDIX A:
STATE LAW VARIATIONS. If your Contract is a Qualified Contract, you may also be
subject to additional restrictions. Adverse federal tax consequences may result
if you choose an Annuity Date that is prior to an Annuitant's 59 1/2th
birthday. See FEDERAL TAX STATUS.
If you annuitize only a portion of your Contract Value on your Annuity Start
Date, you may, at that time, have the option to elect not to have the remainder
of your Contract Value distributed, but instead to continue your Contract with
that remaining Contract Value (a "continuing Contract"). If this option is
available, you would then choose a second Annuity Date for your continuing
Contract, and all references in this Prospectus to your "Annuity Date" would,
in connection with your continuing Contract, be deemed to refer to that second
Annuity Date. This option may or may not be available, or may be available only
for certain types of Contracts. You should call your tax adviser for more
information if you are interested in this option.
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ANNUITY OPTION
You make three basic decisions about your annuity payments. First, you must
choose whether you want those payments to be a fixed-dollar amount and or a
variable-dollar amount. Second, you must choose how many payments you want the
Annuitant(s) to receive (the "period" of the annuity). Third, you must decide
how often you want annuity payments to be made (the "frequency" of the
payments). You may not change your Annuity Option after annuitization.
Frequency of Payments
You may choose to have annuity payments made monthly, quarterly, semi-annually,
or annually. The amount of a variable payment will be determined in each period
on the date corresponding to your Annuity Date, and payment will be made on the
next succeeding day.
Your initial annuity payment must be at least $250. Depending on the net amount
you annuitize, this requirement may limit your options regarding the period
and/or frequency of annuity payments.
Fixed and Variable Annuities
You may choose a fixed annuity (i.e., with fixed-dollar amounts), a variable
annuity (i.e., with variable-dollar amounts), or you may choose both,
converting one portion of the net amount you annuitize into a fixed annuity and
another portion into a variable annuity.
If you select a fixed annuity, each periodic annuity payment received will be
equal to the initial annuity payment, unless you select a joint and survivor
life annuity with reduced survivor payments and the Primary Annuitant dies.
If you select a variable annuity, you may choose as many Variable Investment
Options for your annuity as you wish; the amount of the periodic annuity
payments will vary with the investment results of the Variable Investment
Options selected. After the Annuity Date, Annuity Units may be exchanged among
available Variable Investment Options up to four times in any twelve-month
period. THE CONTRACTS AND THE SEPARATE ACCOUNT in the Statement of Additional
Information explains in more detail how your Contract converts into a variable
annuity.
Annuity Periods
Four types of annuity periods are currently available under the Contracts,
although additional options may become available in the future.
. Life Only. Periodic payments are made to the Annuitant during his or her
lifetime. Payments stop when the Annuitant dies.
. Life with Period Certain. Periodic payments are made to the Annuitant
during his or her lifetime, with payments guaranteed for a specified
period. You may choose to have payments guaranteed for anywhere from 5
through 30 years (in full years only). If the Annuitant dies before the
guaranteed payments are completed, the Beneficiary receives the
remainder of the guaranteed payments.
. Joint and Survivor Life. Periodic payments are made during the lifetime
of the Primary Annuitant. After the death of the Primary Annuitant,
periodic payments are made to the secondary Annuitant named in the
election if and so long as such secondary Annuitant lives. You may
choose to have the payments to the surviving secondary Annuitant equal
50%, 66 2/3% or 100% of the payments made during the lifetime of the
Primary Annuitant (you must make this election when you choose your
Annuity Option). Payments stop when both Annuitants die.
. Period Certain Only. Periodic payments are made to the Annuitant over a
specified period. You may choose to have payments continue for anywhere
from 5 through 30 years (in full years only). If the Annuitant dies
before the guaranteed payments are completed, the Beneficiary receives
the remainder of the guaranteed payments.
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If your Contract was issued in connection with a Qualified Plan subject to
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), your
spouse's consent may be required when you seek any distribution under your
Contract, unless your Annuity Option is Joint and Survivor Life with survivor
payments of at least 50%, and your spouse is your Joint Annuitant.
DEFAULT ANNUITY DATE AND OPTIONS
If you have a Non-Qualified Contract and you do not choose an Annuity Date when
you submit your Application, your Annuity Date will be your Annuitant's 100th
birthday or your younger Joint Annuitant's 100th birthday, whichever applies
(some states' laws may require a different Annuity Date; see APPENDIX A: STATE
LAW VARIATIONS). If you have a Qualified Contract and fail to choose an Annuity
Date, your Annuity Date will be April 1 of the calendar year following the year
you attain age 70 1/2; if you have already attained age 70 1/2 on the Contract
Date, your Annuity Date will be April 1 of the calendar year following your
first Contract Anniversary.
If you have not specified an Annuity Option or do not instruct us otherwise, at
your Annuity Date your Contract Value, less any Contract Debt, any applicable
transaction fee, and any charge for premium taxes and or other taxes, will be
annuitized (if this net amount is at least $5,000) as follows: the net amount
attributed to your Fixed Option Value will be converted into a fixed-dollar
annuity and the net amount attributed to your Variable Account Value will be
converted into a variable-dollar annuity directed to the Subaccounts
proportionate to your Account Value in each. If you have a Non-Qualified
Contract, or if you have a Qualified Contract and are not married, your default
Annuity Option will be Period Certain Only for five years. If you have a
Qualified Contract and you are married, your default Annuity Option will be
Joint and Survivor Life with survivor payments of 50% and your spouse will
automatically be named your Joint Annuitant.
YOUR ANNUITY PAYMENTS
Amount of the First Payment
Your Contract contains tables that we use to determine the amount of the first
annuity payment under your Contract, taking into consideration the annuitized
portion of your Contract Value at the Annuity Date. This amount will vary,
depending on the annuity period and payment frequency you select; this amount
will be larger in the case of shorter Period Certain annuities than longer
Period Certain annuities. Similarly, this amount will be greater for a Life
Only annuity than for a Joint and Survivor Life annuity, because we will expect
to make payments for a shorter period of time on a Life Only annuity. If you do
not choose the Period Certain Only annuity, this amount will also vary
depending on the age of the Annuitant(s) on the Annuity Date and, for some
Contracts in some states, the sex of the Annuitant(s). For fixed annuity
payments, the annuity purchase rates in our tables are based on an annual
interest rate of 3% and the 1983a Annuity Mortality Table. If you elect a fixed
annuity, fixed annuity payments will be based on the greater of our current
annuity purchase rates in effect for your Contract on the Annuity Date and the
guaranteed annuity purchase rates under the Contract. For variable annuity
payments, the tables are based on an assumed annual investment return of 5% and
the 1983a Annuity Mortality Table. If you elect a variable annuity, your
initial variable annuity payment will be based on the applicable variable
annuity purchase rate in our table. A higher assumed investment return would
mean a larger first variable annuity payment, but subsequent payments would
increase only when actual net investment performance exceeds the higher assumed
rate and would fall when actual net investment performance is less than the
higher assumed rate. A lower assumed rate would mean a smaller first payment
and a lower threshold for increases and decreases. If the actual net investment
performance is 5% annually, annuity payments will be level. The assumed
investment return is explained in more detail in the Statement of Additional
Information under THE CONTRACTS AND THE SEPARATE ACCOUNT.
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AGE LIMITATIONS
You may not choose an Annuitant who has (or had) reached his or her 86th
birthday at the time your Contract is (or was) issued. This restriction applies
to Joint and Contingent Annuitants as well as to a sole Annuitant.
DEATH BENEFITS
A death benefit may be payable on proof of the death, before the Annuity Date,
of the Annuitant or of any Contract Owner while the Contract is in force.
Defining Our "Death Benefit" Terms
Your Death Benefit Amount as of any day (prior to your Annuity Date) is equal
to the greater of:
. your aggregate Purchase Payments, less any prior partial withdrawals,
including any withdrawal fees, as of that day; or
. your Contract Value as of that day.
Your Guaranteed Minimum Death Benefit Amount is determined as follows: We look
at your Contract as of your fifth Contract Anniversary and as of every fifth
subsequent Contract Anniversary prior to your Annuity Date, that is, the 10th,
15th, etc., (each of these Anniversaries is a "Milestone Date"). For each
Milestone Date, if your Annuitant was living and had not yet reached his or her
76th birthday as of that date, we calculate what your Death Benefit Amount
would have been as of that Milestone Date and adjust this amount by (1) adding
the aggregate amount of any Purchase Payments received by us after that
Milestone Date and (2) subtracting the aggregate amount of any partial
withdrawals, any fees for withdrawals and transfers, any Annual Fees, and any
previous charges for premium taxes and or other taxes effected since that
Milestone Date. The highest of these adjusted amounts, as of the Notice Date,
is your Guaranteed Minimum Death Benefit Amount. Calculations of any
"Guaranteed Minimum Death Benefit" are made only once a death benefit is
payable under your Contract.
The Notice Date is the day on which we receive proof (in good form) of death
and instructions regarding payment of death benefit proceeds.
The Amount of the Death Benefit: Death of the Annuitant
If the Annuitant dies on or before your fifth Contract Anniversary, or if the
Annuitant had already reached his or her 76th birthday as of your fifth
Contract Anniversary, the death benefit will be equal to your "Death Benefit
Amount" as of the "Notice Date."
If the Annuitant dies after your fifth Contract Anniversary and had not yet
reached his or her 76th birthday as of your fifth Contract Anniversary, the
death benefit will be equal to the greater of:
. your Death Benefit Amount as of the Notice Date; or
. your "Guaranteed Minimum Death Benefit Amount" as of the Notice Date.
The following procedures apply in the event of death of an Annuitant who is not
also a Contract Owner: If your Contract names Joint Annuitants, and only one
Joint Annuitant dies, the surviving Joint Annuitant becomes your sole Annuitant
and the death benefit is not yet payable. If your sole Annuitant dies (or if no
Joint Annuitant survives) and your Contract names a surviving Contingent
Annuitant, he or she becomes the sole Annuitant and the death benefit is not
yet payable.
The Amount of the Death Benefit: Death of a Contract Owner
If a Contract Owner who is not the Annuitant dies before the Annuity Date, a
death benefit may be payable equal to your Contract Value as of the Notice
Date.
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Death Benefit Proceeds
The proceeds of any death benefit payable will be the amount of the death
benefit reduced by any charge for premium taxes and or other taxes and any
Contract Debt. These proceeds will be payable in a single sum or, if the
recipient chooses, as an annuity. Any such annuity is subject to all
restrictions (including minimum amount requirements) as are other annuities
under the Contracts; in addition, there may be legal requirements that limit
the recipient's Annuity Options and the timing of any payments. A recipient
should consult a qualified tax adviser before electing to receive an annuity.
Additional provisions apply if your Contract names a Joint or Contingent Owner
or Annuitant, or if the Beneficiary, Joint Owner, or Contingent Owner is your
spouse. Further information about these provisions is contained in the
Statement of Additional Information.
WITHDRAWALS
OPTIONAL WITHDRAWALS
You may, on or prior to your Annuity Date, withdraw all or a portion of the
amount available under your Contract, so long as any of your Annuitants is
still living. Except as provided below, withdrawals from your Investment
Options may be made at any time. You may request to withdraw a specific dollar
amount or a specific percentage of an Account Value or your Contract Value. You
may choose to make your withdrawal from specified Investment Options; if you do
not specify Investment Options, your withdrawal will be made from all
Investment Options proportionately. Each partial withdrawal, including pre-
authorized withdrawals, must be for at least $1,000. If your partial withdrawal
from an Investment Option would leave a remaining Account Value in that
Investment Option of less than any minimum Account Value we may require in the
future, we have the right, at our option, to transfer that remaining amount to
your other Investment Options on a proportionate basis relative to your most
recent allocation instructions. If your partial withdrawal leaves you with a
Contract Value of less than $1,000, we have the right, at our option, to
terminate your Contract and send you the withdrawal proceeds described in the
next section.
Amount Available for Withdrawal
The amount available to you for withdrawal is your Contract Value at the end of
the Business Day on which your withdrawal request is effective, less any
applicable Annual Fee, any withdrawal transaction fee, any charges for premium
tax and or other taxes, and your Contract Debt. The amount we send to you (your
"withdrawal proceeds") will also reflect any required or requested federal and
state income tax withholding. See FEDERAL TAX STATUS.
You assume investment risk on investments in the Subaccounts; as a result, the
amount available to you for withdrawal from any Subaccount may be more or less
than the total Purchase Payments you have allocated to that Subaccount.
Withdrawal Transaction Fees
There is currently no transaction fee for partial withdrawals. However, we
reserve the right to impose a withdrawal transaction fee in the future of up to
$15 for each partial withdrawal, (including preauthorized partial withdrawals),
in excess of 15 in any Contract Year. Any such fee would be charged against
your Investment Options, including the Fixed Option, proportionately based on
your Account Value in each immediately after the withdrawal.
Pre-Authorized Withdrawals
If your Contract Value is at least $10,000, you may select the pre-authorized
withdrawal option, and you may choose monthly, quarterly, semiannual or annual
withdrawals. Each withdrawal must be for at least $1,000. Each pre-authorized
withdrawal is subject to federal income tax on its taxable portion and may be
subject to a 10% tax penalty if you have not reached age 59-1/2. See FEDERAL
TAX STATUS. Additional information and options are set out in the Statement of
Additional Information and in the Pre-Authorized Withdrawal section of your
Application.
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Special Requirements for Full Withdrawals
If you wish to withdraw the entire amount available under your Contract, you
must either return your Contract to Pacific Mutual or sign and submit to us a
"lost contract affidavit."
Special Restrictions Under Qualified Plans
If your Contract was issued under certain Qualified Plans, you may not withdraw
amounts attributable to contributions made pursuant to a salary reduction
agreement (as defined in Section 402(g)(3)(A) of the Code) or to transfers from
a custodial account (as defined in Section 403(b)(7) of the Code) except in
cases of your (a) separation from service, (b) death, (c) disability as defined
in Section 72(m)(7) of the Code, (d) reaching age 59-1/2, or (e) hardship as
defined for purposes of Section 401(k) of the Code.
These limitations do not affect certain rollovers or exchanges between
Qualified Plans, and do not apply to rollovers from these Qualified Plans to an
individual retirement account or individual retirement annuity. In the case of
tax sheltered annuities, these limitations do not apply to certain salary
reduction contributions made, and investment results earned, prior to dates
specified in the Code.
Hardship withdrawals under the exception provided above are restricted to
amounts attributable to salary reduction contributions, and do not include
investment results; this additional restriction does not apply to salary
reduction contributions made, and investment results earned, prior to dates
specified in the Code.
Certain distributions, including rollovers, may be subject to mandatory
withholding of 20% for federal income tax if the distribution is not
transferred directly to the trustee of another Qualified Plan, or to the
custodian of an individual retirement account or issuer of an individual
retirement annuity. See FEDERAL TAX STATUS. Distributions may also trigger
withholding for state income taxes.
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 Option
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.
Effective Date of Withdrawal Requests
Withdrawal requests are normally effective on the Business Day we receive them
in good form. If you make Purchase Payments by check and submit a withdrawal
request immediately afterwards, the effective date of your withdrawal request
may be delayed until your check clears.
MANDATORY DISTRIBUTION ON DEATH
If a Contract Owner of a Non-Qualified Contract dies before the Annuity Date,
the entire interest must be distributed within 5 years of death. If a Non-
Qualified Contract has Joint Owners, this requirement applies to the first
Contract Owner to die. Distribution to a designated recipient beginning no
later than 1 year after the Contract Owner's death and continuing over the
recipient's life or a period not exceeding the recipient's life expectancy will
satisfy this distribution requirement. If the Contract Owner was not an
Annuitant but was a Joint Owner and there is a surviving Joint Owner, that
surviving Joint Owner is the designated recipient; if no Joint Owner survives
but a Contingent Owner is named in the Contract and is living, he or she is the
designated recipient. Otherwise, or if the Contract Owner was an Annuitant, the
designated recipient is the Beneficiary; if no Beneficiary is living, the
designated recipient is the Annuitant's estate. A sole designated recipient who
is the Contract Owner's spouse may elect to become the Contract Owner (and
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sole Annuitant if the deceased Contract Owner had been the Annuitant) and
continue the Contract. A Joint or Contingent Owner who is the designated
recipient but not the Contract Owner's spouse may also be able to continue the
Contract; however, a distribution will be considered to have been made under
the original Contract for federal income tax purposes.
TAX CONSEQUENCES OF WITHDRAWALS
Withdrawals, including pre-authorized withdrawals, will generally have federal
income tax consequences, which could include tax penalties. YOU SHOULD CONSULT
WITH A TAX ADVISER BEFORE MAKING ANY WITHDRAWAL OR SELECTING THE PRE-AUTHORIZED
WITHDRAWAL OPTION. See FEDERAL TAX STATUS.
SHORT-TERM CANCELLATION RIGHT ("FREE LOOK")
You may return your Contract for cancellation and a full refund during your
"free look period." Your free look period is usually the 10-day period
beginning on the day you receive your Contract, but may vary if required by
state law. For more information, see APPENDIX A: STATE LAW VARIATIONS. If you
return your Contract, it will be canceled and treated as void from your
Contract Date. You will then receive a refund as follows:
. All of your Purchase Payments allocated to the Fixed Option, and
. your Variable Account Value as of the end of the Business Day on which
we receive your Contract for cancellation, plus a refund of any amounts
that may have been deducted as Contract fees or charges to pay premium
and or other taxes.
Some states' laws require us to refund your Purchase Payments allocated to the
Variable Investment Options instead of your Variable Account Value. If you
reside in one of these states, the Purchase Payments you have allocated to any
Subaccount will usually be allocated to the Money Market Subaccount during your
free look period; however, different rules may apply depending on your state of
residence. In such cases, we will transfer your Contract Value in the Money
Market Account to your chosen Variable Investment Options at the end of the
15th calendar day after your Contract Date ("your Free Look Transfer Date"). We
reserve the right to extend your Free Look Transfer Date by the number of days
in excess of ten days that your state of residence allows you to return your
Contract to us under the Free Look Provision.
PACIFIC MUTUAL AND THE SEPARATE ACCOUNT
PACIFIC MUTUAL
We are a mutual life insurance company organized under California law on
January 2, 1868 under the name "Pacific Mutual Life Insurance Company of
California" and reincorporated as Pacific Mutual Life Insurance Company on July
22, 1936. Our operations include both life insurance and annuity products as
well as financial and retirement services. As of the end of 1994, Pacific
Mutual had over $38.3 billion of individual life insurance in force and total
assets of approximately $14.7 billion. Together with its subsidiaries and
affiliated enterprises, Pacific Mutual has total assets and funds under
management of over $91.1 billion. It has been ranked according to assets in the
top 24 largest life insurance carriers in the nation for 1994. We are
authorized to conduct life insurance and annuity business in the District of
Columbia and all states except New York. Our principal offices are located at
700 Newport Center Drive, Newport Beach, California 92660.
Our indirect wholly-owned subsidiary, Pacific Equities Network ("PEN"), serves
as the principal underwriter for the Contracts. PEN is located at 700 Newport
Center Drive, Newport Beach, California 92660. PEN and Pacific Mutual enters
into selling agreements with broker-dealers, under which such broker-dealers
act as agents of Pacific Mutual and PEN in the sale of this Contract.
SEPARATE ACCOUNT A
Separate Account A was established on September 7, 1994 as a separate account
of Pacific Mutual, and is registered with the SEC under the Investment Company
Act of 1940 as a type of investment company called a "unit investment trust."
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Obligations arising under your Contract are general corporate obligations of
Pacific Mutual. We are also the legal owner of the assets in the Separate
Account.
Assets of the Separate Account attributed to the reserves and other liabilities
under the Contract and other contracts issued by Pacific Mutual that are
supported by the Separate Account may not be charged with liabilities arising
from any other business of Pacific Mutual; any income, gain or loss (whether or
not realized) from the assets of the Separate Account are credited to or
charged against the Separate Account without regard to Pacific Mutual's other
income, gain or loss.
We may invest money in the Separate Account in order to commence its operations
and for other purposes, but not to support contracts other than variable
annuity contracts. A portion of the Separate Account's assets may include
accumulations of charges we make against the Separate Account and investment
results of assets so accumulated. These additional assets are ours and we may
transfer them to our General Account at any time; however, before making any
such transfer, we will consider any possible adverse impact the transfer might
have on the Separate Account. Subject to applicable law, we reserve the right
to transfer our assets in the Separate Account to our General Account.
The Separate Account is not the sole investor in the Fund. Investment in the
Fund by other separate accounts in connection with variable annuity and
variable life insurance contracts may create conflicts. See MORE ON THE FUND'S
SHARES in the accompanying Prospectus for the Fund.
FEDERAL TAX STATUS
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial or
administrative action. The summary is general in nature, and does not consider
any applicable state or local tax laws. We do not make any guarantee regarding
the tax status, federal, state or local, of any Contract or any transaction
involving the Contracts. Accordingly, you should consult a qualified tax
adviser for complete information and advice before purchasing a Contract.
The following rules generally do not apply to variable annuity contracts held
by or for non-natural persons (e.g., corporations). If a contract is not owned
or held by a natural person or a nominee for a natural person, the contract
generally will not be treated as an "annuity" for tax purposes, meaning that
the contract owner will be taxed currently on annual increases in account value
at ordinary income rates unless some other exception applies.
Section 72 of the Code governs the taxation of annuities in general, and we
designed the Contracts to meet the requirements of Section 72 of the Code. We
believe that, under current law, the Contract will be treated as an annuity for
federal income tax purposes and that Pacific Mutual (as the issuing insurance
company), and not the Contract Owner(s), will be treated as the owner of the
investments underlying the Contract. Accordingly, no tax should be payable by
you as a Contract Owner as a result of any increase in Contract Value until you
receive money under your Contract. You should, however, consider how amounts
will be taxed when you do receive them. The following discussion assumes that
your Contract will be treated as an annuity for federal income tax purposes.
Section 817(h) of the Code provides that the investments underlying a variable
annuity must satisfy certain diversification requirements. Details on these
diversification requirements appear under OTHER INFORMATION ABOUT THE FUND in
the Fund's Prospectus. Pacific Mutual believes the underlying Variable
Investment Options for the Contract meet these requirements. In connection with
the issuance of temporary regulations relating to diversification requirements
under Section 817(h), the Treasury Department announced that such regulations
do not provide guidance concerning the extent to which Contract Owners may
direct their investments to particular divisions of a separate account. Such
guidance may be included in regulations or revenue rulings under Section 817(d)
relating to the definition of a variable contract. Because of this uncertainty,
we reserve the right to make such changes as we deem necessary or appropriate
to ensure
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that your Contract continues to qualify as an annuity for tax purposes. Any
such changes will apply uniformly to affected Contract Owners and will be made
with such notice to affected Contract Owners as is feasible under the
circumstances.
TAXES PAYABLE BY CONTRACT OWNERS: GENERAL RULES
THESE GENERAL RULES APPLY TO NON-QUALIFIED CONTRACTS. AS DISCUSSED BELOW,
HOWEVER, TAX RULES MAY DIFFER FOR QUALIFIED CONTRACTS AND YOU SHOULD CONSULT A
QUALIFIED TAX ADVISER IF YOU ARE PURCHASING A QUALIFIED CONTRACT.
Distributions of net investment income or capital gains that each Subaccount
receives from its corresponding Portfolio are automatically reinvested in such
Portfolio unless we, on behalf of the Separate Account, elect otherwise. As
noted above, you will be subject to federal income taxes on the investment
income from your Contract only when it is distributed to you.
Taxes Payable on Withdrawals
Amounts you withdraw before annuitization, including amounts withdrawn from
your Contract Value in connection with partial withdrawals for payment of fees,
will be treated first as taxable income, to the extent that your Contract Value
exceeds the aggregate of your Purchase Payments (reduced by non-taxable amounts
previously received), and then as non-taxable recovery of your Purchase
Payments.
The assignment or pledge of (or agreement to assign or pledge) any portion of
the value of the Contract for a loan will be treated as a withdrawal subject to
these rules. Moreover, all annuity contracts issued to you in any given
calendar year by Pacific Mutual and any of our affiliates are treated as a
single annuity contract for purposes of determining whether an amount is
subject to tax under these rules. The Code further provides that the taxable
portion of a withdrawal may be subject to a penalty tax equal to 10% of that
taxable portion unless the withdrawal is: (1) made on or after the date you
reach age 59 1/2, (2) made by a Beneficiary after your death, (3) attributable
to your becoming disabled, or (4) in the form of level annuity payments under a
lifetime annuity.
Taxes Payable on Annuity Payments
A portion of each annuity payment you receive under a Contract generally will
be treated as a partial recovery of Purchase Payments (as used here, "Purchase
Payments" means the aggregate Purchase Payments less any amounts that were
previously received under the Contract but not included in income) and will not
be taxable. (In certain circumstances, subsequent modifications to an
initially-established payment pattern may result in the imposition of a penalty
tax.) The remainder of each annuity payment will be taxed as ordinary income.
However, after the full amount of aggregate Purchase Payments has been
recovered, the full amount of each annuity payment will be taxed as ordinary
income. Exactly how an annuity payment is divided into taxable and non-taxable
portions depends on the period over which annuity payments are expected to be
received, which in turn is governed by the form of annuity selected and, where
a lifetime annuity is chosen, by the life expectancy of the Annuitant(s) or
payee(s).
Should annuity payments cease on account of the death of a Contract Owner
before Purchase Payments have been fully recovered, an Annuitant (or in certain
cases the Beneficiary) is allowed a deduction on the final tax return for the
unrecovered Purchase Payments; however, if any remaining annuity payments are
made to a Beneficiary, the Beneficiary will recover the balance of the Purchase
Payments as payments are made. A lump sum payment taken in lieu of remaining
monthly annuity payments is not considered an annuity payment for tax purposes.
The portion of any lump sum payment to a Beneficiary in excess of aggregate
unrecovered Purchase Payments would be subject to income tax. Such a lump sum
payment may also be subject to a penalty tax.
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If a Contract Owner dies before annuity payments begin, certain minimum
distribution requirements apply. If a Contract Owner dies after the Annuity
Date, the remaining interest in the Contract must be distributed at least as
rapidly as under the method of distribution in effect on the date of death.
Generally, the same tax rules apply to amounts received by the Beneficiary as
those set forth above, except that the early withdrawal penalty tax does not
apply. Thus, any annuity payments or lump sum withdrawal will be divided into
taxable and non-taxable portions.
In addition, designation of a Beneficiary who either is 37 1/2 years younger
than a Contract Owner or is a grandchild of a Contract Owner may have
Generation Skipping Transfer Tax consequences under section 2601 of the Code.
Certain transfers of a Contract for less than full consideration, such as a
gift, will trigger tax on the investment income in the Contract, and may also
trigger tax penalties and, if applicable, gift tax.
QUALIFIED CONTRACTS
The Contracts are available to a variety of Qualified Plans. Tax restrictions
and consequences for Contracts under each type of Qualified Plan differ from
each other and from those for Non-Qualified Contracts. In addition, individual
Qualified Plans may have terms and conditions that impose additional rules.
THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS FOR
WHICH THE CONTRACTS ARE AVAILABLE. IF YOU ARE PURCHASING A QUALIFIED CONTRACT,
YOU SHOULD CONSULT WITH A QUALIFIED TAX ADVISER.
Individual Retirement Annuities ("IRAs")
Contributions to an IRA are subject to limitations. Because your minimum
initial Purchase Payment for a Pacific One Contract is larger than the maximum
annual contribution permitted for an IRA, Pacific One Contracts are available
as IRAs only through a rollover from an existing Qualified Plan.
In addition, distributions from an IRA are subject to certain restrictions.
Failure to make mandatory distributions may result in imposition of a 50%
penalty tax on any difference between the required distribution amount and the
amount actually distributed. A 10% penalty tax is imposed on the amount
includable in gross income from distributions that occur before you attain age
59 1/2 and that are not made on account of death or disability, with certain
exceptions. These exceptions include distributions that are part of a series of
substantially equal periodic payments made over your life (or life expectancy)
or the joint lives (or joint life expectancies) of yourself and your Joint
Annuitant. Distributions of minimum amounts specified by the Code must commence
by April 1 of the calendar year following the calendar year in which you attain
age 70 1/2. Additional distribution rules apply after your death.
You may rollover funds from an existing Qualified Plan (such as proceeds from
existing insurance policies, annuity contracts or securities) into your IRA if
those funds are in cash; this will require you to liquidate any value
accumulated under the existing Qualified Plan. Mandatory withholding of 20% may
apply to any rollover distribution from your existing Qualified Plan if the
distribution is not transferred directly to your IRA; to avoid this withholding
you should have cash transferred directly from the insurance company or plan
trustee to Pacific Mutual.
Similar limitations and tax penalties apply to tax sheltered annuities,
government plans, and 401(k) and pension and profit-sharing plans.
Tax Sheltered Annuities ("TSAs")
Section 403(b) of the Code permits public school systems and certain tax-exempt
organizations to adopt annuity plans for their employees; Purchase Payments
made on Contracts purchased for these employees are
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excludable from the employees' gross income (subject to maximum contribution
limits). Distributions under these Contracts must comply with certain
limitations as to timing, or result in tax penalties.
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.
401(k) Plans; Pension and Profit-Sharing Plans
Deferred compensation plans may be established by an employer for certain
eligible employees under Sections 401(a) and 401(k) of the Code. Contributions
to these plans are subject to limitations.
LOANS
Certain Qualified Contract Owners may borrow against their Contracts. If yours
is a Qualified Contract issued under Section 401(a), 401(k), 403(a) or 403(b)
of the Code and the terms of your Qualified Plan permit, you may request a loan
from Pacific Mutual, using your Contract Value as your 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 usually be effective as of the end of
the Business Day on which we receive all necessary documentation in good form.
We will forward proceeds of your loan to you within seven calendar days after
the effective date of your loan. A $500 loan administrative fee will be
deducted from your loan proceeds.
In order to secure your loan, on the effective date of your loan, we will
transfer an amount equal to the principal amount of your loan into an account
called our "Loan Account". To make this transfer, we will transfer amounts
proportionately from your Investment Options, based on your Account Value in
each.
As your loan is repaid, a portion, corresponding to the amount of the
repayment, of any amount then held as security for your loan will be
transferred from the Loan Account back into your Investment Options in
accordance with your current allocation instructions.
Loan Terms
You may have only one loan outstanding at any time. Each loan must be for at
least $1,000. Your total Contract Debt at the effective date of your loan, may
not exceed the lesser of:
. 50% of your Contract Value, or
. $50,000 less your highest outstanding Contract Debt during the 12-month
period immediately preceding the effective date of your 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.
You will be charged interest on your Contract Debt at an annual rate, set at
the time of the loan withdrawal, equal to the higher of (a) Moody's Corporate
Bond Yield Average-Monthly Average Corporates (the "Moody's Rate"), as
published by Moody's Investors Service, Inc., or its successor, for the
calendar quarter
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immediately preceding the calendar month in which your loan is effective, or
(b) 5%. In the event that the Moody's Rate is no longer available, we may
substitute a substantially similar average rate, subject to compliance with
applicable state regulations. The amount held in the Loan Account to secure
your loan will earn a return equal to an annual rate that is two percentage
points lower than the annual rate of interest charged on your Contract Debt.
Interest charges accrue on your Contract Debt daily, beginning on the effective
date of your loan; earnings on the amount held in the Loan Account to secure
your loan accrue daily beginning on the following day, and those earnings will
be transferred once a year to your Investment Options in accordance with your
current allocation instructions.
Repayment Terms
Your loan, including principal and accrued interest, must be repaid in
quarterly installments. An installment will be due in each quarter on the date
corresponding to the effective date of your loan, beginning with the first such
date following the effective date of your loan.
Example: On May 1, we receive your loan request, and your loan is
effective. Your first quarterly payment will be due on August 1.
Adverse tax consequences may result if you fail to meet the repayment
requirements for your loan. You must repay principal and interest of any loan
in substantially equal payments over the term of the loan. Normally, the term
of a loan will be five years from the effective date of the loan; however, if
you have certified to us that your loan proceeds are to be used to acquire a
principal residence for yourself, you may request a loan term of 30 years. In
either case, however, you must repay your loan prior to your Annuity Date.
You may prepay your loan at any time; if you prepay your entire outstanding
principal, we will bill you for any accrued interest, and your loan will be
considered repaid only when the interest due has been paid.
If we have not received your full payment by its due date, we will, at that
time, make your payment to Pacific Mutual by effecting a partial withdrawal
from your Contract Value as follows: (1) From the Loan Account attributable to
your loan, we will withdraw the amount of principal due. (2) From your
Investment Options, proportionate to your Account Value in each, we will
withdraw the amount sufficient to pay the interest due. If you send us a
payment of less than the amount due, we will effect a partial withdrawal of the
remaining amount due as discussed above. ALL WITHDRAWALS EFFECTED TO MAKE YOUR
LOAN REPAYMENTS WILL BE TREATED AS TAXABLE DISTRIBUTIONS FROM YOUR CONTRACT. If
a payment is received late, it will be applied as the next payment. If your
Contract Value is less than $1,000 and we do not receive your full payment by
its due date, we may, at our option, effect a partial withdrawal as described
and then terminate your Contract and send you the remaining withdrawal
proceeds.
While you have Contract Debt outstanding, we will treat all payments you send
us as Purchase Payments unless you specifically indicate that your payment is a
loan repayment. Any loan repayments in excess of the amount then due will be
applied first, to your outstanding principal, and then to accrued interest.
Tax and Legal Matters
The legal rules, including rules under the Code, that apply to loans under your
Contract are complicated and, in many cases, not clearly defined. In addition,
the rules that apply may depend on your individual circumstances. FOR THESE
REASONS, YOU SHOULD CONSULT WITH A QUALIFIED TAX ADVISER PRIOR TO EFFECTING ANY
LOAN TRANSACTION UNDER YOUR CONTRACT.
Interest paid on your loan will be considered "personal interest" under Section
163(h) of the Code, even if the proceeds of your loan are used to acquire your
principal residence.
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WITHHOLDING
Unless you elect to the contrary, any amounts you receive under your Contract
that are attributable to investment income will be subject to withholding to
meet federal and state income tax obligations. The rate of withholding on
annuity payments made to you will be determined on the basis of the withholding
information you provide to us with your Application. If you do not provide us
with required withholding information, we will withhold, from every withdrawal
from your Contract and from every annuity payment to you, the appropriate
percentage of the taxable amount of the payment. Please call us at 1-800-722-
2333 with any questions about the required withholding information. For
purposes of determining your withholding rate on annuity payments, you will be
treated as a married person with three exemptions. The rate of withholding on
all other payments made to you under your Contract, such as amounts you receive
upon withdrawals, will be 10%. Generally, there will be no withholding for
taxes until you actually receive payments under your Contract.
Distributions from a Contract under 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.
Certain states have indicated that pension and annuity withholding will apply
to payments made to residents. Generally, an election out of federal
withholding will also be considered an election out of state withholding.
IMPACT OF FEDERAL INCOME TAXES
In general, if you expect to accumulate savings over a relatively long period
of time without making significant withdrawals, there should be tax advantages,
regardless of your tax bracket, in purchasing a Contract rather than, for
example, a mutual fund with a similar investment policy and approximately the
same level of expected investment results. This is because little or no income
taxes are incurred by you or by Pacific Mutual while you are participating in
the Subaccounts, and it is generally advantageous to defer the payment of
income taxes, so that the investment return is compounded without any deduction
for income taxes. The advantage will be greater if you decide to liquidate your
investment in the form of monthly annuity payments after your retirement, or if
your tax rate is lower at that time than during the period that you held the
Contract, or both.
TAXES ON PACIFIC MUTUAL
Although the Separate Account is registered as an investment company, it is not
a separate taxpayer for purposes of the Code. The earnings of the Separate
Account are taxed as part of Pacific Mutual's operations. No charge is made
against the Separate Account for Pacific Mutual's federal income taxes
(excluding the charge for premium taxes) but we will review, periodically, the
question of charges to the Separate Account or your Contract for such taxes.
Such a charge may be made in future years for any federal income taxes that
would be attributable to the Separate Account or to our operations with respect
to your Contract, or attributable, directly or indirectly, to Purchase Payments
on your Contract.
Under current law, Pacific Mutual may incur state and local taxes (in addition
to premium taxes) in several states. At present, these taxes are not
significant and they are not charged against the Contract or the Separate
Account. If there is a material change in applicable state or local tax laws,
the imposition of any such taxes upon Pacific Mutual that are attributable to
the Separate Account or to our operations with respect to your Contract may
result in a corresponding charge against the Separate Account or your Contract.
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ADDITIONAL INFORMATION
VOTING RIGHTS
Pacific Mutual is the legal owner of the shares of the Pacific Select Fund
Portfolios held by the Subaccounts, and consequently has the right to vote on
any matter voted on at Fund shareholders' meetings. However, our interpretation
of applicable law requires us to vote the shares attributable to your Variable
Account Value ("your voting interest") in accordance with your directions.
We will pass shareholder proxy materials on to you so that you have an
opportunity to give us voting instructions for your voting interest. You may
provide your instructions by proxy or in person at the shareholders' meeting.
If there are shares of a Portfolio held by a Subaccount for which we do not
receive timely voting instructions, we will vote those shares in the same
proportion as all other shares of that Portfolio held by that Subaccount for
which we have received timely voting instructions. If we hold shares of a
Portfolio in our General Account, we will vote those shares in the same
proportion as other votes cast by all of our separate accounts in the
aggregate, including Separate Account A.
We may elect, in the future, to vote shares of Pacific Select Fund Portfolios
held in Separate Account A in our own right if we are permitted to do so
through a change in applicable federal securities laws or regulations, or in
their interpretation.
The number of Portfolio shares that form the basis for your voting interest is
determined as of the record date set by the Board of Trustees of the Fund. It
is equal to (a) your Contract Value allocated to the Subaccount corresponding
to that Portfolio, divided by (b) the net asset value per share of that
Portfolio. Fractional votes will be counted. We reserve the right, if required
or permitted by a change in federal regulations or their interpretation, to
amend how we calculate your voting interest.
After your Annuity Date, if you have selected a variable annuity, the voting
rights under your Contract will continue during the payout period of your
annuity, but the voting rights will belong to your Annuitant (or Joint
Annuitants). The number of shares that form the basis for your Annuitant's (or
Joint Annuitants') voting interest will be determined as described above, but
will decrease throughout the payout period.
CHANGES TO YOUR CONTRACT
Contract Owner(s) and Contingent Owner
You may change your Non-Qualified Contract at any time prior to your Annuity
Date to name a different Contract Owner or to add a Joint Owner, or to add or
change a Contingent Owner; if yours is a Qualified Contract, you must be the
only Contract Owner, but you may still add or change a Contingent Owner. Your
Contract cannot name more than two Contract Owners (Joint Owners) and one
Contingent Owner at any time. Joint ownership is in the form of a joint
tenancy. Prior to your Annuity Date, the Contract Owner(s) may make all
decisions regarding the Contract, including making allocation decisions and
exercising voting rights. Transactions under jointly owned Contracts require
authorization from both Contract Owners. Transfer of Contract ownership may
involve federal income tax consequences; you should consult a qualified tax
adviser before effecting such a transfer. A change to joint Contract ownership
is considered a transfer of ownership.
Annuitant and Contingent or Joint Annuitant
Your sole Annuitant cannot be changed, and Joint Annuitants cannot be added or
changed, once your Contract is issued. Certain changes may be permitted in
connection with Contingent Annuitants. See SELECTING YOUR ANNUITANT. There may
be limited exceptions for certain Qualified Contracts. Beginning at
annuitization, all decisions regarding the annuity, including allocation
decisions and exercising voting rights, belong to your Annuitant (or, if you
have a Joint and Survivor Life annuity, your Annuitants).
30
<PAGE>
Beneficiaries
Your Beneficiary is a person who may receive death benefits under your
Contract. You may change your Beneficiary or add Beneficiaries at any time
prior to the death of the Annuitant. If you have named your Beneficiary
irrevocably, you will need to obtain the Beneficiary's consent before making
any changes. Qualified Contracts may have additional restrictions on naming and
changing Beneficiaries; for example, if your Contract was issued in connection
with a Qualified Plan subject to Title I of ERISA, your spouse must either be
your Beneficiary or consent to your naming a different Beneficiary. If you
leave no surviving Beneficiary, the Annuitant or the Annuitant's estate will
receive any death benefit proceeds under your Contract.
CHANGES TO ALL CONTRACTS
If, in the judgment of Pacific Mutual's management, continued investment by
Separate Account A in one or more of the Fund Portfolios becomes unsuitable or
unavailable, we may seek to alter the Variable Investment Options available
under the Contracts. Pacific Mutual does not expect that a Portfolio will
become unsuitable, but unsuitability issues could arise due to changes in
investment policies, market conditions, or tax laws, or due to marketing or
other reasons.
Alterations of Variable Investment Options may take differing forms. Pacific
Mutual reserves the right to replace shares of any Portfolio that were already
purchased under any Contract (or shares that were to be purchased in the future
under a Contract) with shares of another Portfolio, shares of another
investment company or series of another investment company, or another
investment vehicle. We may also purchase, through a Subaccount, other
securities for other series or other classes of contracts, and may permit
conversions or exchanges between series or classes of contracts on the basis of
Contract Owner requests. Required approvals of the SEC and state insurance
regulators will be obtained before any such substitutions are effected, and you
will be notified of any planned substitution.
We may add new Subaccounts to Separate Account A, and any new Subaccounts may
invest in Portfolios of the Fund or in other investment vehicles; availability
of any new Subaccounts to existing Contract Owners will be determined at our
discretion. We will notify Contract Owners, and will comply with the filing or
other procedures established by applicable state insurance regulators, to the
extent required by applicable law. We also reserve the right, after receiving
any required regulatory approvals, to do any of the following:
. combine Subaccounts
. delete or substitute Subaccounts
. combine Separate Account A or part of it with another separate account
of Pacific Mutual or any of its affiliates
. transfer Separate Account A assets attributable to the Contracts to
another of our separate accounts
. deregister the Separate Account under the 1940 Act
. operate Separate Account A as a management investment company under the
1940 Act or another form permitted by law
. establish a committee, board or other group to manage aspects of the
Separate Account's operations
. make any changes required by the 1940 Act or other federal securities
laws
. make any changes necessary to maintain the status of the Contracts as
annuities under the Code
. make other changes required under federal or state law relating to
annuities
. suspend or discontinue sale of the Contracts.
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INVESTOR INQUIRIES AND SUBMITTING FORMS AND REQUESTS
You may reach our service representatives at 1-800-722-2333 between the hours
of 6:00 a.m. and 5:00 p.m., Pacific time.
If you are submitting a purchase or other payment by mail, please send it,
along with your Application if you are submitting one, to:
Pacific Mutual Life Insurance Company
P.O. Box 100060
Pasadena, California 91189-0060
Please send your other forms and written requests or questions to:
Pacific Mutual Life Insurance Company
P.O. Box 7187
Pasadena, California 91109-7187
If you are using an overnight delivery service to send payments, please send
them to:
Pacific Mutual Life Insurance Company
c/o FCNPC
1111 South Arroyo Parkway, First Floor
Pasadena, California 91105
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. We
"receive" this information only when it arrives, in good form, at the correct
mailing address set out above. Please call us at 1-800-722-2333 if you have any
questions regarding which address you should use.
Purchase Payments after your initial Purchase Payment, transfer requests, and
withdrawal requests we receive before 4:00 p.m. Eastern time, (or the close of
the New York Stock Exchange, if earlier) will normally be effective on the same
Business Day that we receive them in "good form, unless the transaction or
event is scheduled to occur on another day." Generally, whenever you submit any
other form, notice or request, your instructions will be effective on the next
Business Day after we receive them in "good form unless the transaction or
event is scheduled to occur on another day." "Good 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 your signature may have changed over time or due to other
circumstances. Requests regarding death benefits must be accompanied by both
proof of death and instructions regarding payment satisfactory to Pacific
Mutual. You should call your registered representative or Pacific Mutual if you
have questions regarding the required form of a request.
TELEPHONE TRANSACTIONS
After your "free look" period, you may make transfer requests by telephone if
you have authorized telephone requests (a "telephone authorization"). A
telephone authorization for a jointly owned Contract must be approved by both
Joint Owners. We cannot guarantee that you will always be able to reach us to
complete a telephone transaction; for example, all telephone lines may be busy
during certain periods, such as periods of substantial market fluctuations or
other drastic economic or market change, or telephones may be out of service
during severe weather conditions or other emergencies. Under these
circumstances, you should submit your request in writing. Transaction
instructions we receive by telephone before 4:00 p.m. Eastern time (1:00 p.m.
Pacific time) (or the close of the New York Stock Exchange, if earlier) on any
Business Day will normally be effective on that day, and we will send you
written confirmation of each telephone transfer.
We have established procedures reasonably designed to confirm that instructions
communicated by telephone are genuine. These procedures may require any person
requesting a telephone transaction to provide certain personal identification
we may request. We may also record all or part of any telephone conversation
with
32
<PAGE>
respect to transaction instructions. We reserve the right to deny any
transaction request made by telephone. When you make a written request for a
telephone authorization, you authorize us to accept and to act upon
instructions received by telephone with respect to your Contract, and you agree
that, so long as we comply with our procedures, none of Pacific Mutual, its
affiliates, the Fund, or any of their directors, trustees, officers employees
or agents will be liable for any loss, liability, cost or expense (including
attorneys' fees) in connection with requests that are effected in accordance
with your telephone authorization and that we believe to be genuine. This
policy means that you will bear the risk of loss arising out of your telephone
transaction privileges.
TIMING OF PAYMENTS
For withdrawals from the Variable Investment Options or for death benefit
payments attributable to your Variable Account Value, we will normally send the
proceeds within seven calendar days after your withdrawal request is effective
or after the Notice Date, as the case may be. Similarly, we will normally
effect transfers from the Variable Investment Options or exchanges of
Subaccount Annuity Units, within seven calendar days after your transfer or
exchange request is effective. We will normally periodic annuity payments on
the day the payment is scheduled to be sent. Payments or transfers may be
suspended for a longer period under certain abnormal circumstances. These
include a closing of the New York Stock Exchange other than on a regular
holiday or weekend, a trading restriction by the SEC, or an emergency declared
by the SEC. For withdrawals from the Fixed Option, death benefit payments
attributable to Fixed Option Value, or fixed periodic annuity payments, payment
of proceeds may be delayed for up to six (6) months after the request is
effective. Similar delays may apply to transfers from the Fixed Option and to
loans. (See THE FIXED OPTION for more details.)
CONFIRMATIONS STATEMENTS AND OTHER REPORTS TO CONTRACT OWNERS
Confirmations will be sent out for unscheduled purchase payments and transfers,
loans, loan repayments, unscheduled partial withdrawals, a full withdrawal, and
on payment of any death benefit proceeds. Each quarter prior to your Annuity
Date, we will send you a statement that provides certain information pertinent
to your Contract. These statements disclose Contract Value, Subaccount values,
values under the Fixed Option, transactions made and specific Contract data
that apply to your Contract. Confirmations of your transactions under the pre-
authorized checking plan, dollar cash averaging, earnings sweep, portfolio
rebalancing, and pre-authorized withdrawal options will appear on your
quarterly account statements. Your fourth-quarter statement will contain annual
information about your Contract Value and transactions. You will also be sent
an annual and a semi-annual report for the Separate Account and the Fund and a
list of the securities held in each Portfolio of the Fund, as required by the
1940 Act.
SALES COMMISSIONS
Pacific Mutual pays sales commissions to dealers and other expenses associated
with promotion and sales of the Contracts. Broker-dealers may receive aggregate
commissions of up to 2.5% of your aggregate Purchase Payments. 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.
FINANCIAL STATEMENTS
Pacific Mutual's audited financial statements as of and for the years ended
December 31, 1994 and 1993, and unaudited financial statements as of June 30,
1995 and for the six months ended June 30, 1995 and 1994, are contained in the
Statement of Additional Information.
33
<PAGE>
THE FIXED OPTION
GENERAL INFORMATION
All amounts allocated to the Fixed Option become part of our General Account.
Subject to applicable law, we exercise sole discretion over the investment of
General Account assets, and bear the associated investment risk; you will not
share in the investment experience of General Account assets.
Because of exemptive and exclusionary provisions, interests in the Fixed Option
under the Contract are not registered under the Securities Act of 1933 and the
General Account has not been registered as an investment company under the
Investment Company Act of 1940. An interest you have in the Fixed Option is not
subject to these Acts, and Pacific Mutual has been advised that the SEC staff
has not reviewed disclosure in this Prospectus relating to the Fixed Option.
This disclosure may, however, be subject to certain provisions of federal
securities laws relating to the accuracy and completeness of statements made in
prospectuses.
GUARANTEE TERMS
When you allocate any portion of your Purchase Payments or Contract Value to
our General Account under the Fixed Option, we guarantee you an interest rate
(a "Guaranteed Interest Rate") for a specified period of time (a "Guarantee
Term") of up to one year. Guaranteed Interest Rates may be reset periodically;
your allocation will receive the Guaranteed Interest Rate in effect on the
effective date of your allocation. The Guaranteed Interest Rate on your Fixed
Option Value will never be less than an annual rate of 3%. Each allocation (or
rollover) you make to the Fixed Option receives a Guarantee Term that begins on
the day that allocation or rollover is effective and ends on your next Contract
Anniversary or, if earlier, on your Annuity Date.
Example: Your Contract Anniversary is January 31. On February 1 of year 1,
you allocate $1,000 to the Fixed Option and receive a Guarantee Term of one
year and a Guaranteed Interest Rate of 5%. On August 1, you allocate
another $500 to the Fixed Option and receive a Guaranteed Interest Rate of
6%. Until January 31, year 2, your first $1,000 earns 5% interest and your
second $500 earns 6% interest. On January 31, year 2, a new interest rate
may go into effect for your entire Fixed Option Value.
All Guaranteed Interest Rates will be expressed as annual rates, and interest
will accrue daily. On your Contract Anniversary each year, we will roll over
your Fixed Option Value on that day into a new Guarantee Term of one year (or,
if shorter, the time remaining until your Annuity Date) with a new Guaranteed
Interest Rate or Rate(s), unless you instruct us otherwise.
WITHDRAWALS AND TRANSFERS
You may withdraw amounts from your Fixed Option Value, or transfer amounts from
your Fixed Option Value to one or more Variable Investment Options, at any time
on or prior to the Annuity Date; however, if you reside in a state that
requires refund of purchase payments under the Free Look Right, transfers may
only be made on or after your Free Look Transfer Date.
Payments or transfers from the Fixed Option may be delayed, as described under
ADDITIONAL INFORMATION--Timing of Payments; any amount delayed will, so long as
it is held under the Fixed Option, continue to earn interest at the Guaranteed
Interest Rate then in effect until the Guaranteed Term in effect has ended, and
the minimum guaranteed interest rate of 3% thereafter, unless state law
requires a greater rate be paid.
34
<PAGE>
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE CONTRACTS.............................................. 1
Pacific Equities Network................................................. 1
Broker-Dealer Commissions................................................ 1
PERFORMANCE................................................................ 1
Total Returns............................................................ 1
Yields................................................................... 2
Performance Comparisons and Benchmarks................................... 3
Insurance Company Rating Information..................................... 4
Separate Account Performance............................................. 4
THE CONTRACTS AND THE SEPARATE ACCOUNT..................................... 8
Calculating Subaccount Unit Values....................................... 8
Variable Annuity Payment Amounts......................................... 8
Corresponding Dates...................................................... 10
Age and Sex of Annuitant................................................. 11
Systematic Transfer Programs............................................. 11
Pre-Authorized Withdrawals............................................... 13
Death Benefit............................................................ 13
Joint Annuitants on Qualified Contracts.................................. 14
1035 Exchanges........................................................... 14
Safekeeping of Assets.................................................... 14
Participating............................................................ 14
FINANCIAL STATEMENTS....................................................... 14
</TABLE>
35
<PAGE>
APPENDIX A:
STATE LAW VARIATIONS
Issue Date--The term "Issue Date" shall be substituted for the term "Contract
Date" for Contracts issued to residents of the Commonwealth of Massachusetts.
Purchase Payments: No minimum initial or subsequent Purchase Payment
requirements will apply to a Contract purchased in connection with the Texas
ORP Retirement Program.
SHORT-TERM CANCELLATION RIGHT ("FREE-LOOK")
If you reside in one of the following states on your Contract Date, you may
return your Contract to us for cancellation within 20 days of your receipt of
the Contract and receive a refund as described under SHORT-TERM CANCELLATION
RIGHT ("FREE-LOOK"):
Idaho
South Dakota
If you reside in one of the following states on your Contract Date and you
exercise your Free Look right and return your Contract to us within 10 days of
your receipt of your Contract, we will refund your aggregate Purchase Payments
under your Contract that we received:
<TABLE>
<S> <C>
Georgia South Carolina
Michigan West Virginia
North Carolina
</TABLE>
If you reside in California and are age 65 or older on your Contract Date, you
may return your Contract to us within 30 days of your receipt of your Contract
for cancellation and receive a refund as described under SHORT-TERM
CANCELLATION RIGHT ("FREE-LOOK.")
36
<PAGE>
To receive a current copy of the Pacific One 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
Bar Code
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
<PAGE>
[PASTE-UP LOGO]
Issued By:
Principal Underwriter:
Pacific Mutual Life Insurance Company Pacific Equities Network
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 , 1995
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
, 1995
PACIFIC ONE
SEPARATE ACCOUNT A
----------------
Pacific One (the "Contract") is a variable annuity contract issued by Pacific
Mutual Life Insurance Company ("Pacific Mutual").
This Statement of Additional Information is not a Prospectus and should be read
in conjunction with the Contract's Prospectus, dated , 1995, which is
available without charge upon written or telephone request to Pacific Mutual.
Terms used in this Statement of Additional Information have the same meanings
as in the Prospectus, and some additional terms are defined particularly for
this Statement of Additional Information.
----------------
Pacific Mutual Life Insurance Company
Mailing Address: P.O. Box 7187
Pasadena, California 91109-7187
1-800-722-2333
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE CONTRACTS.............................................. 1
Pacific Equities Network................................................. 1
Broker-Dealer Commissions................................................ 1
PERFORMANCE................................................................ 1
Total Returns............................................................ 1
Yields................................................................... 2
Performance Comparisons and Benchmarks................................... 3
Insurance Company Rating Information..................................... 4
Separate Account Performance............................................. 4
THE CONTRACTS AND THE SEPARATE ACCOUNT..................................... 8
Calculating Subaccount Unit Values....................................... 8
Variable Annuity Payment Amounts......................................... 8
Corresponding Dates...................................................... 10
Age and Sex of Annuitant................................................. 11
Systematic Transfer Programs............................................. 11
Pre-Authorized Withdrawals............................................... 13
Death Benefit............................................................ 13
Joint Annuitants on Qualified Contracts.................................. 14
1035 Exchanges........................................................... 14
Safekeeping of Assets.................................................... 14
Participating............................................................ 14
FINANCIAL STATEMENTS....................................................... 14
</TABLE>
i
<PAGE>
DISTRIBUTION OF THE CONTRACTS
PACIFIC EQUITIES NETWORK
Pacific Equities Network ("PEN"), 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 PEN 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, PEN receives
compensation in the amount of 2.5% of aggregate Purchase Payments for
distributing the Contracts. In addition, PEN may also receive override
payments, expense allowances, bonuses, wholesaler fees and training allowances.
BROKER-DEALER COMMISSIONS
Broker-dealers may receive compensation of up to 2.5% of aggregate Purchase
Payments for sales of the Contracts. Registered representatives earn
commissions from the broker-dealers with which they are affiliated and such
arrangements vary. In addition, registered representatives who meet certain
production levels may qualify, under sales incentive programs adopted by
Pacific Mutual, for non-cash compensation such as expense paid trips, expense
paid educational seminars and merchandise.
PERFORMANCE
From time to time, our reports or other communications to current or
prospective Contract Owners or our advertising or other promotional material
may quote the performance (yield and total return) of a Subaccount. Quoted
results are based on past performance and reflect the performance of all assets
held in that Subaccount for the stated time period. QUOTED RESULTS ARE NEITHER
AN ESTIMATE NOR A GUARANTY OF FUTURE INVESTMENT PERFORMANCE, AND DO NOT
REPRESENT THE ACTUAL EXPERIENCE OF AMOUNTS INVESTED BY ANY PARTICULAR CONTRACT
OWNER. Performance numbers are carried to the nearest one-hundredth of one
percent.
TOTAL RETURNS
A Subaccount may advertise its "average annual total return" over various
periods of time. "Total return" represents the average percentage change in
value of an investment in the Subaccount from the beginning of a measuring
period to the end of that measuring period. "Annualized" total return assumes
that the total return achieved for the measuring period is achieved for each
such period for a full year. "Average annual" total return is computed in
accordance with a standard method prescribed by the SEC.
Average Annual Total Return
To calculate a Subaccount's average annual total return for a specific
measuring period, we first take a hypothetical $1,000 investment in that
Subaccount, at its then-applicable Subaccount Unit Value (the "initial
payment") and we compute the ending redeemable value ("redeemable value") of
that initial payment at the end of the measuring period. The redeemable value
reflects the effect of all recurring fees and charges applicable to a Contract
Owner under the Contract, including the mortality and expense risk charge and
the asset-based Administrative Fee, but does not reflect any charges for
applicable premium taxes. The Annual Fee is also taken into account, assuming
an average Contract Value of $80,000. The redeemable value is then
1
<PAGE>
divided by the initial payment and this quotient is taken to the Nth root (N
represents the number of years in the measuring period), and 1 is subtracted
from this result. Average annual total return is expressed as a percentage.
T = (ERV/P)(1/N)-1
where T = average annual total return
ERV = ending redeemable value
P = hypothetical initial payment of $1,000
N = number of years
Average annual total return figures will be given for recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well
(such as from commencement of the Subaccount's operations, or on a year-by-year
basis).
When considering "average" total return figures for periods longer than one
year, it is important to note that the relevant Subaccount's annual total
return for any one year in the period might have been greater or less than the
average for the entire period.
Aggregate Total Return
A Subaccount may use "aggregate" total return figures along with its "average
annual" total return figures for various periods; these figures represent the
cumulative change in value of an investment in the Subaccount for a specific
period. Aggregate total returns may be shown by means of schedules, charts or
graphs and may indicate subtotals of the various components of total return.
The SEC has not prescribed standard formulas for calculating aggregate total
return.
Total returns may also be shown for the same periods that do not take into
account the Annual Fee.
YIELDS
Money Market Subaccount
The "yield" (also called "current yield") of the Money Market Subaccount is
computed in accordance with a standard method prescribed by the SEC. The net
change in the Subaccount's Unit Value during a seven-day period is divided by
the Unit Value at the beginning of the period to obtain a base rate of return.
The current yield is generated when the base rate is "annualized" by
multiplying it by the fraction 365/7; that is, the base rate of return is
assumed to be generated each week over a 365-day period and is shown as a
percentage of the investment. The "effective yield" of the Money Market
Subaccount is calculated similarly but, when annualized, the base rate of
return is assumed to be reinvested. The effective yield will be slightly higher
than the current yield because of the compounding effect of this assumed
reinvestment.
The formula for effective yield is: (base period return +1)365/7-1.
Realized capital gains or losses and unrealized appreciation or depreciation of
the assets of the underlying Money Market Portfolio are not included in the
yield calculation. Current yield and effective yield do not reflect the
deduction of charges for any applicable premium taxes, but do reflect a
deduction for the Annual Fee, assuming an average Contract Value of $80,000.
Other Subaccounts
"Yield" of the other Subaccounts is computed in accordance with a different
standard method prescribed by the SEC. The net investment income (investment
income less expenses) per Subaccount Unit earned during a specified one-month
or 30-day period is divided by the Subaccount Unit Value on the last day of the
specified
2
<PAGE>
period. This result is then annualized (that is, the yield is assumed to be
generated each month or each 30-day period for a year), according to the
following formula, which assumes semi-annual compounding:
YIELD = 2[(((a-b)/cd) + 1)6-1]
where: a = net investment income earned during the period by the Portfolio
attributable to the Subaccount.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Subaccount Units outstanding during
the period that were entitled to receive dividends.
d = the Unit Value of the Subaccount Units on the last day of the
period.
The yield of each Subaccount reflects the deduction of all recurring fees and
charges applicable to the Subaccount, such as the mortality and expense risk
charge, the asset-based Administrative Fee and the Annual Fee (assuming an
average Contract Value of $80,000), but does not reflect any charge for
applicable premium taxes and or other taxes.
The Subaccounts' yields will vary from time to time depending upon market
conditions, the composition of each Portfolio and operating expenses of the
Fund allocated to each Portfolio. Consequently, any given performance quotation
should not be considered representative of the Subaccount's performance in the
future. Yield should also be considered relative to changes in Subaccount Unit
Values and to the relative risks associated with the investment policies and
objectives of the various Portfolios. In addition, because performance will
fluctuate, it may not provide a basis for comparing the yield of a Subaccount
with certain bank deposits or other investments that pay a fixed yield or
return for a stated period of time.
PERFORMANCE COMPARISONS AND BENCHMARKS
In advertisements and sales literature, we may compare the performance of some
or all of the Subaccounts to the performance of other variable annuity issuers
in general and to the performance of particular types of variable annuities
investing in mutual funds, or series of mutual funds, with investment
objectives similar to each of the Subaccounts. This performance may be
presented as averages or rankings compiled by Lipper Analytical Services, Inc.
("Lipper"), the Variable Annuity Research and Data Service ("VARDS(R)") or
Morningstar, Inc. ("Morningstar"), which are independent services that monitor
and rank the performance of variable annuity issuers and mutual funds in each
of the major categories of investment objectives on an industry-wide basis.
Lipper's rankings include variable life issuers as well as variable annuity
issuers. VARDS(R) rankings compare only variable annuity issuers. The
performance analyses prepared by Lipper and VARDS(R) rank such issuers on the
basis of total return, assuming reinvestment of dividends and distributions,
but do not take sales charges, redemption fees or certain expense deductions at
the separate account level into consideration. In addition, VARDS(R) prepares
risk adjusted rankings, which consider the effects of market risk on total
return performance. We may also compare the performance of the Subaccounts with
performance information included in other publications and services that
monitor the performance of insurance company separate accounts or other
investment vehicles. These other services or publications may be general
interest business publications such as The Wall Street Journal, Barron's,
Business Week, Forbes, Fortune, and Money.
In addition, our reports and communications to Contract Owners, advertisements,
or sales literature may compare a Subaccount's performance to various
benchmarks that measure the performance of a pertinent group of securities
widely regarded by investors as being representative of the securities markets
in general or as being representative of a particular type of security. These
benchmarks include the following: (1) the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500"), an unmanaged weighted index of 500 companies that
represent approximately 80% of the market capitalization of the United States
equity markets; (2) the Consumer Price Index ("CPI"), published by the U.S.
Bureau of Labor Statistics, a statistical
3
<PAGE>
measure of change, over time, in the prices of goods and services in major
expenditure groups and generally considered to be a measure of inflation; (3)
the Dow Jones Industrial Average ("DJIA"); (4) the Donoghue Money Market
Institutional Averages; (5) the Lehman Brothers Government Corporate Index; (6)
the Lehman Brothers Government Bond Index; (7) the Salomon Brothers High Yield
Bond Indexes; and (8) the Morgan Stanley Capital International's EAFE Index. We
may also compare the performance of the Subaccounts with that of other
appropriate indices of investment securities and averages for peer universes of
funds or data developed by us derived from such indices or averages. Unmanaged
indexes generally assume the reinvestment of dividends or interest but do not
generally reflect deductions for investment management or administrative costs
and expenses.
INSURANCE COMPANY RATING INFORMATION
Pacific Mutual may also advertise or report to Contract Owners its ratings as
an insurance company by the A.M. Best Company. Each year, A.M. Best reviews the
financial status of thousands of insurers, culminating in the assignment of
Best's Ratings. These ratings reflect Best's current opinion of the relative
financial strength and operating performance of an insurance company in
comparison to the norms of the life/health industry. Best's Ratings range from
A++ to F. An A++ rating means, in the opinion of A.M. Best, that the insurer
has demonstrated the strongest ability to meet its respective policyholder and
other contractual obligations. A.M. Best publishes Best's Insurance Reports,
Life-Health Edition. The 1995 Edition reported Pacific Mutual's rating of A+
for financial position and operating performance as of June 1995.
In addition, the claims-paying ability of Pacific Mutual as measured by the
Standard & Poor's Corporation may be referred to in advertisements or in
reports to Contract Owners. A Standard & Poor's insurance claims-paying ability
rating is an assessment of an operating insurance company's financial capacity
to meet the obligations of its insurance policies in accordance with their
terms. Standard & Poor's ratings range from AAA to D. Our claims-paying ability
rating is AA+, as of August 1994.
Pacific Mutual may additionally advertise its rating from Duff & Phelps Credit
Rating Co. A Duff & Phelps rating is an assessment of a company's insurance
claims-paying ability. Duff & Phelps ratings range from AAA to CCC. Duff &
Phelps rates the claims-paying ability of Pacific Mutual as AA+ as of October
1995.
Pacific Mutual may advertise its insurance financial strength rating from
Moody's Investors Service, Inc. Moody's ratings range from Aaa to C. As of
October, 1994, Moody's gave Pacific Mutual a rating of Aa3.
SEPARATE ACCOUNT PERFORMANCE
In order to help you understand how investment performance can affect your
Variable Account Value, we are including performance information based on the
historical performance of the Portfolios. The information presented also
includes data representing unmanaged market indices.
The Subaccounts have not yet commenced operations. Therefore, no historical
performance data exist for the Subaccounts. Nine of the Portfolios of the Fund
available under the Contract, however, have been in operation since January 4,
1988 (January 30, 1991 in the case of the Equity Index Portfolio and January 4,
1994 in the case of the Growth LT Portfolio). Historical performance
information for each of the Equity Portfolio and the Bond and Income Portfolio
is based on the performance of that Portfolio's predecessor; each predecessor
series was a series of Pacific Corinthian Variable Fund and began its first
full year of operations January 1, 1984, the assets of which were acquired by
the Fund on December 31, 1994. The following tables represent what the
performance of the Subaccounts would have been, if the Subaccounts had been
both in existence and invested in the corresponding Portfolio since the date of
the Portfolio's (or predecessor series') inception. Because the Subaccounts
have not commenced operations, however, and because the Contracts were not
available during this period, THESE ARE NOT ACTUAL PERFORMANCE NUMBERS FOR THE
SUBACCOUNTS OR FOR THE CONTACT. These are hypothetical total return numbers
that represent the actual performance of the Portfolios, adjusted for the fees
and charges applicable to the Contract. Any charge for premium taxes and/or
other taxes are not reflected in these data, and reflection of the Annual Fee
assumes an average Contract size of $80,000.
4
<PAGE>
THE RESULTS SHOWN IN THIS SECTION ARE NOT AN ESTIMATE OR GUARANTY OF FUTURE
INVESTMENT PERFORMANCE.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
------ ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Money Market....................... 2.36% 1.79% 3.21% -- 3.95%
High Yield Bond.................... -0.98% 10.65% 10.55% -- 8.87%
Managed Bond....................... -5.76% 3.68% 6.66% -- 7.44%
Government Securities.............. -6.50% 2.77% 5.93% -- 6.83%
Growth LT.......................... 11.90% -- -- -- 11.90%
Equity Income...................... -1.68% 2.99% 5.27% -- 8.46%
Multi-Strategy..................... -2.90% 2.94% 5.37% -- 7.61%
Equity............................. -4.27% 4.81% 7.26% 11.59% 11.29%
Bond and Income.................... -9.76% 4.34% 7.30% 9.70% 10.01%
Equity Index....................... -0.35% 4.33% -- -- 8.99%
International...................... 1.61% 5.08% 1.57% -- 5.94%
Donoghue MF........................ 3.76% 3.37% 5.11% -- *
EAFE............................... 7.80% 7.86% 1.50% 17.54% *
First Boston....................... -0.97% 11.16% 13.08% -- *
LBG/Bond........................... -3.37% 4.66% 7.53% -- *
LBG/C Bond......................... -3.51% 4.85% 7.70% 9.84% *
Russell 2500....................... -1.05% 10.22% 10.86% -- *
S&P 500............................ 1.27% 6.23% 8.66% 14.37% *
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1994
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
------ ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Money Market....................... 2.36% 5.45% 17.11% -- 31.16%
High Yield Bond.................... -0.98% 35.47% 65.09% -- 81.18%
Managed Bond....................... -5.76% 11.44% 38.04% -- 65.24%
Government Securities.............. -6.50% 8.54% 33.38% -- 58.79%
Growth LT (1)...................... 11.80% -- -- -- 11.80%
Equity Income...................... -1.68% 9.26% 29.30% -- 76.51%
Multi-Strategy..................... -2.90% 9.09% 29.88% -- 67.04%
Equity............................. -4.27% 15.14% 41.97% 199.51% 224.52%
Bond and Income.................... -9.76% 13.60% 42.24% 152.36% 185.95%
Equity Index....................... -0.35% 13.57% -- -- 40.18%
International...................... 1.61% 16.03% 8.12% -- 49.70%
Donoghue MF........................ 3.76% 10.45% 28.30% -- *
EAFE............................... 7.80% 25.48% 7.73% 403.33% *
First Boston....................... -0.97% 37.36% 84.90% -- *
LBG/Bond........................... -3.37% 14.64% 43.76% -- *
LBG/C Bond......................... -3.51% 15.27% 44.90% 155.63% *
Russell 2500....................... -1.05% 33.90% 67.45% -- *
S&P 500............................ 1.27% 19.88% 51.48% 282.93% *
</TABLE>
- --------
*Not available
(1) Cumulative return is for the period January 4, 1994 (commencement of
operations) to December 31, 1994.
5
<PAGE>
Tax Deferred Accumulation
In reports or other communications to you or in advertising or sales materials,
we may also describe the effects of tax-deferred compounding on the Separate
Account's investment returns or upon returns in general. These effects may be
illustrated in charts or graphs and may include comparisons at various points
in time of returns under the Contract or in general on a tax-deferred basis
with the returns on a taxable basis. Different tax rates may be assumed.
In general, individuals who own annuity contracts are not taxed on increases in
the value under the annuity contract until some form of distribution is made
from 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 with accumulations from an investment on
which gains are taxed on a current basis. The chart shows accumulations on an
initial investment or Purchase Payment of $25,000, assuming hypothetical annual
returns of 0%, 4% and 8%, compounded annually, and a tax rate of 31%. The
values shown for the taxable investment do not include any deduction for
management fees or other expenses but assume that taxes are deducted annually
from investment returns. The values shown for the variable annuity do not
reflect the deduction of contractual expenses such as the Mortality and Expense
Risk Charge, the Administrative Fee and the Annual Fee, any charge for premium
taxes and or other taxes, or the expenses of an underlying investment vehicle,
such as the Fund. For a description of the charges and expenses under the
Contract, see FEE TABLE and CHARGES, FEES AND DEDUCTIONS in the Prospectus. In
addition, these values assume that the Contract Owner does not surrender the
Contract or make any withdrawals until the end of the period shown. The chart
assumes a full withdrawal, at the end of the period shown, of all Contract
Value and the payment of taxes at the 31% rate on the amount in excess of the
Purchase Payment.
The rates of return illustrated are hypothetical and are not an estimate or
guaranty of performance. Actual tax rates may vary for different taxpayers from
that illustrated and withdrawals by Contract Owners who have not reached age 59
1/2 may be subject to a tax penalty of 10%.
6
<PAGE>
POWER OF TAX DEFERRAL
$25,000 investment at annual rates of 0.00%, 4.00% and 8.00%, taxed @ 31%
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Taxable Tax-Deferred
Investment Investment
---------- ------------
<S> <C> <C>
10 Years
0% $25,000.00 $25,000.00
4% $32,823.20 $33,284.21
8% $42,784.64 $44,991.46
20 Years
0% $25,000.00 $25,000.00
4% $43,094.51 $45,546.87
8% $73,221.00 $88,151.51
30 Years
0% $25,000.00 $25,000.00
4% $56,579.99 $63,698.61
8% $125,309.35 $181,330.83
</TABLE>
7
<PAGE>
THE CONTRACTS AND THE SEPARATE ACCOUNT
CALCULATING SUBACCOUNT UNIT VALUES
The Unit Value of the Subaccount Units in each Variable Investment Option is
computed as of the end of each Business Day. The initial Unit Value of each
Subaccount will be $10 on the Business Day the Subaccount begins operations. At
the end of each subsequent Business Day, the Unit Value for a Subaccount is
equal to:
Y multiplied by Z
where
(Y) = the Unit Value for that Subaccount as of the end of the preceding
Business Day; and
(Z)= the Net Investment Factor for that Subaccount for the period (a
"valuation period") between that Business Day and the immediately
preceding Business Day.
The "Net Investment Factor" for a Subaccount for any valuation period is equal
to:
(A divided by B)minus C
where
(A) = the "per share value of the assets" of that Subaccount as of the
end of that valuation period, which is equal to: a+b+c
(a)= the net asset value per share of the corresponding portfolio
shares held by that Subaccount as of the end of that valuation
period;
where
(b)= the per share amount of any dividend or capital gain
distributions made by the Fund for that Portfolio during that
valuation period; and
(c)= any per share charge (a negative number) or credit (a positive
number) for any income and or any other taxes or other amounts
set aside during that valuation period as a reserve for any
income and or any other taxes for which we determine to have
resulted from the operations of the Subaccount of Contract, and
or any taxes attributable directly or indirectly, to Purchase
Payments;
(B)= the net asset value per share of the corresponding Portfolio shares
held by the Subaccount as of the end of the preceding of the
valuation period; and
(C)= a factor that assesses against the Subaccount assets for each
calendar day in the valuation period, the charge for mortality and
expense risks at a rate that is equal on an annual basis to the
annual rate of 0.0125 and the Administrative Charge at a rate that
is equal on an annual basis to the annual rate of 0.0015 (see
Charges, Fees and Deductions).
As explained in the Prospectus, the Annual Fee, if applicable, is assessed
against your Variable Account Value through the automatic debit of Subaccount
Units; the Annual Fee decreases the number of Subaccount Units attributed to
your Contract but does not alter the Unit Value for any Subaccount.
VARIABLE ANNUITY PAYMENT AMOUNTS
The following steps show how we determine the amount of each variable annuity
payment under your Contract.
First: Pay Applicable Premium Taxes
When you convert your Contract Value (less Contract Debt) into variable annuity
payments, you must pay any applicable charge for premium taxes and or other
taxes on your Contract Value (unless applicable law requires those taxes to be
paid at a later time). We assess this charge by reducing your Contract Value,
proportionately relative to your Account Value in each Subaccount and in the
Fixed Option in an amount equal to the aggregate amount of the charges. The
remaining amount of your available Contract Value may be used to provide
variable annuity payments. Alternatively, your remaining Contract Value may be
used to provide fixed annuity payments, or it may be divided to provide both
fixed and variable annuity payments. You may also choose to withdraw some or
all of your remaining Contract Value (less Contract Debt) and any applicable
Annual Fee and charge for premium taxes and or other taxes.
8
<PAGE>
Second: The First Variable Payment
We begin by referring to your Contract's Option Table for your Annuity Option
(the "Annuity Option Table"). The Annuity Option Table allows us to calculate
the dollar amount of the first variable annuity payment under your Contract,
based on the amount applied toward the variable annuity. The number that the
Annuity Option Table yields will be based on the Annuitant's age (and, in
certain cases, sex) and assumes a 5% investment return, as described in more
detail below.
Example: Assume a man is 65 years of age at his Annuity Date and has
selected a lifetime annuity with monthly payments guaranteed for 10 years.
According to the Annuity Option Table, this man should receive an initial
monthly payment of $6.91 for every $1000 of his Contract Value (reduced by
applicable charges and any Contract Debt) that he will be using to provide
variable payments. Therefore, if his Contract Value after deducting
applicable charges and any Contract Debt is $100,000 on his Annuity Date
and he applies this entire amount toward his variable annuity, his first
monthly payment will be $691.00.
Third: Subaccount Annuity Units
For each Subaccount, we use the amount of the first variable annuity payment
under your Contract attributed to each Subaccount to determine the number of
Subaccount Annuity Units that will form the basis of subsequent payment
amounts. First, we use the Annuity Option Table to determine the amount of that
first variable payment for each Subaccount. Then, for each Subaccount, we
divide that amount of the first variable annuity payment by the value of one
Subaccount Annuity Unit (the "Subaccount Annuity Unit Value") as of the end of
the Annuity Date to obtain the number of Subaccount Annuity Units for that
particular Subaccount. The number of Subaccount Annuity Units used to calculate
subsequent payments under your Contract will not change unless exchanges of
Annuity Units are made, (or if the Joint and Survivor Annuity Option is elected
and the Primary Annuitant dies first,) but the value of those Annuity Units
will change daily, as described below.
Fourth: The Subsequent Variable Payments
The amount of each subsequent variable annuity payment will be the sum of the
amounts payable based on each Subaccount. The amount payable based on each
Subaccount is equal to the number of Subaccount Annuity Units for that
Subaccount multiplied by their Subaccount Annuity Unit Value at the end of the
Business Day in each payment period you elected that corresponds to the Annuity
Date.
Each Subaccount's Subaccount Annuity Unit Value, like its Subaccount Unit
Value, changes each day to reflect the net investment results of the underlying
investment vehicle, as well as the assessment of the mortality and expense risk
charge at a rate equal on an annual basis to the annual rate of 0.0125 and the
Administrative Fee at a rate equal on an annual basis to the annual rate of
0.0015. In addition, the calculation of Subaccount Annuity Unit Value
incorporates an additional factor; as discussed in more detail below, this
additional factor adjusts Subaccount Annuity Unit Values to correct for the
Option Table's implicit assumption of a 5% annual investment return on amounts
applied but not yet used to furnish annuity benefits.
Different Subaccounts may be selected for your Contract before and after your
Annuity Date, subject to any restrictions we may establish. Currently, your
Annuitant(s) may exchange Subaccount Annuity Units in any Subaccount for
Subaccount Annuity Units in any other Subaccount(s) up to four times in any
twelve month period after you annuitize. The number of Subaccount Annuity Units
in any Subaccount may change due to such exchanges. Exchanges following
annuitization will be made by exchanging Subaccount Annuity Units of equivalent
aggregate value, based on their relative Subaccount Annuity Unit Values.
Understanding the "Assumed Investment Return" Factor
The Annuity Option Table incorporates a number of implicit assumptions in
determining the amount of your first variable annuity payment. As noted above,
the numbers in the Annuity Option Table reflect certain
9
<PAGE>
actuarial assumptions based on the Annuitant's age, and, in some cases, the
Annuitant's sex. In addition, these numbers assume that the amount of your
Contract Value that you convert to a variable annuity will have a positive
investment return of 5% each year during the payout of your annuity; this 5% is
referred to as an "assumed investment return."
The Subaccount Annuity Unit Value for a Subaccount will increase only to the
extent that the investment performance of that Subaccount exceeds its mortality
and expense risk charge, the Administrative Fee, and the assumed investment
return. The Subaccount Annuity Unit Value for any Subaccount will generally be
less than the Subaccount Unit Value for that same Subaccount, and the
difference will be the amount of the assumed investment factor.
Example: Assume the investment performance of a Subaccount is at a rate of
6.40% per year. The Subaccount Unit Value for that Subaccount would
increase at a rate of 5.00% per year (6.40% minus the mortality and expense
risk charge at the annual rate of 1.25% and minus the Administrative Fee at
the annual rate of .15% equals 5.00%), but the Subaccount Annuity Unit
Value would not increase (or decrease) at all. The net investment factor
for that 5% return (1.05) is then divided by the factor for the 5% assumed
investment return (1.05) and 1 is subtracted from the result to determine
the adjusted rate of change in Subaccount Annuity Unit Value:
1.05 = 1 - 1 = 0%.
------
1.05
If the investment performance of a Subaccount assets is at a rate less than
6.40% per year, the Subaccount Annuity Unit Value will decrease, even if the
Subaccount Unit Value is increasing.
Example: Assume the investment performance of a Subaccount is at a rate of
4.00% per year. The Subaccount Unit Value for that Subaccount would
increase at a rate of 2.60% per year (4.00% minus the mortality and expense
risk charge at the annual rate of 1.25% and minus the Administrative Fee at
the annual rate of .15% equals 2.60%), but the Subaccount Annuity Unit
Value would decrease at a rate of 2.29% per year. The net investment factor
for that 2.6% return (1.026) is then divided by the factor for the 5%
assumed investment return (1.05) and 1 is subtracted from the result to
determine the adjusted rate of change in Subaccount Annuity Unit Value:
1.026 = .9771 -1 = -2.29%.
-----
1.05
The assumed investment return will always cause increases in Subaccount Annuity
Unit Values to be somewhat less than if the assumption had not been made, will
cause decreases in Subaccount Annuity Unit Values to be somewhat greater than
if the assumption had not been made, and will (as shown in the example above)
sometimes cause a decrease in Subaccount Annuity Unit Values to take place when
an increase would have occurred if the assumption had not been made. If we had
assumed a higher investment return in our Annuity Option tables, it would
produce annuities with larger first payments, but the increases in subaccount
annuity payments would be smaller and the decreases in subsequent annuity
payments would be greater; a lower assumed investment return would produce
annuities with smaller first payments, and the increases in subsequent annuity
payments would be greater and the decreases in subsequent annuity payments
would be smaller.
CORRESPONDING DATES
If any transaction or event under your Contract is scheduled to occur on a
"corresponding date" that does not exist in a given calendar period, the
transaction or event will be deemed to occur on the following date. In
addition, as stated in the Prospectus, any event scheduled to occur on a day
that is not a Business Day will occur on the next succeeding Business Day.
Example: If your Contract is issued on February 29 in year 1 (a leap year),
your Contract Anniversary in years 2, 3 and 4 will be on March 1.
Example: If your Annuity Date is July 31 and you select monthly annuity
payments, the payments received will be based on valuations made on July
31, August 31, October 1 (for September), October 31, December 1 (for
November), December 31, January 31, March 1 (for February), March 31, May 1
(for April), May 31 and July 1 (for June).
10
<PAGE>
AGE AND SEX OF ANNUITANT
As mentioned in the Prospectus, the Contracts generally provide for sex-
distinct annuity purchase rates in the case of life annuities. Statistically,
females tend to have longer life expectancies than males; consequently, if the
amount of annuity payments is based on life expectancy, they will ordinarily be
higher if an annuitant is male than if an annuitant is female. Certain states'
regulations prohibit sex-distinct annuity purchase rates, and Contracts issued
in those states will use unisex rates. In addition, Contracts issued in
connection with Qualified Plans are required to use unisex rates.
We may require proof of your Annuitant's age and sex before commencing annuity
payments. If the age or sex (or both) of your Annuitant are incorrectly stated
in your Contract, the amount payable will be corrected to equal the amount that
the annuitized portion of the Contract Value under that Contract would have
purchased for your Annuitant's correct age and sex. If the correction is
effected after annuity payments have commenced, and we have made overpayments
based on the incorrect information, we will deduct the amount of the
overpayment, with interest at 3% a year, from any payments due then or later;
if we have made underpayments, we will add the amount, with interest at 3% a
year, of the underpayments to the next payment we make after we receive proof
of the correct sex and/or date of birth.
SYSTEMATIC TRANSFER PROGRAMS
Dollar Cost Averaging
When you request dollar cost averaging, you are authorizing us to make periodic
reallocations of your Contract Value without waiting for any further
instruction from you. You may request to begin or stop dollar cost averaging at
any time prior to your Annuity Date; the effective date of your request will be
the day we receive written notice from you in good form. Your request may
specify the date on which you want your first transfer to be made. If you do
not specify a date for your first transfer, we will treat your request as if
you had specified the effective date of your request. Your first transfer may
not be made until 30 days after your Contract Date, and if you specify an
earlier date, your first transfer will be delayed until one calendar month
after the date you specify. If you request dollar cost averaging on your
Application for your Contract and you fail to specify a date for your first
transfer, your first transfer will be made one period after your Contract Date
(that is, if you specify monthly transfers, the first transfer will occur 30
days after your Contract Date; quarterly transfers, 90 days after your Contract
Date; semi-annual transfers, 180 days after your Contract Date; and if you
specify annual transfers, the first transfer will occur on your Contract
Anniversary). If you stop dollar cost averaging, you must wait 30 days before
you may begin this option again.
Your request to begin dollar cost averaging must specify the Investment Option
you wish to transfer money from (your "source account"). You may choose any one
Variable Investment Option or the Fixed Option as your source account. The
Account Value of your source account must be at least $10,000 for you to begin
dollar cost averaging.
Your request to begin dollar cost averaging must also specify the amount and
frequency of your transfers. You may choose monthly, quarterly, semi-annual or
annual transfers. The amount of your transfers may be specified as a dollar
amount or a percentage of your source Account Value; however, the first
transfer must be at least $250. Dollar cost averaging transfers are subject to
the same requirements and limitations as other transfers.
Finally, your request must specify the Investment Option(s) you wish to
transfer amounts to (your "target account(s)"). If you select more than one
target account, your dollar cost averaging request must specify how transferred
amounts should be allocated among the target accounts. Your source account may
not also be a target account.
Your dollar cost averaging transfers will continue until your request to stop
dollar cost averaging is effective or, if earlier, until your source Account
Value is zero or you annuitize. If, as a result of a dollar cost averaging
11
<PAGE>
transfer, your source Account Value falls below any minimum Account Value we
may establish, we have the right, at our option, to transfer that remaining
Account Value to your target account(s) on a proportionate basis relative to
your most recent allocation instructions. You may not use dollar cost averaging
and the earnings sweep at the same time. We may change, terminate or suspend
the dollar cost averaging option at any time.
Portfolio Rebalancing
Portfolio rebalancing allows you to maintain the percentage of your Contract
Value allocated to each Variable Investment Option at a pre-set level prior to
annuitization. For example, you could specify that 30% of your Contract Value
should be in the Equity Index Subaccount, 40% in the Managed Bond Subaccount,
and 30% in the Growth LT Subaccount. Over time, the variations in each
Subaccount's investment results will shift this balance of your Contract Value
allocations. If you elect the portfolio rebalancing feature, we will
automatically transfer your Contract Value back to the percentages you specify.
You may choose to have rebalances made quarterly, semi-annually or annually
until your Annuity Date; portfolio rebalancing is not available after you
annuitize.
Procedures for selecting portfolio rebalancing are generally the same as those
discussed in detail above for selecting dollar cost averaging: You may make
your request at any time and it will be effective when we receive it in good
form. If you stop portfolio rebalancing, you must wait 30 days to begin again.
You may specify a date for your first rebalance, or we will treat your request
as if you selected the request's effective date. If you specify a date fewer
than 30 days after your Contract Date, your first rebalance will be delayed one
month, and if you request rebalancing on your Application but do not specify a
date for the first rebalance, it will occur one period after your Contract
Date, as described above under Dollar Cost Averaging. We may change, terminate
or suspend the portfolio rebalancing feature at any time.
Earnings Sweep
An earnings sweep automatically transfers the Earnings attributable to a
specified Investment Option (the "sweep option") to one or more other
Investment Options (your "target option(s)"). If you elect to use the earnings
sweep, you may select either the Fixed Option or the Money Market Subaccount as
your sweep option. The Account Value of your sweep option will be required to
be at least $10,000 when you elect the earnings sweep. You may select one or
more Variable Investment Options (but not the Money Market Subaccount) as your
target option(s).
You may choose to have earnings sweeps occur monthly, quarterly, semi-annually
or annually until you annuitize. At each earnings sweep, we will automatically
transfer your accumulated Earnings attributable to your sweep option for the
previous period proportionately to your target option(s). That is, if you
select a monthly earnings sweep, we will transfer the sweep option Earnings
from the preceding month; if you select a semi-annual earnings sweep, we will
transfer the sweep option Earnings accumulated over the preceding six months.
Earnings sweep transfers are subject to the same requirements and limitations
as other transfers. For the purpose of determining Earnings, transfers,
withdrawals, and any applicable annual fees, transaction fees, and charges for
premium taxes and/or other taxes imposed on your sweep option will first be
attributed to that sweep option's earnings on a last in, first out basis, and
then to amounts allocated or transferred to that sweep option.
Procedures for selecting the earnings sweep are generally the same as those
discussed in detail above for selecting dollar cost averaging and portfolio
rebalancing: You may make your request at any time and it will be effective
when we receive it in good form. If you stop the earnings sweep, you must wait
30 days to begin again. You may specify a date for your first sweep, or we will
treat your request as if you selected the request's effective date. If you
specify a date fewer than 30 days after your Contract Date, your first earnings
sweep will be delayed one month, and if you request the earnings sweep on your
Application but do not specify a
12
<PAGE>
date for the first sweep, it will occur one period after your Contract Date,
as described above under Dollar Cost Averaging.
If you are using the earnings sweep, you may also use portfolio rebalancing
only if you select the Fixed Option as your sweep option. You may not use the
earnings sweep and dollar cost averaging at the same time. We may change,
terminate or suspend the earnings sweep option at any time.
PRE-AUTHORIZED WITHDRAWALS
You may specify a dollar amount for your pre-authorized withdrawals, or you
may specify a percentage of your Contract Value or an Account Value. You may
direct us to make your pre-authorized withdrawals from one or more specific
Investment Options; if you do not give us these specific directions, amounts
will be deducted proportionately from your Account Value in each Investment
Option.
Procedures for selecting pre-authorized withdrawals are generally the same as
those discussed in detail above for selecting dollar cost averaging, portfolio
rebalancing, and earnings sweeps: You may make your request at any time and it
will be effective when we receive it in good form. If you stop the pre-
authorized withdrawals, you must wait 30 days to begin again. You may specify
a date for the first withdrawal, or we will treat your request as if you
selected the request's effective date. If you specify a date fewer than 30
days after your Contract Date, your first pre-authorized withdrawal will be
delayed one month, and if you request pre-authorized withdrawals on your
Application but do not specify a date for the first withdrawal, it will occur
one period after your Contract Date.
If your pre-authorized withdrawals cause your Account Value in any Investment
Option to fall below any minimum Account Value we may establish, we have the
right, at our option, to transfer that remaining Account Value to your other
Investment Options on a proportionate basis relative to your most recent
allocation instructions. If your pre-authorized withdrawals cause your
Contract Value to fall below $1,000, we may, at our option, terminate your
Contract and send you the remaining withdrawal proceeds.
Each pre-authorized withdrawal is subject to any applicable charge for premium
taxes and or other taxes, to federal income tax on its taxable portion, and,
if you have not reached age 59 1/2, a 10% tax penalty.
DEATH BENEFIT
Any death benefit payable will be calculated as of the date we receive proof
(in good form) of the Annuitant's death (or, if applicable, the Contract
Owner's death) and instructions regarding payment; any claim of a death
benefit must be made in writing and in a form satisfactory to us. A recipient
of death benefit proceeds may elect to have this benefit paid in one lump sum,
in periodic payments, in the form of a lifetime annuity or in some combination
of these. Annuity payments will begin within 30 days once we receive all
information necessary to process the claim.
If your Contract names Joint or Contingent Annuitants, no death benefit will
be payable unless and until the last Annuitant dies prior to the Annuity Date
or a Contract Owner dies prior to the Annuity Date. If yours is a Qualified
Contract, your Contingent Annuitant or Contingent Owner must be your spouse.
Death of an Annuitant
If a Joint Annuitant who is not a Contract Owner dies prior to the Annuity
Date, the surviving Joint Annuitant becomes your Annuitant. If your Annuitant
is not a Contract Owner and dies, or if there is no surviving Joint Annuitant,
your surviving Contingent Annuitant becomes your Annuitant. If there is no
surviving Contingent Annuitant, the death benefit becomes payable.
Any death benefit payable on the death of your Annuitant is payable to the
surviving Beneficiary. If no Beneficiary survives, any death benefit is
payable to the Annuitant's estate.
Death of a Contract Owner
If any Contract Owner dies prior to the Annuity Date and the Annuitant has not
died previously, a death benefit may be payable. If that Contract Owner was
the sole Annuitant or a Joint Annuitant under the
13
<PAGE>
Contract, the death benefit will be payable to the surviving Beneficiary, or
to that Annuitant's estate if no Beneficiary survives. If that Contract Owner
was not an Annuitant under the Contract, the death benefit will be payable to
the surviving Joint Owner of your Contract, if there is one; if not, the death
benefit will be payable to the surviving Contingent Owner, if there is one; if
not the death benefit will be payable to the surviving Beneficiary, or to the
Annuitant or the Annuitant's estate if no Beneficiary survives. If the Joint
or Contingent Owner is the deceased Contract Owner's surviving spouse, he or
she may elect to become the Contract Owner and continue the Contract rather
than receive the death benefit proceeds.
JOINT ANNUITANTS ON QUALIFIED CONTRACTS
If your Contract was issued in connection with a Qualified Plan subject to
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") and
you change your marital status after your Contract Date, you may be permitted
to add a Joint Annuitant on your Annuity Date and to change your Joint
Annuitant. Generally speaking, you may be permitted to add a new spouse as a
Joint Annuitant, and you may be permitted to remove a Joint Annuitant who is
no longer your spouse. You may call Pacific Mutual for more information.
1035 EXCHANGES
You may make your initial Purchase Payment through an exchange of an existing
annuity contract. To exchange, you must complete a 1035 Exchange form, which
is available by calling 1-800-722-2333, and mail the form along with the
annuity contract you are exchanging (plus your completed application if you
are making an initial Purchase Payment) to us.
In general terms, Section 1035 of the Internal Revenue Code of 1986, as
amended (the "Code"), provides that you recognize no gain or loss when you
exchange one annuity contract solely for another annuity contract. However,
transactions under Section 1035 may be subject to special rules and may
require special procedures and recordkeeping, particularly if the exchanged
annuity contract was issued prior to August 14, 1982. You should consult your
tax adviser prior to effecting a 1035 Exchange.
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.
PARTICIPATING
The Contract is participating and will share in the surplus earnings of
Pacific Mutual. However, 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 Contract Value. If no election is made by the
Contract Owner, the dividend will be added to the Contract Value. Pacific
Mutual will allocate any dividend to Contract Value in accordance with the
Owner's most recent allocation instructions, unless instructed. The Owner
should consult with his or her tax adviser before making an election.
FINANCIAL STATEMENTS
Separate Account A has not yet commenced operations and therefore no financial
statements are included. Pacific Mutual's audited financial statements as of
and for the years ended December 31, 1994 and 1993, and unaudited financial
statements as of June 30, 1995 and for the six months ended June 30, 1995 and
1994, are set forth below. These financial statements should be considered
only as bearing on the ability of Pacific Mutual to meet its obligations under
the Contracts and not as bearing on the investment performance of the assets
held in the Separate Account.
The financial statements of Pacific Mutual as of and for the years ended
December 31, 1994 and 1993 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein.
14
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY
UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 1995
AND FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
15
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 1995
--------------
(IN THOUSANDS)
<S> <C>
ASSETS
Bonds............................................................ $ 6,990,684
Preferred stocks................................................. 142,982
Common stocks.................................................... 65,722
Unconsolidated subsidiaries...................................... 194,761
Mortgage loans................................................... 1,395,877
Real estate...................................................... 163,570
Home office properties........................................... 50,864
Policy loans..................................................... 2,352,930
Cash and short-term investments.................................. 365,449
Investment income due and accrued................................ 144,609
Premiums due and uncollected, and other assets................... 179,920
Separate account assets.......................................... 4,305,992
-----------
Total Assets................................................. $16,353,360
===========
LIABILITIES AND SURPLUS
Liabilities
Policy reserves................................................ $ 6,785,662
Deposit funds.................................................. 3,536,023
Other liabilities.............................................. 870,316
Asset valuation reserve........................................ 193,145
Separate account liabilities................................... 4,305,992
-----------
Total liabilities................................................ 15,691,138
Surplus.......................................................... 662,222
-----------
Total Liabilities and Surplus................................ $16,353,360
===========
</TABLE>
See Note to Financial Statements
16
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND SURPLUS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
REVENUES
Premiums, annuity considerations and deposit funds..... $1,469,814 $1,024,357
Net investment income.................................. 466,763 432,035
Other income........................................... 16,139 11,906
---------- ----------
Total Revenues........................................ 1,952,716 1,468,298
---------- ----------
BENEFITS AND EXPENSES
Current and future policy benefits..................... 1,733,018 1,272,148
Operating expenses..................................... 120,853 112,481
Premium and other taxes (excluding tax on capital
gains)................................................ 15,077 15,024
Dividends to policyowners.............................. 9,363 8,889
---------- ----------
Total Benefits and Expenses........................... 1,878,311 1,408,542
---------- ----------
Income before Federal income taxes...................... 74,405 59,756
Federal income taxes.................................... 45,127 17,003
---------- ----------
Net gain from operations................................ 29,278 42,753
Net realized capital gains.............................. 2,148 6,537
---------- ----------
NET INCOME.............................................. $ 31,426 $ 49,290
========== ==========
SURPLUS
Net income.............................................. $ 31,426 $ 49,290
Other surplus transactions, net......................... 3,172 (36,697)
---------- ----------
Increase in surplus..................................... 34,598 12,593
Surplus, beginning of period............................ 627,624 582,776
---------- ----------
SURPLUS, END OF PERIOD.................................. $ 662,222 $ 595,369
========== ==========
</TABLE>
See Note to Financial Statements
17
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1995 1994
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOW FROM OPERATIONS
Receipts
Premiums, annuity considerations and deposit funds. $ 1,456,159 $ 786,063
Net investment income.............................. 390,390 343,799
Allowances and reserve adjustments on reinsurance
ceded............................................. 28,352 254,737
Payments
Policy benefit payments............................ (791,899) (579,351)
Net policy loans................................... (40,440) (129,324)
Operating expenses................................. (129,968) (82,273)
Net transfer to separate accounts.................. (476,532) (167,744)
Premium and other taxes............................ (24,477) (21,394)
Dividends to policyowners.......................... (9,545) (9,338)
Federal income tax................................. (14,230) (22,736)
Other applications, net.............................. (23,467) (23,090)
----------- -----------
NET CASH FLOW FROM OPERATIONS........................ 364,343 349,349
----------- -----------
CASH FLOW FROM INVESTMENTS
Proceeds
Bonds.............................................. 1,080,201 1,671,810
Stocks............................................. 74,947 69,734
Mortgage loans..................................... 129,865 215,735
Real estate........................................ 3,412 2,385
Other investments.................................. 59,310 12,450
Payments for the purchase of
Bonds.............................................. (1,363,710) (2,017,337)
Stocks............................................. (87,817) (67,970)
Mortgage loans..................................... (115,727) (112,223)
Real estate........................................ (1,422) (3,691)
Other investments.................................. (33,979) (70,872)
----------- -----------
NET CASH FLOW USED FOR INVESTMENTS................... (254,920) (299,979)
----------- -----------
CASH FLOW FROM BORROWINGS............................ 158,281 0
----------- -----------
Increase in cash and short-term investments.......... 267,704 49,370
Cash and short-term investments, beginning of period. 97,745 342,401
----------- -----------
CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD....... $ 365,449 $ 391,771
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid...................................... $ 7,651 $ 13,782
=========== ===========
</TABLE>
See Note to Financial Statements
18
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY
NOTE TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
1. BASIS OF PRESENTATION
The information set forth in the statement of financial position as of June
30, 1995 and the statements of operations and surplus and of cash flow for the
six months ended June 30, 1995 and June 30, 1994 is unaudited. The information
reflects all adjustments, consisting only of normal recurring adjustments,
that, in the opinion of management, are necessary to present fairly the
financial position and results of operations of Pacific Mutual Life Insurance
Company ("Pacific Mutual") for the periods indicated. Results of operations for
the interim periods are not necessarily indicative of the results of operations
for the full year. For further information, refer to the financial statements
and footnotes thereto included in Pacific Mutual's audited financial statements
for the years ended December 31, 1994 and December 31, 1993.
In April 1993, the Financial Accounting Standards Boards ("FASB") issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises" (the
"Interpretation"). The Interpretation was amended by Statement of Financial
Accounting Standards No. 120, "Accounting and Reporting by Mutual Life
Insurance Enterprises for Certain Long-Duration Participating Contracts,"
("SFAS No. 120") which was issued in January 1995, to further clarify the
accounting for mutual life insurance companies and to defer the effective date
of general provisions of the Interpretation to fiscal years beginning after
December 15, 1995. SFAS No. 120 did not change the disclosure of other
transition provisions of the Interpretation. The Interpretation does not
preclude mutual life insurance enterprises from issuing financial statements
prepared under statutory accounting practices but concludes that those
financial statements should not be described as being prepared in conformity
with generally accepted accounting principles ("GAAP"). Upon the effective date
of the Interpretation, in order for their financial statements to be described
as being prepared in accordance with GAAP, mutual life insurance companies and
their subsidiaries will be required to adopt all applicable authoritative GAAP
pronouncements in any general purpose financial statements that they may elect
to issue. Pacific Mutual has not quantified the effects of the application of
the Interpretation on its financial statements since the company has not yet
determined whether for general purposes it will continue to issue statutory
financial statements or statements adopting all applicable authoritative GAAP
pronouncements.
19
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY
AUDITED FINANCIAL STATEMENTS AS OF
AND FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
20
<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, 1994 and 1993, 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, 1994 and 1993 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 21, 1995
21
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1994 1993
- ------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ASSETS
Bonds $ 6,669,853 $ 5,899,646
Preferred stocks 132,604 143,016
Common stocks 57,874 71,086
Unconsolidated subsidiaries 196,401 141,611
Mortgage loans 1,421,182 1,611,400
Real estate 157,507 134,257
Home office properties 51,419 52,115
Policy loans 2,312,455 1,960,162
Cash and short-term investments 97,745 342,401
Investment income due and accrued 125,534 125,783
Premiums due and uncollected, and other assets 245,243 143,669
Separate account assets 3,260,374 2,720,997
- ------------------------------------------------------------------------
TOTAL ASSETS $14,728,191 $13,346,143
- ------------------------------------------------------------------------
LIABILITIES AND SURPLUS
Liabilities
Policy reserves $ 6,476,634 $ 5,807,708
Deposit funds 3,298,915 3,485,440
Other liabilities 885,638 583,989
Asset valuation reserve 179,006 165,251
Separate account liabilities 3,260,374 2,720,979
- ------------------------------------------------------------------------
Total Liabilities 14,100,567 12,763,367
Surplus 627,624 582,776
- ------------------------------------------------------------------------
TOTAL LIABILITIES AND SURPLUS $14,728,191 $13,346,143
- ------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF OPERATIONS AND SURPLUS
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums, annuity considerations and deposit
funds $ 2,180,409 $ 2,325,160
Net investment income 879,116 879,931
Other income 5,073 4,959
- -------------------------------------------------------------------------------
TOTAL REVENUES 3,064,598 3,210,050
- -------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 2,686,406 2,818,344
Operating expenses 222,203 218,387
Premium and other taxes (excluding tax on capital
gains) 28,715 26,057
Dividends to policyowners 17,162 17,609
- -------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 2,954,486 3,080,397
- -------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 110,112 129,653
Federal income taxes 41,510 22,367
- -------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 68,602 107,286
NET REALIZED CAPITAL GAINS 12,424 11,226
- -------------------------------------------------------------------------------
NET INCOME $ 81,026 $ 118,512
- -------------------------------------------------------------------------------
SURPLUS
Net income $ 81,026 $ 118,512
Contribution certificates 149,589
Other surplus transactions, net (36,178) (57,012)
- -------------------------------------------------------------------------------
Increase in surplus 44,848 211,089
Surplus, beginning of year 582,776 371,687
- -------------------------------------------------------------------------------
SURPLUS, END OF YEAR $ 627,624 $ 582,776
- -------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOW FROM OPERATIONS
Receipts
Premiums, annuity considerations and deposit funds $ 1,687,583 $ 2,065,646
Net investment income 809,791 839,682
Allowances and reserve adjustments on reinsurance
ceded 491,363 230,995
Other 23,862 9,965
Payments
Policy benefit payments (1,408,650) (1,530,086)
Net policy loans (352,358) (436,216)
Operating expenses (247,437) (204,768)
Net transfer to separate accounts (594,284) (922,130)
Premium and other taxes (34,795) (24,785)
Dividends to policyowners (17,319) (17,641)
Federal income tax (23,995) (87,162)
- ------------------------------------------------------------------------------
NET CASH FLOW FROM OPERATIONS 333,761 (76,500)
- ------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENTS
Proceeds
Bonds 2,937,210 2,696,822
Stocks 139,785 346,072
Mortgage loans 390,642 408,238
Real estate 20,163 90,389
Other investments 47,132 94,874
Payments for the purchase of
Bonds (3,673,859) (3,174,986)
Stocks (126,823) (278,932)
Mortgage loans (230,859) (131,841)
Real estate (17,466) (7,087)
Other investments (114,106) (37,844)
- ------------------------------------------------------------------------------
NET CASH FLOW FROM INVESTMENTS (628,181) 5,705
- ------------------------------------------------------------------------------
CASH FLOW FROM BORROWINGS 49,764
- ------------------------------------------------------------------------------
CASH FLOW FROM CONTRIBUTION CERTIFICATES 149,589
- ------------------------------------------------------------------------------
Increase (decrease) in cash and short-term invest-
ments (244,656) 78,794
Cash and short-term investments, beginning of year 342,401 263,607
- ------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 97,745 $ 342,401
- ------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 22,120 $ 8,054
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
24
<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. Its core business consists of life insurance, annuity and pension
products. In addition, Pacific Mutual provides other insurance, employee
benefits and investment management and advisory services through its
subsidiaries.
BASIS OF PRESENTATION
Pacific Mutual's financial statements are based on accounting practices
prescribed or permitted by the Insurance Department of the State of
California, which are currently considered generally accepted accounting
principles 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.
In April 1993, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises" (the
"Interpretation"). The Interpretation was amended by Statement of Financial
Accounting Standards No. 120, "Accounting and Reporting by Mutual Life
Insurance Enterprises for Certain Long-Duration Participating Contracts,"
("SFAS No. 120") which was issued in January 1995, to further clarify the
accounting for mutual life insurance companies and to defer the effective
date of the general provisions of the Interpretation to fiscal years
beginning after December 15, 1995. SFAS No. 120 did not change the
disclosure of other transition provisions of the Interpretation. The
Interpretation does not preclude mutual life insurance enterprises from
issuing financial statements prepared under statutory accounting practices
but concludes that those financial statements should not be described as
being prepared in conformity with generally accepted accounting principles
("GAAP"). Upon the effective date of the Interpretation, in order for their
financial statements to be described as being prepared in accordance with
GAAP, mutual life insurance companies and their subsidiaries will be
required to adopt all applicable authoritative GAAP pronouncements in any
general purpose financial statements that they may elect to issue. Pacific
Mutual has not quantified the effects of the application of the
Interpretation on its financial statements since the company has not yet
determined whether for general purposes it will continue to issue statutory
financial statements or statements adopting all applicable authoritative
GAAP pronouncements.
CHANGE IN ACCOUNTING POLICIES
During 1993, Pacific Mutual implemented the accrual method of accounting
for the costs of its postretirement health care and life insurance plans as
prescribed by the Insurance Department of the State of California. This
change is more fully described in Note 10.
INVESTMENTS
Investments in bonds are carried at amortized cost. Preferred stocks are
principally stated at amortized cost. Common stocks are carried at market
value. Investments in unconsolidated subsidiaries are reported on the
equity method of accounting, except for 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.
25
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 and these capital gains and losses
are amortized into investment income over the remaining life of the
investment sold. The IMR was $13.1 million and $22.4 million as of December
31, 1994 and 1993, respectively.
Net realized capital gains and losses are determined on the specific
identification method and are presented net of federal capital gains tax of
$2.2 million and $16.9 million and transfers to the IMR of $(.4) million
and $22.4 million for the years ended December 31, 1994 and 1993,
respectively.
Derivatives which qualify for hedge accounting are valued consistently with
the hedged items. Realized 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 through income when realized.
On November 15, 1994, Pacific Financial Asset Management Corporation, a
wholly-owned, second-tier 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. Substantially all operations of these entities and net assets of $20.9
million were contributed in exchange for approximately 42% of the newly
issued partnership units.
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, 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.
26
<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
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. The difference between the effective tax rate and the statutory
tax rate of 35% for 1994 and 1993 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 for 1994.
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 values 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.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1994
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, Pacific
Corinthian Life Insurance Company ("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 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.
27
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
2. REHABILITATION OF FIRST CAPITAL LIFE INSURANCE COMPANY (CONTINUED)
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 Pacific Financial Holding Company,
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
Statement ----------------- Estimated
Value Gains Losses Fair Value
---------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
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 2,480,307 28,911 81,147 2,428,071
Redeemable preferred stock 81,026 343 5,031 76,338
------------------------------------------
Total $6,870,603 $140,000 $300,312 $6,710,291
------------------------------------------
December 31, 1993:
U.S. Treasury securities and
obligations of U.S.
government authorities and
agencies $ 482,104 $ 10,227 $ 6,788 $ 485,543
Obligations of states,
political subdivisions and
foreign governments 194,819 16,520 296 211,043
Corporate securities 3,328,988 338,039 6,114 3,660,913
Mortgage-backed securities 2,248,574 120,947 10,875 2,358,646
Redeemable preferred stock 88,456 3,314 359 91,411
------------------------------------------
Total $6,342,941 $489,047 $ 24,432 $6,807,556
------------------------------------------
</TABLE>
28
<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, 1994 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 $ 429,348 $ 414,074
Due after one year through five years 1,349,078 1,343,824
Due after five years through ten years 1,340,882 1,299,969
Due after ten years 1,270,988 1,224,353
------------------------
4,390,296 4,282,220
Mortgage-backed securities 2,480,307 2,428,071
------------------------
Total $6,870,603 $6,710,291
------------------------
</TABLE>
Proceeds from sales of investments in debt securities were $1.5 billion and
$1.2 billion for the years ended December 31, 1994 and 1993, respectively.
In 1994 and 1993, gross gains of $30 million and $53 million and gross
losses of $43 million and $2 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, 1994 December 31, 1993
Statement Estimated Statement Estimated
Value Fair Value Value Fair Value
----------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
Assets:
Debt securities (See note
3) $6,870,603 $6,710,291 $6,342,941 $6,807,556
Preferred and common
stocks 109,458 116,993 125,646 143,090
Mortgage loans 1,421,182 1,452,596 1,611,400 1,692,700
Policy loans 2,312,455 2,312,455 1,960,162 1,960,162
Derivative financial
instruments:
Interest rate swaps 121 (24,809) 25,641
Other 2,672 (2,822) 10,116 47,118
Liabilities:
Guaranteed interest
contracts 2,635,356 2,614,961 2,586,538 2,669,666
Deposit liabilities 871,548 833,274 929,748 977,285
Other derivative
financial instruments 2,270 2,128 440
Contribution certificates 149,593 124,313 149,589 153,480
</TABLE>
The following methods and assumptions were used to estimate the fair values
of these financial instruments as of December 31, 1994 and 1993:
PREFERRED AND COMMON STOCKS
The estimated fair values are based on quoted market prices or dealer
quotes.
29
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
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
values.
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 $749 million as of December 31, 1994, 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.
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 and interest rates. Pacific Mutual has also set aside a
corporate total return portfolio utilizing derivative financial
instruments. These instruments include interest rate and currency swaps,
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.
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, 1994, the notional amount of options held
and options written approximated $1.5 billion and $42 million,
respectively. Option contracts mature during fiscal years 1995 through
2000.
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
8.6% as of December 31, 1994, and from 1.9% to 12.2% as of December 31,
1993. Interest rate swap contracts mature during fiscal years 1996 through
2013. As of December 31, 1994 and 1993, interest rate swap contracts
outstanding with financial institutions had a total notional amount of $477
million and $770 million, respectively.
30
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
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, 1994, the
notional amount of foreign currency exchange contracts approximated $35
million. Foreign currency exchange contracts expire during fiscal years
1995 through 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, 1994 and 1993, the notional amounts of futures contracts were
$163 million and $573 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.
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, 1994 and 1993, subsidiary assets, including PCL, were $4.5
billion and $4.4 billion, respectively, and liabilities were $4.2 billion
as of December 31, 1994 and 1993.
Revenue and net income, including PCL, were $1.1 billion and $75 million
for the year ended December 31, 1994, and $1.0 billion and $57 million for
the year ended December 31, 1993. Dividends from subsidiaries totaled $2
million and $24 million for the years ended December 31, 1994 and 1993,
respectively. All earnings of the 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
commercial paper borrowings outstanding as of December 31, 1993.
In addition, Pacific Mutual had available lines of credit totaling
approximately $250 million and $300 million as of December 31, 1994 and
1993, respectively. There were no borrowings outstanding as of December 31,
1994 and 1993.
31
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
8.CONTRIBUTION CERTIFICATES
On December 30, 1993, Pacific Mutual issued $150 million of Contribution
Certificates (the "Certificates"), also referred to as Surplus Notes, at
an interest rate of 7.9% maturing on December 30, 2023. Interest is
payable semiannually. 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.
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, 1994 and 1993, individual life and
annuity premiums assumed were $20 million and $22 million and premiums
ceded were $363 million and $292 million, respectively. Amounts
recoverable from reinsurers for individual life and annuities include
reinsured and paid claims of $13 million and $21 million as of December
31, 1994 and 1993, respectively. Policy benefits payable are net of
reinsurance on unpaid claims of $(4) million and $0 at December 31, 1994
and 1993, respectively.
Pacific Mutual also reinsures substantially all of its group life and
health business with a subsidiary insurance company. Premiums of $90
million and $122 million, and benefits of $70 million and $80 million were
ceded during the years ended December 31, 1994 and 1993, respectively.
Amounts payable to the subsidiary under this agreement were $8 million and
$4 million as of December 31, 1994 and 1993, 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. No contributions were made during 1994 or 1993
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 (March 31 of each year) are as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ----------
(In Thousands)
<S> <C> <C>
Actuarial present value of accumulated benefits:
Vested $ 88,122 $ 83,060
Nonvested 1,115 572
---------------------
Total $ 89,237 $ 83,632
---------------------
Net assets available for benefits $111,089 $109,194
---------------------
</TABLE>
The above present values were determined using an assumed discount rate of
8.5% in 1994 and 1993.
32
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
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 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,
1994 and 1993 was $1.7 million for both years.
During 1993, Pacific Mutual implemented the accrual method of accounting
for the costs of The Plans as prescribed by the Insurance Department of
the State of California, and elected to amortize its transition obligation
of $26.7 million over twenty years.
Components of net periodic postretirement benefit cost as follows (In
Thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993
--------------------------
<S> <C> <C>
Service cost $ 186 $ 89
Interest cost 1,790 1,907
Amortization (260) (260)
--------------------------
1,716 1,736
Recognized transition obligation--net 1,337 1,336
--------------------------
Net periodic postretirement benefit cost $ 3,053 $ 3,072
--------------------------
</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>
1994 1993
------------------
<S> <C> <C>
Accumulated
postretirement
obligation:
Retirees $20,580 $ 22,844
Fully eligible active
plan participants 1,346 1,044
Other active plan
participants 2,455 1,972
------------------
24,381 25,860
Fair value of plan
assets 0 0
------------------
Unfunded accumulated
postretirement
obligation 24,381 25,860
Unrecognized net
gain/(loss) 942 (1,060)
Prior service cost 1,849 2,109
Unrecognized transition
obligation--net (24,056) (25,393)
------------------
Accrued postretirement
benefit liability $ 3,116 $ 1,516
------------------
</TABLE>
33
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
The assumed health care cost trend rate used in measuring the accumulated
benefit obligation was 11% for 1994 and 12% for 1993, and is assumed to
decrease gradually to 6% in 2005 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 rate assumptions were increased
by 1%, the accumulated postretirement benefit obligation as of December
31, 1994 and 1993 would be increased by 11.2% and 8.8%, 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 13.6% and 8.6%, respectively.
The discount rate used in determining the accumulated postretirement
benefit obligation was 8.0% and 7.5% for 1994 and 1993, 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>
1995 $55,152
1996-1999 23,588
2000 and thereafter 20,669
----------
Total $99,409
----------
</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.
34
<PAGE>
Part C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
Part A: None
Part B:
(1) Registrant's Financial Statements
None
(2) Depositor's Financial Statements
Unaudited financial statements dated as of June 30, 1995
included in Part B include the following for Pacific
Mutual:
Statements of Financial Position
Statements of Operations and Surplus
Statements of Cash Flow
Note to Financial Statements
Audited financial statements dated as of December 31,
1994 included in Part B include the following for
Pacific Mutual Life Insurance Company ("Pacific
Mutual"):
Statements of Financial Position
Statements of Operations and Surplus
Statements of Cash Flow
Notes to Financial Statements
Audited financial statements dated as of December 31,
1993 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
(b) Exhibits
1. (a) Resolution of the Board of Directors of Pacific
Mutual authorizing establishment of Separate
Account A and Memorandum establishing Separate
Account A.
II-1
<PAGE>
2. Not applicable
3. (a) Distribution Agreement between Pacific Mutual and
Pacific Equities Network ("PEN")(Draft)
(b) Form of Selling Agreement between Pacific Mutual,
PEN and Various Broker-Dealers
4. (a) Form of Individual Flexible Premium Variable
Accumulation Annuity Contract (Draft)
(b) Qualified Plan Loan Endorsement
(c) Individual Retirement Annuity Rider
(d) Qualified Pension Plan Rider
(e) 403(b) Tax-Sheltered Annuity Rider
(f) Section 457 Plan Rider
(g) Endorsement for 403(b) Texas Optional Retirement
Program (ORP)
5. (a) Application Form for Individual Flexible Premium
Variable Accumulation Annuity Contract (Draft).
(b) Variable Annuity PAC APP
(c) Application/Confirmation Form
6. (a) Pacific Mutual's Articles of Incorporation
(b) By-laws of Pacific Mutual
7. Not applicable
8. (a) Fund Participation Agreement
(b) Addendum to Fund Participation Agreement (to add
Growth LT Series)
(c) Addendum to Fund Participation Agreement (to add
Equity and Bond and Income Series)
9. Opinion and Consent of legal officer of Pacific Mutual
as to the legality of Contracts being registered.
II-2
<PAGE>
10. (a) Consent of Deloitte & Touche LLP
(b) Powers of Attorney
11. Not applicable
12. Not applicable
13. Performance Calculations
Item 25. Directors and Officers of Pacific Mutual
<TABLE>
<CAPTION>
Positions and Offices
Name and Address with Pacific Mutual
<S> <C>
Thomas C. Sutton Director, Chairman of the Board,
and Chief Executive Officer
Harry G. Bubb Director and Chairman Emeritus
Glenn S. Schafer Director and President
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
J. Fernando Niebla Director
Susan Westerberg Prager Director
James R. Ukropina Director
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
Raymond L. Watson Director
Edward Byrd Vice President and Controller
David R. Carmichael Senior Vice President and General
Counsel
Audrey L. Milfs Vice President and Corporate
Secretary
Khan T. Tran Vice President and Treasurer
</TABLE>
______________________________
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 Separate Account A
The following is an explanation of the organization chart of
Pacific Mutual's subsidiaries:
PACIFIC MUTUAL, SUBSIDIARIES & AFFILIATED ENTERPRISES
LEGAL STRUCTURE
Pacific Mutual Life Insurance Company has a 40% ownership of
American Maturity Life Insurance Company and is the parent
company of Pacific Mutual Realty Finance, Inc., Pacific
Financial Holding Company, and Pacific Corinthian Life
Insurance Company. Subsidiaries of Pacific Financial Holding
Company include: Pacific Equities Network, Group Holding
Company, Pacific Financial Asset Management Corporation, and
Alliance Health Plan Network, Inc. (a Delaware corporation).
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) (93.3% owned consisting of 100% of Class A and
71.3% 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
Group Holding Company include: PM Group Life Insurance
Company (an Arizona corporation) and its subsidiary Employee
Benefits America Administration Corp. Subsidiaries of Pacific
Financial Asset Management
II-4
<PAGE>
Corporation include: PMRealty Advisors Inc. and PIMCO
Advisors L.P. (a Delaware Limited Partnership which is 42%
owned). Subsidiaries of Pacific Corinthian Life Insurance
Company 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
None
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 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
II-5
<PAGE>
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 out of or are based upon any
untrue statement or alleged untrue statement of a
material fact or any 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.
II-6
<PAGE>
Item 29. Principal Underwriters
(a) PEN also acts as principal underwriter for Pacific
Select Separate Account, Pacific Select Exec Separate
Account, Pacific Select Variable Annuity Separate
Account 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.
(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, or (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
II-7
<PAGE>
(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.
(b) The Registrant and its Depositor are relying upon Rule
6c-7 of the Investment Company Act of 1940 with respect
to annuity contracts offered as funding vehicles to
participants in the Texas Optional Retirement Program,
and the provisions of paragraphs(a) - (d) of the Rule
have been complied with.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has caused this Pre-Effective
Amendment No. 1 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 the State of California on this 18th day of October, 1995.
SEPARATE ACCOUNT A
(Registrant)
By: PACIFIC MUTUAL LIFE INSURANCE COMPANY
By:
Thomas C. Sutton*
Chairman and Chief Executive Officer
By: PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By:
Thomas C. Sutton*
Chairman and Chief Executive Officer
*By: /s/ Sharon A. Cheever
--------------------------
Sharon A. Cheever
as attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Thomas C. Sutton* Director, Chairman of the Board ____________, 1995
and Chief Executive Officer
Glenn S. Schafer* Director and President ____________, 1995
Harry G. Bubb* Director and Chairman Emeritus ____________, 1995
Richard M. Ferry* Director ____________, 1995
</TABLE>
II-9
<PAGE>
<TABLE>
<S> <C> <C>
Donald E. Guinn* Director ____________, 1995
Ignacio E. Lozano, Jr.* Director ____________, 1995
Charles A. Lynch* Director ____________, 1995
Dr. Allen W. Mathies, Jr.* Director ____________, 1995
Charles D. Miller* Director ____________, 1995
Donn B. Miller* Director ____________, 1995
J. Fernando Niebla* Director ____________, 1995
Susan Westerberg Prager* Director ____________, 1995
James R. Ukropina* Director ____________, 1995
Raymond L. Watson* Director ____________, 1995
Edward Byrd* Vice President and Controller ____________, 1995
*By: /s/ Sharon A. Cheever
----------------------- ____________, 1995
Sharon A. Cheever
as attorney-in-fact
</TABLE>
II-10
<PAGE>
EXHIBIT 99.1(a)
Resolution of the Board of Directors of Pacific Mutual
authorizing establishment of Separate Account A and
Memorandum establishing Separate Account A
<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 regulatory authority in California
or any other regulatory authority in any state or jurisdiction having
jurisdiction over the insurance activities of the Company or over the 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 an
exemptive application if necessary or advisable under the Investment Company Act
of 1940 and to make such other filings or seek any interpretations that are
necessary or advisable from the Securities and Exchange Commission or any other
agency of the United States Government; or making any filings, seek any
interpretations, or make other submissions that such Officer deems necessary or
advisable with other regulatory authorities having jurisdiction over the offer
and sale of the 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.
IN, WITNESS WHEREOF, I have executed this certificate as Secretary of said
corporation on this 24th day of August, 1994.
Audrey L. Milfs
Secretary
#4427
<PAGE>
OFFICE MEMORANDUM
DATE September 7, 1994
TO Thomas C. Sutton
FROM Gerald W. Robinson
SUBJECT Separate Account A
RECOMMENDATION:
That you authorize the establishment of the Separate Account A ("Separate
Account") for the Pacific Portfolios, a variable annuity contract, and Pacific
One, a variable annuity contract.
WHY RECOMMENDATION IS REQUESTED AT THIS TIME:
Documentation of the authorization must accompany the registration materials to
be filed with the Securities and Exchange Commission and the State of California
for the Separate Account.
BACKGROUND:
Pacific Mutual's Finance Committee has approved the development of the Separate
Account to fund the Pacific Portfolios and Pacific One variable annuity
contracts. The Separate Account may be offered under other variable contracts
in the future.
On November 22, 1989, the Board of Pacific Mutual Life Insurance Co. adopted a
resolution authorizing any Officer of the corporation to take whatever action
necessary to establish and maintain Separate Accounts which may be required in
connection with variable life insurance policies and variable annuity contracts
and any derivative thereof. Our outside counsel recommends obtaining this
authorization from the CEO.
AUTHORIZATION:
On behalf of Pacific Mutual Life Insurance Co., the establishment of Separate
Account A for the Pacific Portfolios and Pacific One variable annuity contracts
is hereby authorized.
Establishment of
Separate Account A
Is Authorized:
Thomas C. Sutton
Chairman & Chief Executive Officer
<PAGE>
EXHIBIT 99.3(a)
Distribution Agreement between Pacific Mutual
and Pacific Equities Network ("PEN") (Draft)
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made as of the _____ day of _______________, 1995, by and between
Pacific Mutual Life Insurance Company, a California company, ("Pacific Mutual")
on its own behalf and on behalf of its Separate Account A (the "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 or will be registered as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, PEN is registered as a broker-dealer under the Securities Exchange Act
of 1934 (the "1934 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 any
Contracts issued by Pacific Mutual and funded by interests in the General
Account of Pacific Mutual and in the Separate Account and PEN is willing to
render such services;
NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter
set forth, the parties agree as follows:
1. Principal Underwriter. Pacific Mutual hereby appoints PEN, during the term
of this Agreement, subject to the registration requirements of the 1933 Act and
the 1940 Act and the provisions of the 1934 Act, to be the distributor and
principal underwriter for the sale of any Contracts to the public in each state
and other jurisdiction 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 hereto. PEN shall offer the Contracts for sale and distribution at
premium rates set by Pacific Mutual.
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 any and all Contracts, and reserves the right to direct, approve or
disapprove any action hereunder taken on its behalf by PEN.
1. 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
<PAGE>
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 1934 Act and a member of the
NASD. Except as provided in Section 3 hereof, PEN shall be responsible for
ensuring that Broker and its agents of 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 any such 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.
2. 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 any Contracts under the insurance
laws of the applicable jurisdictions.
3. 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.
4. Conformity with Registration Statement and Approved Sales Materials. In
performing its duties as distributor, PEN will act in conformity with the
registration statement and with the instructions and directions of Pacific
Mutual, the requirements of the 1933 Act, the 1940 Act, the 1934 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.
5. 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
<PAGE>
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.
6. Standard of Care. PEN shall be responsible for exercising reasonable care
in carrying out the provisions of this Agreement.
7. Reports and Records. PEN shall be responsible for maintaining and
preserving accurate records relating to matters pertaining to this Agreement and
the Broker and general agent and their agents, representatives or sub-agents who
are licensed, registered and otherwise qualified to sell the Contracts, as
required by applicable laws and regulations, or as Pacific Mutual may reasonable
request for its own record-keeping or accounting purposes; 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. 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.
8. Investigation and Procedures. PEN and Pacific Mutual agree to cooperate
fully in any regulatory investigation or proceeding or judicial proceeding
arising in connection with any 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 any 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 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
<PAGE>
a more prompt response is required, the proposed response shall be communicated
by telephone, telegraph or telecopier.
1. Indemnification. Pacific Mutual hereby agrees to indemnify and hold
harmless PEN and its officers and directors, and employees for any expenses
(including legal expenses), losses, claims, damages, or liabilities incurred by
reason of any untrue or alleged untrue statement or representation of a material
fact or any omission or alleged omission to state a material fact required to be
stated to make other statements not misleading, if made in reliance on any
prospectus, registration statement, post-effective amendment thereof, or sales
materials supplied or approved by Pacific Mutual or the Separate Account.
Pacific Mutual shall reimburse each such person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
liability, damage, or claim. However, in no case shall Pacific Mutual be
required to indemnify for any expenses, losses, claims, damages or liabilities
which have resulted from the willful misfeasance, bad faith, negligence,
misconduct, or wrongful act of PEN.
PEN hereby agrees to indemnify and hold harmless Pacific Mutual, its officers,
directors, and employees, and the Separate Account for any expenses, losses,
claims, damages, or liabilities arising out of or based upon any of the
following in connection with the offer or sale of any Contract: 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 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 10. The Indemnifying Party will be entitled
to participate in the defense of the Indemnified Party, but 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.
1. 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
<PAGE>
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.
2. 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 any such property held by
PEN shall be held by PEN only 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 Section
12, 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 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.
3. 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.
4. 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 9 and 10
<PAGE>
hereof.
5. Regulation. This Agreement shall be subject to the provisions of the 1940
Act and the 1934 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.
6. 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 any Contract.
7. 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 otherwise, the remainder of this Agreement shall not
be affected thereby.
1. Entire Agreement; Amendments. This Agreement (a) sets forth the entire
understanding of the parties with respect to the subject matter hereof; (b)
incorporates and merges any and all previous agreements, understandings, and
communications, oral or written; and (c) may not be modified, amended, or waived
except by a written instrument duly executed by the party against whom such
modification, amendment, or waiver is sought to be enforced.
2. Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
3. Governing Law. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: ____________________________________
Chairman and Chief Executive Officer
ATTEST:
__________________________________________
<PAGE>
Secretary
PACIFIC EQUITIES NETWORK
By: ____________________________________
President
WITNESS:
__________________________________________
<PAGE>
EXHIBIT 99.3(b)
Form of Selling Agreement between Pacific Mutual,
PEN and Various Broker-Dealers
<PAGE>
SELLING AGREEMENT
AGREEMENT by and between PACIFIC MUTUAL LIFE INSURANCE COMPANY ("Pacific
Mutual"), a California corporation; PACIFIC EQUITIES NETWORK ("PEN"), a
California corporation, a broker-dealer registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (the "1934 Act"),
and a member of the National Association of Securities Dealers, Inc. ("NASD");
_______________________________________________________________________________
_______________________________________________________________________________
("Selling Broker-Dealer"), also a broker-dealer registered under the 1934 Act
and a member of the NASD; and each of the undersigned General Agents jointly and
severally referred to herein as "General Agent".
W I T N E S S E T H:
WHEREAS, Pacific Mutual issues certain insurance and annuity contracts listed
in Schedule B (the "Contracts"), some of which are registered ("Securities
Registered Contracts") under the Securities Act of 1933 (the "1933 Act");
WHEREAS, Pacific Mutual has authorized PEN, as principal underwriter of the
Contracts, to enter into agreements, subject to the consent of Pacific Mutual,
with broker-dealers and general agents for the distribution of the Contracts;
WHEREAS, PEN has agreed to secure duly qualified broker-dealers and general
agents to contract with Pacific Mutual and PEN for the distribution of the
Contracts, assist these broker-dealers and general agents in obtaining licenses,
registrations and appointments to enable their registered representatives and
sub-agents to sell the Contracts, and provide educational meetings to
familiarize these broker-dealers and general agents and their registered
representatives and sub-agents with the provisions and features of the
Contracts; and
WHEREAS, Selling Broker-Dealer and General Agent have been selected by PEN to
distribute the contracts and Selling Broker-Dealer and General Agent wish to
participate in the distribution of the Contracts.
NOW THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
I.
APPOINTMENT
Subject to the terms and conditions of this Agreement, Pacific Mutual and PEN
hereby appoint Selling Broker-Dealer and General Agent for the solicitation of
applications for the purchase of the Contracts.
Selling Broker-Dealer and General Agent accept such appointment and each
agrees to use its best efforts to find purchasers for the Contracts acceptable
to Pacific Mutual. Selling Broker-Dealer and General Agent will seek purchasers
of Securities Related Contracts only while the registration statement relating
to such contracts is effective under the 1933 Act.
<PAGE>
II.
AUTHORITY AND DUTIES OF GENERAL AGENT
A. LICENSING AND APPOINTMENT OF SUB-AGENTS
General Agent is authorized to appoint sub-agents ("Sub-agents") to solicit
sales of the Contracts. General Agent agrees to fulfill all requirements set
forth in the General Letter of Recommendation attached as Schedule A hereto in
conjunction with its submission of licensing and appointment papers for all Sub-
agents.
General Agent warrants that it and all of its Sub-agents appointed pursuant to
this Agreement shall not solicit nor aid, directly or indirectly, in the
solicitation of any application for any Contract until they are fully licensed
by the proper authorities under the applicable insurance laws within the
applicable jurisdictions where General Agent and Sub-agents propose to offer the
Contracts, where Pacific Mutual is authorized to conduct business and where the
Contracts may be lawfully sold.
General Agent shall periodically provide Pacific Mutual with a list of all
Sub-agents appointed by General Agent and the jurisdictions where such Sub-
agents are licensed to solicit sales of the Contracts. Pacific Mutual shall
periodically provide General Agent with a list which shows; (i) the
jurisdictions where Pacific Mutual is authorized to do business; and (ii) any
limitations on the availability of the Contracts in any of such jurisdictions.
General Agent shall prepare and transmit the appropriate appointment forms to
Pacific Mutual. General Agent shall pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and authorizations
for Sub-agents to solicit and sell the Contracts. Pacific Mutual will pay
appointment fees for General Agent and resident appointment fees for Sub-agents.
Non-resident appointment fees for Sub-agents will be paid by the General Agent.
All renewal appointment fees will be paid by the General Agent for Sub-agents
who have generated less than $20,000 target premium within the prior 12 months.
Pacific Mutual may refuse for any reason to apply for the appointment of a Sub-
agent and may cancel any existing appointment at any time.
B. REJECTION OF SUB-AGENT
Pacific Mutual or PEN may refuse for any reason, by written notice to General
Agent, to permit any Sub-agent the right to solicit applications for the sale of
any of the Contracts. Upon receipt of such notice, General Agent immediately
shall cause such Sub-agent to cease such solicitations of sales and cancel the
appointment of any Sub-agent under this agreement.
C. SUPERVISION OF SUB-AGENTS
General Agent shall supervise all Sub-agents appointed pursuant to this
Agreement to solicit sales of the Contracts and bear responsibility for all acts
and omissions of each Sub-agent. General Agent shall comply with and exercise
all responsibilities required by applicable federal and state law and
regulations. General Agent shall train and supervise its Sub-agents to ensure
that purchase of a Contract is not recommended to an applicant in the absence of
reasonable grounds to believe the purchase of the Contract is suitable for that
applicant. While not limited to the following, a determination of suitability
shall be based on information furnished to a Sub-agent after reasonable inquiry
of such applicant concerning the applicant's insurance and investment
objectives, financial situation and needs, and the likelihood that the applicant
will continue to make any premium payments contemplated by the Contracts and
will keep the Contract in force for a sufficient period of time so that Pacific
Mutual's acquisition costs are amortized over a reasonable period of time.
Nothing contained in this Agreement or otherwise shall be deemed to make any
Sub-agent appointed by General Agent an employee or agent of Pacific Mutual or
PEN. Pacific Mutual and PEN shall not have any responsibility for the training
and supervision of any Sub-agent or any other employee of General Agent. If the
act or omission of a Sub-agent or any other employee of General Agent is the
proximate cause of claim, damage or liability (including reasonable attorneys'
fees) to Pacific Mutual or PEN, General Agent shall be responsible and liable
therefor.
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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
3
<PAGE>
General Agent shall review all such applications for completeness and for
compliance with the conditions herein, including the suitability and prospectus
delivery requirements set forth above under Sections II.C and III. Check or
money order in payment of such Contracts should be made payable to the order of
"Pacific Mutual". All applications are subject to acceptance or rejection by
Pacific Mutual in its sole discretion.
C. RECEIPT OF MONEY
All money payable in connection with any of the Contracts, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any contract
owner or anyone else having an interest in the Contracts, is the property of
Pacific Mutual and shall be transmitted immediately in accordance with the
administrative procedures of Pacific Mutual without any deduction or offset for
any reason including, but not limited to, any deduction or offset for
compensation claimed by Selling Broker-Dealer or General Agent, unless there has
been a prior arrangement for net wire transmissions between Pacific Mutual and
Selling Broker-Dealer or General Agent.
D. NOTICE OF SUB-AGENT'S NONCOMPLIANCE
Selling Broker-Dealer shall immediately notify PEN and General Agent in the
event a Sub-agent fails or refuses to submit to the supervision of Selling
Broker-Dealer or General Agent in accordance with this Agreement, the agreement
between Selling Broker-Dealer, General Agent and Sub-agent referred to in
Section IV.H, below, or otherwise fails to meet the rules and standards imposed
by Selling Broker-Dealer or its registered representatives or General Agent or
its Sub-agents. Selling Broker-Dealer or General Agent shall also immediately
notify such Sub-agent that he or she is no longer authorized to sell the
Contracts, and both Selling Broker-Dealer and General Agent shall take whatever
additional action may be necessary to terminate the sale activities of such Sub-
agent relating to the Contracts.
E. SALES PROMOTION, ADVERTISING AND PROSPECTUSES
No sales promotion materials, circulars, documents or any advertising relating
to any of the Contracts shall be used by Selling Broker-Dealer, General Agent or
any Sub-agents unless the specific item has been approved in writing by PEN and
Pacific Mutual prior to use. Selling Broker-Dealer shall be provided, without
any expense to Selling Broker-Dealer, with prospectuses relating to Securities
Regulated Contracts. Selling Broker-Dealer and General Agent shall be provided
with such other material as PEN determines necessary or desirable for use in
connection with sales of the Contracts. Nothing in these provisions shall
prohibit Selling Broker-Dealer or General Agent from advertising life insurance
and annuities on a generic basis.
Selling Broker-Dealer, General Agent and Sub-agents shall make no material
representations relating to the Securities Regulated Contracts, other than those
contained in the relevant registration statement, as may be amended, or in sales
promotion or other materials approved by Pacific Mutual and PEN as provided in
this section.
F. CONFIDENTIALITY
Selling Broker-Dealer and General Agent shall keep confidential all
information obtained pursuant to this Agreement, including, without limitation,
names of the purchasers of the Policies, and shall disclose such information,
only if Pacific Mutual or PEN have authorized such disclosure in writing, or if
such disclosure is expressly required by applicable federal or state regulatory
authorities.
G. RECORDS
Selling Broker-Dealer and General Agent shall have the responsibility for
maintaining the records of its Sub-agents and representatives licensed,
registered and otherwise qualified to sell the Contracts. Selling Broker-Dealer
and General Agent shall maintain such other records as are required of them by
applicable laws and regulations. The books, accounts and records of Selling
Broker-Dealer and General Agent relating to the sale of the Contracts shall be
maintained so as to clearly and accurately disclose the nature and details of
the transactions. Selling Broker-Dealer and General Agent each agree to make
the books and records relating to the sale of the Contracts available to Pacific
Mutual or PEN upon their written request.
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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.
5
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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:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
PACIFIC MUTUAL LIFE INSURANCE COMPANY -------------------------------------
(GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
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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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(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(GENERAL AGENT) (GENERAL AGENT)
By: By:
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(GENERAL AGENT) (GENERAL AGENT)
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(GENERAL AGENT) (GENERAL AGENT)
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<PAGE>
SCHEDULE A
----------
GENERAL LETTER OF RECOMMENDATION
General Agent hereby certifies to Pacific Mutual that all of the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as Sub-agents ("applicant")
submitted by General Agent. General Agent will, upon request, forward proof of
compliance with same to Pacific Mutual in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare that
each applicant is personally known to us, has been examined by us, is known to
be of good moral character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each individual is
trustworthy, competent, and qualified to act as an agent for Pacific Mutual, and
to hold himself out in good faith to the general public. We vouch for each
applicant.
2. We have on file a B-300, B-301 or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements for
the registration of each applicant as a registered representative through our
NASD member firm, and each applicant is presently registered as an NASD
registered representative.
The above information in our files indicates no fact or condition which would
disqualify the applicant from receiving a license, and all the findings of all
investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state in which each applicant is requesting a license, and that all such persons
have fulfilled the appropriate examination, education and training requirements.
4. If the applicant is required to submit his or her picture, signature, and
securities registration in the state in which he or she is applying for a
license, we certify that those items forwarded to Pacific Mutual are those of
the applicant and the securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a license with
Pacific Mutual in order to place insurance chiefly or solely on his or her life
or property, lives or property of his or her relatives, or property or liability
of his or her associates.
6. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will be
properly protected.
7. We will not permit any applicant to transact insurance as an agent until
duly licensed therefor. No applicants have been given a contract or furnished
supplies, nor have any applicants have permitted to write, solicit business or
act as an agent in any capacity, and they will not be so permitted until the
certificate of authority or license applied for is received.
8. We certify that General Agent, Selling Broker-Dealer and applicant shall
have entered into a written agreement pursuant to which: (i) applicant is
appointed a Sub-agent of General Agent and a registered representative of
Selling Broker-Dealer; (ii) applicant agrees that his or her selling activities
relating to securities regulated Contracts shall be under the supervision and
control of Selling Broker-Dealer and his or her selling activities relating to
all Contracts shall be under the supervision and control of General Agent; and
(iii) that applicant's right to continue to sell such Contracts is subject to
his or her continued compliance with such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer or General Agent.
12
<PAGE>
SCHEDULE B
COMPENSATION SCHEDULE TO PACIFIC MUTUAL SELLING AGREEMENT
FOR PACIFIC ONE, INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ACCUMULATION DEFERRED ANNUITY
CONTRACT FORM 95-01
EFFECTIVE DATES OF SCHEDULE
- ---------------------------
The effective date of this Schedule B for PACIFIC ONE, Individual Flexible
Premium Variable Accumulation Deferred Annuity Contracts Form 95-01 ("Contract")
is as follows: with respect to the rates of commissions paid for Contracts
solicited and issued beginning November 1, 1995. 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 of Schedule B.
ELECTION OF SCHEDULE
- --------------------
General Agent and/or Selling Broker-Dealer shall be paid compensation as
follows:
COMMISSION PERCENTAGE
---------------------
.25% commission + 1.00% (1st quarter and thereafter)
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: Trail commissions will commence being paid on first
quarter. 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. 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 initial commission and trail rate on premium
received will be reduced for older ages. Attained age 76 to 80 will receive an
initial commission equal to .225% and a trail equal to .90% per year. Age 81 to
85 will receive a initial commission equal to .20% and a trail equal to .80% per
year. If there are joint annuitants, the younger annuitant's issue age will be
used.
4. COMPENSATION PAYMENTS: Commission 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 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:
13
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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.
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
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(Selling Broker-Dealer)
By: By:
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(Signature) (Signature)
Title: Title:
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Date: Date:
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PACIFIC MUTUAL LIFE INSURANCE COMPANY
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(General-Agent)
By: By:
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Title: Title:
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Date: Date:
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(General Agent) (General -Agent)
By: By:
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Title: Title:
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Date: Date:
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EXHIBIT 99.4(a)
Form of Individual Flexible Premium Variable
Annuity Contract (draft)
<PAGE>
Pacific Mutual
Life Insurance Company
700 Newport Center Drive
PACIFIC ONE Newport Beach, CA 92660
================================================================================
Individual Flexible Premium Variable Annuity Contract
. Investment Experience Reflected in Benefits
. Variable and Fixed Accumulation Before Annuity Date; Variable and Fixed
Annuity Payments Thereafter
. Death Benefit Proceeds Payable Before Annuity Date
. Participating
Please 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, (copy or
confirmation is attached) and our receipt of the purchase payment(s).
Contract Loan Amount is less than 100% of Contract Value.
Benefits and values under this Contract may be on a variable basis. Amounts
directed into one or more of the Variable Investment Options will reflect the
investment experience of those Investment Options. These amounts may increase
or decrease, and are not guaranteed as to a dollar amount.
Free Look Right -- You may return this Contract within 10 days after you
receive it. To do so, mail it to us at our Service Center or to the agent who
sold it to you. This Contract will then be deemed void from the beginning. No
withdrawal fee will be imposed, and we will refund:
. any Purchase Payments allocated to the Fixed Option; and
. any Variable Account Value as of the Business Day we receive the Contract;
plus
. any Contract fees and charges for premium taxes and or other taxes we deduct
from your Contract Value allocated to the Variable Accounts.
Signed at our Home Office, 700 Newport Center Drive, Newport Beach, California
92660.
Chairman and Chief Executive Officer Secretary
Form 95-01
<PAGE>
CONTRACT SPECIFICATIONS
SERVICE CENTER: Send Forms and written requests to: Send Payments to:
Pacific Mutual Life Pacific Mutual Life
Insurance Company Insurance Company
P.O. Box 7187 P.O. Box 100060
Pasadena, California Pasadena, California
91109-7187 91189-0060
Toll-free number: 1-800-722-2333 (between 6:00 a.m. and 5:00 p.m., Pacific
Time)
Please use our toll-free number to present inquiries or obtain information
about your coverage and for us to provide assistance in resolving complaints.
BASIC CONTRACT - NON-QUALIFIED PLAN
INVESTMENT OPTIONS:
FIXED OPTION
VARIABLE INVESTMENT OPTIONS:
MONEY MARKET MULTI-STRATEGY
HIGH YIELD BOND EQUITY
MANAGED BOND BOND AND INCOME
GOVERNMENT SECURITIES EQUITY INDEX
GROWTH LT INTERNATIONAL
EQUITY INCOME ---------------
ADMINISTRATIVE CHARGE: 0.15%
MORTALITY AND EXPENSE RISKS CHARGE: 1.25%
ANNUAL FEE: $40 IF CONTRACT IS LESS THAN $100,000
CONTRACT NUMBER: 001234567-0
CONTRACT DATE: JAN 01, 1995
OWNER(S): LELAND STAFFORD DOE
ANNUITANT(S): LELAND STAFFORD DOE
ANNUITANT'S ISSUE AGE AND SEX: 35, MALE
INITIAL PURCHASE PAYMENT: $25,000
ANNUITY START DATE: JAN 01, 2045
Page 3
<PAGE>
DEFINITIONS
PM, we, our and us -- Pacific Mutual Life Insurance Company.
You and your -- The person or persons named as Owner(s) in the Contract
Specifications. If there are Joint Owners, you and your means both Joint
Owners.
Account Value -- The amount of your Contract Value allocated to a Subaccount(s)
or to the Fixed Option.
Age -- The Owner's or Annuitant's attained age, as applicable, at his or her
last birthday.
Annuitant -- The person you name on whose life annuity payments may be
determined. The Annuitant's life may also be used to determine certain minimum
death benefits, and the Annuity Date. If you designate Joint Annuitants or a
Contingent Annuitant, unless otherwise stated, "Annuitant" means the sole
surviving Annuitant. You cannot change the Annuitant or change or add a Joint
Annuitant except that if your Contract is a Qualified Contract, you may add a
Joint Annuitant on the Annuity Date.
Annuity Date ("Annuity Start Date") -- The date shown in the Contract
Specifications, or the date you later elect, if any, for the start of annuity
payments if the Annuitant is still living and the Contract is in force.
Annuity Options -- A set of features of a series of payments after your Annuity
Date.
Beneficiary -- The person you name who may receive any death benefit proceeds
payable on the death of the Annuitant or an Owner prior to the Annuity Date; or
any remaining annuity benefits payable on the death of the Annuitant after the
Annuity Date. If no Beneficiary is named or the Beneficiary does not survive
the Annuitant, and the Annuitant dies, then the Annuitant's estate will have the
rights of the Beneficiary. If you are not the Annuitant and you die before the
Annuitant, and before the Annuity Date, any death benefit proceeds will be
payable to the surviving Joint Owner, if any; otherwise to the surviving
Contingent Owner, if any; otherwise, to the Beneficiary, if living; otherwise,
to the Annuitant or the Annuitant's estate.
Business Day -- Any day on which the value of the amount invested in a
Subaccount is determined. In this Contract, "day" or "date" means Business Day
unless otherwise stated. If any transaction or event under this Contract is
scheduled to occur on a "corresponding date" that does not exist in a given
calendar period, or on a day that is not a Business Day, such transaction or
event will be deemed to occur on the next following Business Day, unless
otherwise stated.
Code -- The Internal Revenue Code of 1986, as amended.
Contingent Annuitant -- The person, if any, you select who may become the
Annuitant if the Annuitant dies before your Annuity Date. You may add or change
your Contingent Annuitant prior to the Annuity Date provided the existing
Contingent Annuitant is not the sole surviving Annuitant. Any Contingent
Annuitant you name must not have attained age 86 as of your Contract Date.
Contingent Owner -- The person, if any, you select who may succeed to your
rights as Owner of this Contract if you die before your Annuity Date.
Contract Anniversary -- The same date in each subsequent year as your Contract
Date.
Contract Date -- The date we issue your Contract, as shown in the Contract
Specifications. Contract Years, Contract Semi-Annual Periods, Contract Quarters
and Contract Months are measured from this date.
Contract Debt -- As of the end of any Business Day, the principal amount you
have outstanding on any loan under this Contract, plus any accrued and unpaid
interest.
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<PAGE>
Contract Value -- As of the end of any Business Day, your Variable Account
Value, plus your Fixed Option Value, plus the amount held in the Loan Account to
secure your Contract Debt, if any, including any interest.
Fixed Option -- Amounts allocated under your Contract to the Fixed Option are
held in our General Account and receive interest at rates declared periodically
("the Guaranteed Interest Rate"), but not less than 3% on an annual basis.
General Account -- Our General Account consists of all assets of PM, other than
those assets allocated to Separate Account A or to any of our other separate
accounts.
Investment Option -- A Variable Account or a Fixed Option offered under the
Contract.
Loan Amount -- As of the end of any Business Day, the Loan Amount equals the
amount that is eligible as a loan under the Contract if your Contract is issued
under a Qualified Plan under Code Section 401(a), 401(k), 403(a), or 403(b) and
your Qualified Plan permits loans.
Non-qualified Contract -- A Contract other than a Qualified Contract.
Owner -- The person(s) who has (have) all rights under this Contract before the
Annuity Date. If your Contract names Joint Owners, Owner means both Joint
Owners.
Purchase Payment (Premium Payment) -- An amount paid to us by or on behalf of an
Owner as consideration for the benefits provided under this Contract.
Qualified Contract -- A Contract that qualifies under the Code as an individual
retirement annuity ("IRA"), or a Contract purchased by a Qualified Plan that
qualifies for special tax treatment under the Code.
Qualified Plan -- A retirement plan that receives favorable tax treatment under
Section 401, 403(a) and (b), 408, or 457 of the Code.
SEC -- Securities and Exchange Commission.
Separate Account / The Separate Account A -- A separate account of PM that
consists of Subaccounts.
Service Center -- PM's mailing address shown in the Contract Specifications. We
will notify you of any change in our mailing address.
Subaccount -- An investment division of the Separate Account. Each Subaccount,
(a "Variable Investment Option" or "Variable Account"), invests its assets in a
separate series or class of shares of a designated investment company.
Subaccount Annuity Unit (Annuity Units) -- Annuity Units are used to measure
variation in variable annuity payments. The amount of each variable annuity
payment (after the first payment) will vary with the value and number of your
Annuity Units in each Subaccount.
Subaccount Unit -- Subaccount units are used to measure your Contract Value in
that Subaccount.
Variable Account (A "Variable Investment Option") -- A Subaccount of a PM
Separate Account or a separate account of PM, which is available under your
Contract, in which assets of PM are segregated from assets in its General
Account and other separate accounts.
Page 5
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PURCHASE PAYMENTS
Purchase Payments -- This Contract will not be in force until we receive the
initial purchase payment. Your initial purchase payment is shown in the
Contract Specifications. You may make additional purchase payments at any time
before the Annuity Date, while the Annuitant is living and this Contract is in
force. Each additional purchase payment must be at least $1,000. We may limit
the amount of any single purchase payment. You must obtain our consent before
making a purchase payment that will bring your aggregate purchase payments over
$500,000.
Purchase payments are payable in U.S. dollars either at our Service Center or
through our agent. Checks should be made payable to Pacific Mutual Life
Insurance Company. If you make purchase payments by check other than a
cashier's check, your withdrawal requests and any refund under the "free look"
period may be delayed until your check has cleared. On written request a
receipt for the purchase payment signed by an officer of PM will be provided
after payment.
Purchase Payment Allocation -- You may allocate all or a part of a purchase
payment to one or more of the Investment Options prior to the Annuity Date. We
will allocate your purchase payments that we receive during the Free Look Period
as shown in your application, or most recent allocation instructions received by
us, if any.
You may change your allocation by sending us proper instructions. See GENERAL
PROVISIONS: Instructions and Requests. We will allocate any purchase payment
according to your most recent allocation instructions. We may reject any
instruction or purchase payment that does not comply with our requirements.
Minimum Investment Option Amount -- We reserve the right to require that, as a
result of any allocation to an Investment Option, any transfer, or any partial
withdrawal, your remaining Account Value in any Investment Option must meet a
minimum Account Value amount. We also reserve the right to transfer any
remaining Account Value that does not meet such minimum amount to your other
Investment Options on a prorata basis relative to your most recent allocation
instructions.
THE FIXED OPTION
Under the Fixed Option, we credit interest at the Guaranteed Interest Rate(s)
during each Guarantee Term on the amount of purchase payments and or Contract
Value that you allocate or transfer to, or roll over in, the Fixed Option, as
described below.
Purchase payments and or Contract Value you allocate or transfer to, or roll
over in, the Fixed Option are held in our General Account. Subject to
applicable law, we have sole discretion over the investment of our General
Account assets.
Guarantee Term -- We credit your Contract with a "Guaranteed Interest Rate(s)"
for a specified period of time (a "Guarantee Term") of up to one year on that
portion of your purchase payment and or Contract Value allocated to the Fixed
Option, while the Annuitant is living and this Contract is in force, and prior
to the Annuity Date. We credit the Guaranteed Interest Rate in effect on the
Business Day that the allocation and or transfer is effective for an initial
Guarantee Term that ends on your next Contract Anniversary.
At the end of each initial Guarantee Term and each succeeding Guarantee Term, we
roll over your Fixed Option Value attributed to that Guarantee Term to a new
Guarantee Term of at least one year, unless you instruct us otherwise. We
credit the Guaranteed Interest Rate(s) in effect at the time of the rollover on
the amount of the Fixed Option Value rolled over until the end of such Guarantee
Term. We reserve the right to offer Guarantee Terms for durations other than
one year.
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<PAGE>
We stop crediting interest on that portion of your Fixed Option Value you
withdraw, transfer, (including transfers to the Loan Account), or convert to an
Annuity Option, including: any fees for withdrawals or transfers; any annual
fee; and any charges for premium taxes and or other taxes. We do so as of the
end of the Business Day any such transaction is effective.
Guaranteed Interest Rate -- Guaranteed Interest Rates may be reset periodically,
but will never be less than the Minimum Guaranteed Interest Rate of 3% annually.
All Guaranteed Interest Rates are expressed as annual rates, and interest is
accrued daily.
VARIABLE INVESTMENT OPTIONS
The Variable Investment Options consist of Subaccounts of the Separate Account.
The available Subaccounts as of the Contract Date are shown in the Contract
Specifications.
Separate Account -- We established and maintain the Separate Account under the
laws of California. Any income, gains or losses (whether or not realized) from
the assets of each Variable Account are credited or charged against such
Variable Account 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 the
Separate Account assets equal to the reserves and other Contract liabilities
with respect to each Variable Account will not be chargeable with liabilities
arising out of any other business we conduct. We may transfer assets of a
Separate Account in excess of the reserves and other liabilities with respect to
that Variable Account to another separate account or to our General Account.
All obligations arising under the Contract are our general corporate
obligations. We do not hold ourselves out to be trustees of the Separate Account
assets.
We reserve the right, subject to compliance with the law then in effect, and
after any required regulatory approval, to:
. add or change designated investment companies or their portfolios, or other
investment vehicles;
. add, delete or make substitutions for the securities and other assets that
are held or purchased by the Separate Account or any Variable Account;
. permit conversion or exchanges between portfolios and or classes of
contracts on the basis of Owners' requests;
. add, remove or combine Variable Accounts;
. combine the assets of any Variable Account with any other separate account
of PM or of any of its affiliates;
. register or deregister Separate Account A or any Variable Account under the
Investment Company Act of 1940 ("1940 Act");
. operate any Variable Account as a managed investment company under the 1940
Act;
. run any Variable Account under the direction of a committee, board, or
other group;
. restrict or eliminate any voting rights of Owners with respect to any
Variable Account or other persons who have voting rights as to any Variable
Account;
. make any changes required by the 1940 Act or other federal securities laws;
. make any changes necessary to maintain the status of the Contracts as
annuities under the Code;
Page 7
<PAGE>
. make other changes required under federal or state law relating to
annuities;
. suspend or discontinue sale of the Contracts, and;
. comply with law.
If any of these changes result in a material change in the underlying
investments of a Variable Account, we will notify you of such change.
We will not change the investment policy of the Separate Account without: (1)
the approval of the Insurance Commissioner in the State of California; and (2)
following the filing and other procedures established by insurance regulators of
the state of issue, with whom the approval process is on file. Unless required
by law or regulation, an investment policy may not be changed without our
consent.
From time to time we may make other Variable Accounts available to you. Any new
Variable Accounts may invest in portfolios of the designated investment company,
other designated investment companies or their portfolios, or in other
investment vehicles. New Variable Accounts will be made available to existing
Owners at our discretion. We will provide you with written notice of all
material details, including investment objectives and charges. We will comply
with the filing or other procedures established by applicable state insurance
regulators, to the extent required by applicable law.
CONTRACT VALUE
Your Contract Value on any Business Day is the sum of: your Fixed Option Value
on that day; plus your Variable Account Value on that day; plus your Loan
Account Value to secure any Contract Debt on that day. We generally determine
values at or about 4:00 p.m., Eastern time, on each day that the New York Stock
Exchange is open, provided our offices are also open on that day.
Fixed Option Value -- Your Fixed Option Value on any Business Day is: your
Fixed Option Value on the prior Business Day increased by interest; plus the
amount of any purchase payments received by us and allocated to the Fixed Option
on that day; plus the amount of any transfers to the Fixed Option on that day,
including transfers from the Loan Account; minus any deductions from the Fixed
Option on that day caused by: transfers, including transfers to the Loan
Account; withdrawals; amounts converted to an Annuity Option; any charges for
premium taxes and or other taxes; any fees for withdrawals and or transfers; and
any annual fee. See THE FIXED OPTION.
Variable Account Value -- Your Variable Account Value on any Business Day is the
sum of your Subaccount Values on that day.
Subaccount Value -- Your Subaccount Value for each Subaccount on any Business
Day is the number of Subaccount Units in the Subaccount that are credited to
your Contract on that day multiplied by the Unit Value of the Subaccount on that
day.
We credit your Contract with Subaccount Units for a Subaccount as a result of:
any portion of your purchase payments received by us and allocated to the
Subaccount; and any transfers of your Contract Value to the Subaccount,
including transfers from the Loan Account.
We debit your Contract with Subaccount Units for a Subaccount as a result of any
deductions from the Subaccount, including those caused by: withdrawals;
transfers, (including transfers to the Loan Account); amounts converted to an
Annuity Option; any fees for transfers and or withdrawals; any charges for
premium taxes and or other taxes; and any annual fee.
Page 8
<PAGE>
The number of Subaccount Units we debit or credit to your Contract in connection
with a transaction is equal to the amount of the transaction applicable to that
Subaccount divided by that Subaccount's Unit Value on that day. The number of
your Subaccount Units in a Subaccount will change only if we debit or credit
Subaccount Units for the transactions above. The number of Subaccount Units
will not change because of subsequent changes in the Subaccount Unit Value.
Subaccount Unit Value -- The initial Unit Value of each Subaccount was $10 on
the Business Day the Subaccount began operations. At the end of each subsequent
Business Day, the Unit Value for each Subaccount is equal to Y x Z where:
(Y) is the Unit Value for that Subaccount as of the end of the prior Business
Day; and
(Z) is the Net Investment Factor for that Subaccount for the period (a
"valuation period") between the prior Business Day and that Business Day.
Net Investment Factor -- Each Subaccount's Net Investment Factor for any
valuation period is equal to (A/B)-C where:
(A) is the net result of:
(a) the net asset value per share of the portfolio shares held by the
Subaccount as of the end of that valuation period;
(b) plus the per share amount of any dividend or capital gain
distributions made during that valuation period on the portfolio
shares held by the Subaccount;
(c) minus or plus any per share charge or credit for any income taxes,
other taxes, or amount(s) set aside during that valuation period as a
reserve for any income and or any other taxes for which we determine
to have resulted from the operations of the Subaccount or Contract,
and or any taxes attributable, directly or indirectly, to purchase
payments;
(B) is the net asset value per share of the portfolio shares held by the
Subaccount as of the end of the prior valuation period; and
(C) is a factor that we assess against the net assets held by each Subaccount
for the mortality and expense risk charge and the administrative fee
during that valuation period.
Loan Account Value -- Your Loan Account Value as of the end of any Business Day
is: your Loan Account Value on the prior Business Day, increased by interest;
plus any Contract Debt loaned on that day; minus any Contract Debt repaid on
that day, including any withdrawal from the Loan Account to repay Contract Debt;
and minus any earned interest transferred from the Loan Account on that day.
Page 9
<PAGE>
CHARGES, FEES AND DEDUCTIONS
Administrative Fee -- We charge an administrative fee against assets held in
each Subaccount. This fee is assessed daily at the annual rate of .15%. This
fee is guaranteed not to increase.
Annual Fee -- We charge an annual fee of $40 on each Contract Anniversary
against your Contract Value, and at the time you make a full withdrawal, if your
Contract Value is less than $100,000 on that date. This fee is guaranteed not
to increase.
We will deduct the annual fee, if any, from each Investment Option on a prorata
basis relative to your Account Value in each Investment Option. Any annual fee
we deduct from a Subaccount will reduce the number of Subaccount Units credited
to your Contract.
No annual fee is charged on amounts you annuitize or on payment of any death
benefit proceeds.
Mortality and Expense Risk Charge -- We impose a mortality and expense risk
charge against assets held in each Subaccount. This charge is assessed daily at
the annual rate of 1.25%. The mortality and expense risk charge is to
compensate us for the risks we assume that mortality and expenses will vary from
those we assumed. This charge is guaranteed not to increase.
Premium Taxes -- From your Contract Value, we will deduct a charge for any taxes
we pay that are attributable to purchase payments, ("premium taxes"). Such
taxes will include, but not be limited to: any federal, state or local premium
taxes; and any federal, state or local income, excise, business or any other
type of tax, (or component thereof), measured by or based upon, directly or
indirectly, the amount of purchase payments we receive from you. We will
normally deduct this charge when you annuitize. We may impose this charge on a
full withdrawal, a partial withdrawal at the time any death benefit is paid, or
when we pay the taxes. We will base this charge on the Contract Value, the
amount of the transaction, the aggregate amount of purchase payments we receive
under your Contract or any other amount, at our sole discretion, we deem
appropriate.
Other Taxes -- We reserve the right to charge the Separate Account and or deduct
from your Contract Value a charge for any federal, state or local taxes we pay
that are or become attributable to the Separate Account or Contract, including,
but not limited to, income taxes attributable to our operation of the Separate
Account or to our operations with respect to the Contract, or taxes
attributable, directly or indirectly, to purchase payments.
Transfer Fee -- We reserve the right to impose a transfer fee of $15 on each
transfer made in excess of fifteen transfers in any Contract Year. We will
treat each transfer request as a single transfer, regardless of the number of
Investment Options or Guarantee Terms from which or to which Account Values are
to be transferred. We will deduct any transfer fee we impose from your Contract
Value on a prorata basis relative to your Account Value in each Investment
Option immediately after the transfer.
Withdrawal Fee -- We reserve the right to impose a withdrawal fee of $15 on each
partial withdrawal made in excess of fifteen withdrawals in any Contract Year.
We will deduct from your Contract Value, on a prorata basis relative to your
Account Value in each Investment Option immediately after the withdrawal, any
such fee we impose on a partial withdrawal. We will treat each withdrawal
request as a single withdrawal, regardless of the number of Investment Options
or Guarantee Terms from which Account Values are to be withdrawn.
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TRANSFERS
You may make transfers under this Contract subject to certain restrictions and
any transfer fees.
You may request transfer of part or all of your Contract Value among Investment
Options as often as you wish, while your Annuitant is living and prior to the
Annuity Date.
If your transfer causes your Account Value remaining in any Investment Option
immediately after such transfer to be less than any minimum amount we may
establish, we may transfer such remaining Account Value to your other Investment
Options on a prorata basis relative to your most recent allocation instructions.
We may reject any transfer request. We also reserve the right to limit the size
of transfers, to limit the number and frequency of transfers, to restrict
transfers, and to suspend the right to transfer.
WITHDRAWALS
You may, prior to your Annuity Date, withdraw all or a portion of the amount
available under your Contract, while the Annuitant is living and your Contract
is in force. If you make a full withdrawal, we require return of your Contract
with your written request, or a signed lost Contract affidavit. You may choose
to withdraw from any specific Investment Option(s), or from all Investment
Options proportionately. If you do not specify, we will make the withdrawal
from your Investment Options on a prorata basis relative to your Account Value
in each. Each partial withdrawal must be for $1,000 or more.
If your partial withdrawal causes your Contract Value to be less than $1000
immediately after the withdrawal, we may terminate your Contract and send you
the withdrawal proceeds. If your partial withdrawal causes your Account Value
remaining in any Investment Option to be less than any minimum amount we may
establish, we reserve the right to transfer such remaining Account Value to your
other Investment Options on a prorata basis relative to your most recent
allocation instructions.
Amount Available for Withdrawal -- The amount available for withdrawal is your
Contract Value as of the end of the Business Day on which we receive your proper
withdrawal request, less:
. any annual fee;
. any withdrawal fee;
. any charges for premium taxes and or other taxes; and
. any existing Contract Debt.
The amount we send to you (your "withdrawal proceeds") will also reflect any
required or requested federal and or state income tax withholding.
If you make a full withdrawal, this Contract will end; we will have no further
obligations under this Contract.
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CONTRACT LOANS
If your Contract is issued under a Qualified Plan under Code Section 401(a),
401(k), 403(a), or 403(b) and your Qualified Plan permits, you may request a
loan of all or part of the Loan Amount, subject to the provisions of the
Qualified Plan Loan Endorsement attached to this Contract. If your Contract is
a Non-Qualified Contract, or if your Qualified Plan does not permit loans, loans
under this Contract will not be available to you.
DEATH BENEFIT
A death benefit may be payable on proof of the death of the Annuitant or an
Owner before the Annuity Date, while this Contract is in force.
Death of Annuitant -- The Death Benefit Amount as of any Business Day (before
your Annuity Date) is equal to the greater of:
. your aggregate purchase payments, less: any withdrawals, any fees for
withdrawals or transfers, and any annual fees, since your Contract Date; or
. your Contract Value as of that day.
The Guaranteed Minimum Death Benefit Amount is determined as follows: First, we
calculate what the Death Benefit Amount would have been as of your fifth
Contract Anniversary and each subsequent fifth Contract Anniversary that occurs
while the Annuitant is living and before the Annuitant reaches his or her 76th
birthday, (each of these Contract Anniversaries is a "Milestone Date"). We then
adjust the Death Benefit Amount for each Milestone Date as follows: (1) we add
the aggregate amount of any purchase payments received by us since that
Milestone Date; and (2) we subtract any withdrawals, any fees for withdrawals or
transfers, any annual fees, and any previous charges for premium taxes and or
other taxes, since that Milestone Date. The highest of these adjusted Death
Benefit Amounts as of the Notice Date is your Guaranteed Minimum Death Benefit
Amount.
If the Annuitant dies on or before your fifth Contract Anniversary (your first
Milestone Date), or dies after your first Milestone Date and had reached his or
her 76th birthday on or prior to your first Milestone Date, the death benefit
will be equal to your Death Benefit Amount as of the Notice Date. The "Notice
Date" is the day on which we receive proof (in good form) of death and
instructions satisfactory to us regarding payment of death benefit proceeds.
If the Annuitant dies after your first Milestone Date and had not yet reached
his or her 76th birthday as of your first Milestone Date, the death benefit will
be equal to the greater of:
. your Death Benefit Amount as of the Notice Date; or
. your Guaranteed Minimum Death Benefit Amount as of the Notice Date.
The proceeds of any death benefit payable will be the amount of the death
benefit reduced by any charges for premium taxes and or other taxes and any
Contract Debt. These proceeds will be payable in a lump sum or, if the
recipient chooses, may be applied towards an Annuity Option under this Contract
or towards the purchase of any annuity option we then offer. Any such annuity
option is subject to the same restrictions and requirements as are Annuity
Options under this Contract.
If an Annuitant dies before the Annuity Date, unless there is a surviving Joint
or Contingent Annuitant, we will pay the death benefit proceeds to the
Beneficiary, if living; otherwise to the Annuitant's estate. If an Annuitant
dies and there is a surviving Joint Annuitant, the surviving Joint Annuitant
becomes the Annuitant. If there is no surviving Joint Annuitant and there is a
Contingent Annuitant, the Contingent Annuitant becomes the
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Annuitant. Death benefit proceeds are payable only on the death of the sole
surviving Annuitant prior to the Annuity Date. If you are the Annuitant and
you die, we will determine the amount of any death benefit and the Beneficiary
under the Death of Annuitant provisions; we will distribute any death benefit
proceeds under the Death of Owner Distribution Rules below.
Death of Owner -- If you are not the Annuitant, and you die before the
Annuitant, the death benefit will be equal to your Contract Value as of the
Notice Date.
The proceeds of any death benefit payable will be the amount of the death
benefit reduced by any charges for premium taxes and or other taxes and any
Contract Debt. These proceeds will be payable in a lump sum or, if the
recipient chooses, may be applied towards an Annuity Option under this Contract
or towards the purchase of any annuity option we then offer. Any such annuity
option is subject to the same restrictions and requirements as are Annuity
Options under this Contract.
If you die while the Annuitant is living and prior to the Annuity Date, we will
pay the death benefit proceeds to the surviving Joint Owner, if any. If there
is no surviving Joint Owner and there is a Contingent Owner, we will pay the
death benefit proceeds to the surviving Contingent Owner, if any. If there is
no surviving Contingent Owner, the death benefit proceeds will be paid to the
Beneficiary, if living; otherwise to the Annuitant or the Annuitant's estate.
If you are 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 in accordance with the Death of Owner provisions of
this Contract.
Death of Owner Distribution Rules -- The following rules will control the
determination of whether a distribution must be made under this Contract, even
if they are inconsistent with any other provisions contained in this Contract.
The rules do not effect the determination of the amount of benefit payable or
distribution proceeds. Where there is more than one Owner, these rules apply
upon the date on which the first of these joint Owners dies.
If the Owner dies before the Annuity Date, then any death benefit proceeds under
this Contract must be distributed either: (1) within five years after the
Owner's death; or (2) over a period that does not exceed the life or life
expectancy of the Designated Beneficiary with payments that start within one
year after the Owner's death. The Designated Beneficiary is the individual
selected by the Owner to succeed to the Owner's interest in the Contract after
the death of an Owner of this Contract which includes a Joint or Contingent
Owner, if any, a Beneficiary, or the Annuitant or the Annuitant's estate.
If the spouse of the deceased Owner is the sole surviving Beneficiary, or is the
sole surviving Joint or Contingent Owner, and has an unrestricted right to
receive the death benefit proceeds in one lump sum, the spouse may continue this
Contract in force as Owner rather than receive the death benefit proceeds. In
this case, if the spouse's death occurs before the Annuity Date, then any death
benefit proceeds must be distributed within 5 years of the spouse's death.
If the Owner dies after the Annuity Date, but payments have not yet been
completed, then distributions of the remaining amounts payable under this
Contract must be made at least as rapidly as the rate that was being used at the
date of death.
If the Owner is a Non-individual Owner, the rules set forth in these Death of
Owner Distribution Rules apply in the event of the death of the Primary
Annuitant. A Non-individual Owner means a corporation or other entity which is
a non-natural person, unless the entity demonstrates to our satisfaction, or we
otherwise determine at our sole option, that the Contract should be treated, for
purposes of Section 72(s) of the Code, as owned by an individual (natural)
person. 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. The rules set forth in these Distribution Rules are intended to
satisfy the distributions-at-death timing requirements of Section
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72(s) of the Code. This Contract is deemed to incorporate any provision of
Section 72(s) of the Code, or any successor provision, as interpreted by us and
deemed necessary to qualify this Contract as an annuity. We reserve the right
to amend this Contract without a signed request and to provide a form of
amendment (rider) to the Contract to satisfy any changes in these requirements.
These Distribution Rules do not apply to Qualified Contracts issued under
Qualified Plans as defined in Section 401(a), 401(k), 403(a) or 403(b) of the
Code.
Interest on Death Benefit Proceeds -- If proceeds are not paid in one sum or
applied under an Annuity Option within 30 days after we receive due proof of the
death of the Annuitant or an Owner before the Annuity Date, we will pay interest
on the proceeds. Interest will be paid at the rate of 3% a year from the date
we receive due proof of death until the proceeds are paid or applied under an
Annuity Option. If the law in the state in which you live on the Contract Date
requires payment of a greater amount, we will pay that amount.
BENEFICIARY
Your Beneficiary is the person you name who may receive any death benefit
proceeds, or any remaining annuity payments after the Annuity Date, under your
Contract if the Annuitant or Owner dies. If you leave no surviving Beneficiary,
the Annuitant's estate, (in the event of an Owner's death, the Annuitant or
Annuitant's estate), may receive the death benefit proceeds under your Contract.
If the Beneficiary is a trustee, we will neither be responsible for verifying a
trustee's right to receive any death benefit proceeds payable, nor for how the
trustee disposes of any death benefit proceeds. If before payment of any death
benefit proceeds, we receive written notice that the trust has been revoked or
is not in effect, then any death benefit proceeds payable will be paid to the
Annuitant or the Annuitant's estate.
Adding or Changing Your Beneficiary -- You may add, change, or remove any
Beneficiary, other than an irrevocable Beneficiary, subject to the terms of any
assignment, at any time prior to the Annuity Date by sending us a written
request in a form satisfactory to us. However, if you have named an irrevocable
Beneficiary, you may not add any new Beneficiary, or remove or change the
irrevocable Beneficiary, without obtaining his or her written consent in a form
acceptable to us. You may remove any non-irrevocable Beneficiary without
obtaining the consent of the irrevocable Beneficiary. Qualified Contracts may
have additional restrictions on naming and changing Beneficiaries. The change
or addition will take effect only when we receive all necessary documents and
record the change or addition.
ANNUITY BENEFITS
On the Annuity Date, your Contract Value will convert into the Annuity Option(s)
you have chosen. We will send the first annuity payment under this Contract on
the day following the Annuity Date.
Choice of Annuity Date -- Your Annuity Date is shown in the Contract
Specifications. If you did not select an Annuity Date in your application for
this Contract, we assigned an Annuity Date based on the type of this Contract
and the Annuitant's age. See Default Annuity Date and Options.
You may change your Annuity Date by notifying us in writing at least 10 Business
Days prior to your current Annuity Date or new Annuity Date, whichever is
earlier. Your Annuity Date may not be earlier than your first Contract
Anniversary, and must occur on or before the day your younger Annuitant reaches
his or her 100th birthday. If your Contract is a Qualified Contract, your
Annuity Date cannot be earlier than your first Contract Anniversary, and must
occur on or before April 15 of the calendar year following the year in which
your Annuitant (who is the Qualified Plan participant) reaches his or her 70
1/2th birthday. You may be subject to additional restrictions under your
Qualified Plan. You should consult with your Qualified Plan administrator
before you elect your Annuity Date.
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Application of Contract Value -- Prior to the Annuity Date, you may elect to
convert all or part of your Contract Value less any Contract Debt, any transfer
fee, and any charges for premium taxes and or other taxes, to an Annuity Option
we then offer on the Annuity Date. You may also elect a full withdrawal in lieu
of annuity payments under an Annuity Option. Before we make any full withdrawal,
we require return of this Contract, (or a signed lost Contract affidavit), to
us. The aggregate net amount you apply must be at least $5,000; otherwise, we
will pay a single amount equal to your withdrawal proceeds. See WITHDRAWALS.
If you convert only a portion of your Contract Value on your Annuity Date, you
may, at that time, have the option to elect to continue your Contract with
that remaining Contract Value. If this option is available, you would choose a
second Annuity Date for such Contract Value; all references in this Contract to
your Annuity Start Date (or Annuity Date) would, with regard to such Contract
Value, be deemed to refer to that second Annuity Date. This option may or may
not be available, or may be available only for certain types of Contracts. You
should call PM for more information if you desire this option.
Your Selections -- Prior to the Annuity Date, you may make three selections
about the annuity payments. First, you may choose whether you want those
payments to be a fixed-dollar amount or a variable-dollar amount, or both.
Second, you may choose the form of annuity payments (Annuity Option). Third,
you may choose to have annuity payments made monthly, quarterly, semi-annually,
or annually.
The first annuity payment on any Annuity Date must be at least $250. We will
reduce your payment frequency if the first annuity payment is less than $250.
If you elect annuity payments for a Period Certain Only, we reserve the right to
also reduce the Period Certain to meet the $250 minimum first payment. After
the Annuity Date, you may not change the Annuity Option, or surrender the
Contract for payment of amounts converted into a variable annuity and or fixed
annuity.
Fixed and Variable Annuities -- You may choose a fixed annuity (with fixed-
dollar payments), a variable annuity (with variable-dollar payments), or you may
choose both. You may convert one portion of your Contract Value, less any
Contract Debt, any transfer fee, and any charges for premium taxes and or other
taxes, into a fixed annuity and another portion into a variable annuity. If you
select a variable annuity, you may choose any Subaccounts for your annuity. On
your Annuity Date, we will transfer that portion of your Contract Value, less
Contract Debt, you indicate to the Subaccount(s) you choose, if you select a
variable annuity. We will transfer the portion of your Contract Value, less
Contract Debt, you indicate, to the Fixed Option, if you choose a fixed annuity.
We will apply the net amount you convert to a fixed annuity and or a variable
annuity, (and in this instance, to each Subaccount), based on your relative
Account Value in each Investment Option on the Annuity Date. Any net amount you
convert to a fixed annuity will be held in our General Account (but not under
the Fixed Option).
Each periodic payment for the fixed annuity will be equal to the amount of your
first fixed annuity payment (unless you elect a joint and survivor life annuity
with reduced survivor payments). The amount of each variable annuity periodic
payment will vary with the investment results of the Subaccount(s) you select.
After the Annuity Date, the Annuitant may exchange the Annuity Units in any
Subaccount(s) for Annuity Units in any other Subaccount(s) up to four times in
any twelve month period. We reserve the right to limit the Subaccounts
available, to change the number and frequency of exchanges, and to change the
number of Subaccounts you may choose.
In choosing an Annuity Option, you must submit your Option request to us in
writing on a form provided by us or in another form satisfactory to us.
Annuity Options -- The following forms of annuity payments are available under
this Contract, although additional options may become available in the future:
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Option 1: Life Only. Periodic payments are made to the Annuitant during his or
her lifetime. Payments stop when the Annuitant dies.
Option 2: Life with Period Certain. Periodic payments are made to the Annuitant
during his or her lifetime, with payments guaranteed for a specified
period. You may choose to have payments guaranteed from 5 through 30
years (in full years only). If the Annuitant dies before the
guaranteed payments are completed, we pay the Beneficiary the
remainder of the guaranteed payments.
Option 3: Joint and Survivor Life. Periodic payments are made during the
lifetime of the Primary Annuitant. After the death of the Primary
Annuitant, periodic payments are made to the secondary Annuitant named
in the election if and so long as such secondary Annuitant lives.
Payments made to the secondary Annuitant may be in installments equal
to 50%, 66 2/3% or 100% (as specified in the election) of the original
payment amount payable during the lifetime of the Primary Annuitant.
If you elect a reduced payment to the secondary Annuitant, fixed
annuity payments will be equal to 50% or 66 2/3% of the original fixed
payment payable during the lifetime of the Primary Annuitant; variable
annuity payments will be determined using 50% or 66 2/3%, as
applicable, of the number of Annuity Units for each Subaccount
credited to the Contract. Payments stop when both Annuitants die.
Option 4: Period Certain Only. Periodic payments are made to the Annuitant over
a specified period. You may choose to have payments continue from 5
through 30 years (in full years only). If the Annuitant dies before
the guaranteed payments are completed, we pay the Beneficiary the
remainder of the guaranteed payments.
Default Annuity Date and Options -- If this is a Non-Qualified Contract and you
did not choose an Annuity Date when you submitted your application for this
Contract, your Annuity Date is the Annuitant's 100th birthday. If there are
Joint Annuitants, the Annuity Date will be based on the younger Annuitant's
birthday, unless otherwise required by law. If this is a Qualified Contract and
you did not choose an Annuity Date, your Annuity Date is April 1 of the calendar
year following your Annuitant's 70 1/2th birthday; if there are Joint
Annuitants, the Annuity Date will be based on the birthday of the Annuitant who
is the Qualified Plan participant. If the Annuitant has reached his or her 70
1/2th birthday when the Contract is issued, the Annuity Date is April 1 of the
calendar year following the first Contract Anniversary.
If you do not elect an Annuity Option, your Contract Value, less any Contract
Debt, and any charges for premium taxes and or other taxes, when converted, will
be converted as follows, subject to our minimum requirements: (1) the net
amount from your Fixed Option Value will be applied to a fixed annuity and held
in our General Account; and (2) the net amount from your Variable Account Value
will be applied to a variable annuity and applied to the Subaccounts in
proportion to your Account Value in each Subaccount on the Annuity Date. If
this is a Non-Qualified Contract, or a Qualified Contract and the Annuitant is
not married, your Annuity Option will be Period Certain Only for five years. If
this is a Qualified Contract and the Annuitant is married, your Annuity Option
will be Joint and Survivor Life, with survivor payments of 50%, and the
Annuitant's spouse will be named as the secondary Annuitant. If you do not
elect your frequency of payments, we will make payments based on our most
frequent schedule that results in an initial annuity payment of at least $250.
Amount of Payments -- We use the Annuity Option Tables at the end of the
Contract to determine the amount of the first annuity payment, based on your net
amount from your Contract Value applied to the Annuity Option on the Annuity
Date and your selections. The first annuity payment amount depends on the form
of annuity, the payment frequency you select, and whether you select a fixed
annuity and or a variable annuity. If you do not choose the Period Certain Only
Option, this amount also depends on the age of the Annuitant(s) on the Annuity
Date and the sex of the Annuitant(s), unless unisex rates apply.
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Fixed Annuity Payments -- The minimum guaranteed income purchased per $1000 of
the net amount applied to a fixed annuity is based on an annual interest rate of
3% and the 1983a Mortality Table. The fixed annuity payments made will be based
on the greater of: (1) our current annuity purchase rates in effect for this
Contract on your Annuity Date; and (2) our guaranteed purchase rates. The
dollar amount of any payments after the first annuity payment are specified
during the annuity payment period according to the provisions of the Annuity
Option you elect.
Variable Annuity Payments -- Your Subaccount Annuity Units. For each
Subaccount, we divide the amount of the initial variable annuity payment from
each Subaccount by the Annuity Unit Value for that Subaccount, (the "Annuity
Unit Value"), on the Annuity Date, to obtain the number of Annuity Units for
that Subaccount. The number of your Annuity Units in each Subaccount will not
change unless exchanges of Annuity Units are made, but the Annuity Unit Value of
those Annuity Units will vary.
Your Subsequent Variable Payments. The amount of each subsequent variable
annuity payment will be the sum of the amounts payable based on your Annuity
Units in each Subaccount. To determine the amount payable for each Subaccount,
we multiply the number of your Annuity Units in that Subaccount by their Annuity
Unit Value on the day in each payment period that corresponds to the Annuity
Date.
Annuity Unit Value -- The initial Annuity Unit Value for each Subaccount was
arbitrarily set at $10 on the Business Day the Subaccount began operations. At
the end of each subsequent Business Day, the Annuity Unit Value for each
Subaccount is equal to (A x B) x C where:
(A) is the Subaccount's Annuity Unit Value for that Subaccount as of the end
of the prior Business Day;
(B) is the Net Investment Factor for that Subaccount for that valuation
period; and
(C) is an interest factor to offset the effect of the assumed interest rate of
5% per year, which is built into the Annuity Option Tables.
We generally calculate the Annuity Unit Value of each Subaccount at or about
4:00 p.m., Eastern Time, on each day the New York Stock Exchange is open,
provided our offices are also open that day.
We guarantee that the amount of each subsequent annuity payment will not be
affected by variations in our expenses or in mortality experience.
Periodic Payments -- The first payment under these Options will be determined on
the Annuity Date and will be made on the day following the Annuity Date. For a
Designated Beneficiary entitled to a death benefit on account of the Annuitant's
death, the first payment will be made on the first day of the calendar month on
or next following the day we receive due proof of the Annuitant's death and
instructions regarding payment, and such other documentation as we may require
(called the "Annuity Date"). Subsequent payments will be determined on the day
in each payment period that corresponds to the Annuity Date and will be made on
the following day.
Misstatement of Age or Sex -- We may require proof of the Annuitant's age and
sex before commencing annuity payments. If the age or sex (or both) of the
Annuitant are incorrectly stated in this Contract, we will correct the amount
payable to equal the amount that the Account Value, less any charges for premium
taxes and or other taxes, under this Contract would have purchased for the
Annuitant's correct age and sex, if applicable. If we make the correction after
annuity payments have commenced, and we have made overpayments, we will deduct
the amount of the overpayment, with interest at 3% per year, from any payments
due then or later. If we have made underpayments, we will add the amount, with
interest at 3% a year, of the underpayments to the next payment we make after we
receive proof of the correct sex and/or date of birth.
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GENERAL PROVISIONS
Reports to Owners -- We will send you those reports required by applicable law.
Payments, Instructions and Requests -- Unless this Contract provides otherwise,
all payments, loan repayments, instructions and requests must be received in
writing at our Service Center at its mailing address. (See DEFINITIONS: Service
Center). Any subsequent purchase payments, loans, loan repayments, requests for
transfer, or withdrawal and instructions we receive in proper form before the
close of the New York Stock Exchange on any Business Day usually will be
processed the same Business Day unless the transaction or event is scheduled to
occur on another day. Generally, all other instructions and requests normally
will be effective as of the end of the day next following the Business Day we
receive them in proper form, unless the event is scheduled to occur on another
day. We may require that you provide signature guarantees or other safeguards
for any instruction, request or other document you may send to our Service
Center. You acknowledge and agree that we will not be liable for any loss,
liability, cost or expense of any kind or character for acting on instructions
or requests submitted to us that we reasonably believe to be genuine, provided
we follow our procedures.
Entire Contract -- This document, the attached application or confirmation
thereof, any subsequent applications to change this Contract or confirmation
thereof, and any riders and endorsements, constitute the entire Contract, and
supersede any and all prior agreements, whether oral or written, about the
subject matter of this Contract and the application. All statements made in the
application are representations and not warranties.
Contract Modifications -- Modifications to this Contract or any waivers of our
rights or requirements under this Contract can only be made if in writing by an
authorized officer of PM.
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.
Claims of Creditors -- Your Contract Value and other benefits under this
Contract are exempt from the claims of creditors to the extent permitted by law.
Removal of Beneficiary or Contingent Annuitant -- You may remove a Beneficiary,
(other than an irrevocable Beneficiary), or a Contingent Annuitant from this
Contract by providing proper instructions to our Service Center.
Ownership -- This Contract belongs to the Owner. The Owner is entitled to
exercise all rights available to the Owner under this Contract. If this
Contract is jointly owned, both Owners must join in any request to exercise
these rights. The Owner may exercise these rights under this Contract without
the consent of the Beneficiary, (other than any irrevocable Beneficiary), or any
other person, except as otherwise required by law.
Assignment -- You may assign all rights and benefits under this Contract before
the Annuity Date. We are not bound by any assignment until we have received
written notice satisfactory to us and we record the assignment. We are not
responsible for the validity of any assignment. If the Contract has been
absolutely assigned, the assignee becomes the Owner. A person who receives the
Contract as collateral security does not become the Owner, unless the Contract
is absolutely assigned. You should consult with your tax adviser before taking
any action.
Delay of Payments -- Generally, payments, transfers, or exchanges will be made
within seven days from receipt of the payment and or request in a form
satisfactory to us. Payment of your withdrawal proceeds or
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transfers or exchanges to or from a Variable Account may be delayed after
receipt of your withdrawal, transfer, or exchange request under certain
circumstances. These include: a closing of the New York Stock Exchange other
than on a regular holiday or weekend; a trading restriction by the SEC; or an
emergency declared by the SEC. We may delay payments or transfers from our
General Account (which would include payment of your withdrawal proceeds and
transfers from the Fixed Option, loans, repayments of Contract Debt from the
Loan Account, repayments from the Fixed Option of due and unpaid interest on
Contract Debt, fixed annuity payments, and lump sum death benefit payments
unless state law requires otherwise) for up to six months after the requested
effective date of the transaction. Any amount delayed will, so long as it is
held under the Fixed Option, continue to earn interest at the Guaranteed
Interest Rate(s) then in effect until the Guaranteed Term in effect has ended,
and 3% on an annual basis thereafter. If you make purchase payments by check,
we may delay making payments to you until your check has cleared.
Incontestability -- We will not contest this Contract.
Proof of Life or Death -- Before we make a payment, we have the right to require
proof of the life or death of any person whose life or death determines whether,
to whom, or how much we must pay any benefits under this Contract.
Dividends -- We do not expect dividends to become payable. At the end of each
Contract Year, we will determine your dividend, if any. You may choose to have
it paid in cash or added to your Contract Value. If you do not make a choice, we
will add it to your Contract Value. We will allocate any dividend added to your
Contract Value in accordance with your most recent allocation instructions,
unless you instruct otherwise. You should consult with your tax adviser before
making any election.
Withholding Taxes -- We will withhold any taxes required to be withheld by law
or requested to be withheld.
ANNUITY OPTION TABLES
For the fixed annuity option, the Tables below illustrate the minimum guaranteed
monthly income purchased per $1000 of the net amount applied. The actuarial
basis for the fixed annuity option Tables is the 1983 Annuity Mortality Table
with interest at 3%. The Tables also illustrate the rates for the first monthly
variable annuity payment per $1000 of the net amount applied to the variable
annuity payment option. The rates for variable annuity payments are based on
interest at the annual rate of 5%. Subsequent payments may be higher or lower
than the first payment, based on the investment performance of the Subaccount(s)
you elect and whether you exchange Subaccount Annuity Units.
These Tables provide for sex-distinct and unisex payment purchase rates for life
payment options. For some Qualified Plans and in some states the use of sex-
distinct purchase rates are prohibited. For those Qualified Plans and in those
states we use blended unisex purchase rates for life payment options, whether
the Annuitant is male or female.
We will provide rates for any payment frequency, interest rate, age or sex,
combinations thereof, and or payout percentage, if applicable, not shown that we
offer. We will also provide, upon request, rates for any annuity option not
shown that we then offer.
Page 19
<PAGE>
OPTIONS 1 AND 2 -- SINGLE LIFE ANNUITIES WITH GUARANTEED PAYMENTS FOR:
Fixed Annuity Rates
<TABLE>
<CAPTION>
Male at 3% Female at 3% Unisex at 3%
Age None 10 Yr. 20 Yr. None 10 Yr. 20 Yr. None 10 Yr. 20 Yr.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 3.28 3.27 3.26 3.13 3.12 3.12 3.20 3.20 3.19
35 3.44 3.44 3.41 3.26 3.26 3.24 3.35 3.35 3.33
40 3.66 3.64 3.60 3.42 3.42 3.40 3.54 3.54 3.50
45 3.93 3.90 3.82 3.63 3.63 3.59 3.78 3.77 3.71
50 4.27 4.22 4.08 3.90 3.89 3.82 4.09 4.06 3.96
55 4.70 4.62 4.39 4.25 4.22 4.11 4.48 4.43 4.25
60 5.28 5.14 4.71 4.72 4.66 4.44 5.00 4.90 4.58
65 6.10 5.81 5.02 5.35 5.22 4.79 5.73 5.52 4.92
70 7.23 6.61 5.27 6.25 5.96 5.12 6.74 6.30 5.20
75 8.82 7.49 5.42 7.56 6.89 5.35 8.18 7.20 5.39
80 11.06 8.33 5.49 9.53 7.89 5.47 10.28 8.12 5.48
85 14.16 8.97 5.51 12.48 8.74 5.50 13.30 8.86 5.51
</TABLE>
Variable Annuity Rates
<TABLE>
<CAPTION>
Male at 5% Female at 5% Unisex at 5%
Age None 10 Yr. 20 Yr. None 10 Yr. 20 Yr. None 10 Yr. 20 Yr.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 4.57 4.56 4.54 4.44 4.44 4.42 4.51 4.50 4.49
35 4.71 4.70 4.67 4.55 4.54 4.52 4.63 4.62 4.60
40 4.91 4.89 4.82 4.69 4.68 4.65 4.80 4.78 4.74
45 5.16 5.12 5.02 4.87 4.86 4.81 5.02 4.99 4.92
50 5.48 5.41 5.24 5.12 5.09 5.01 5.30 5.26 5.13
55 5.89 5.79 5.51 5.44 5.40 5.26 5.67 5.60 5.39
60 6.46 6.28 5.80 5.89 5.80 5.55 6.18 6.05 5.68
65 7.27 6.91 6.08 6.51 6.34 5.87 6.89 6.64 5.98
70 8.41 7.68 6.29 7.39 7.05 6.16 7.90 7.38 6.23
75 10.02 8.52 6.43 8.72 7.93 6.37 9.36 8.24 6.40
80 12.29 9.30 6.49 10.71 8.88 6.47 11.49 9.10 6.48
85 15.42 9.90 6.51 13.70 9.68 6.50 14.55 9.80 6.51
</TABLE>
Page 20
<PAGE>
OPTION 3 -- JOINT AND SURVIVOR LIFE
<TABLE>
<CAPTION>
Primary Annuitant
Male Age
60 65 70 75 80 85
3% 5% 3% 5% 3% 5% 3% 5% 3% 5% 3% 5%
Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
60 4.70 5.87 5.10 6.27 5.55 6.75 6.03 7.29 6.54 7.87 7.03 8.46
65 4.85 6.00 5.32 6.47 5.86 7.03 6.45 7.66 7.07 8.34 7.67 9.04
Female 70 4.98 6.13 5.54 6.67 6.18 7.33 6.91 8.08 7.69 8.92 8.47 9.77
Age 75 5.09 6.24 5.72 6.86 6.49 7.63 7.40 8.54 8.40 9.58 9.43 10.68
80 5.17 6.32 5.86 7.01 6.75 7.89 7.85 8.98 9.13 10.29 10.51 11.71
85 5.22 6.38 5.96 7.11 6.95 8.09 8.21 9.35 9.78 10.93 11.57 12.75
</TABLE>
<TABLE>
<CAPTION>
Primary Annuitant
Unisex Age
60 65 70 75 80 85
3% 5% 3% 5% 3% 5% 3% 5% 3% 5% 3% 5%
Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
60 4.60 5.76 5.02 6.17 5.49 6.66 6.03 7.24 6.60 7.89 7.19 8.57
65 4.72 5.87 5.20 6.34 5.76 6.91 6.41 7.58 7.12 8.35 7.84 9.17
Unisex 70 4.81 5.96 5.36 6.49 6.02 7.15 6.81 7.96 7.70 8.89 8.63 9.89
Age 75 4.88 6.04 5.49 6.62 6.25 7.38 7.20 8.33 8.31 9.46 9.52 10.73
80 4.93 6.09 5.58 6.72 6.43 7.56 7.53 8.65 8.89 10.03 10.45 11.63
85 4.96 6.13 5.64 6.79 6.55 7.69 7.78 8.91 9.37 10.51 11.31 12.47
</TABLE>
<TABLE>
<CAPTION>
OPTION 4 -- PERIOD CERTAIN
Period Monthly Period Monthly Period Monthly Period Monthly
Years Income Years Income Years Income Years Income
Fixed Variable Fixed Variable Fixed Variable Fixed Variable
3% 5% 3% 5% 3% 5% 3% 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 28.99 29.80 10 9.61 10.51 17 6.23 7.20 24 4.84 5.88
4 22.06 22.89 11 8.86 9.77 18 5.96 6.94 25 4.71 5.76
5 17.91 18.74 12 8.24 9.16 19 5.73 6.71 26 4.59 5.65
6 15.14 15.99 13 7.71 8.64 20 5.51 6.51 27 4.47 5.54
7 13.16 14.02 14 7.26 8.20 21 5.32 6.33 28 4.37 5.45
8 11.68 12.56 15 6.87 7.82 22 5.15 6.17 29 4.27 5.36
9 10.53 11.42 16 6.53 7.49 23 4.99 6.02 30 4.18 5.28
</TABLE>
Page 21
<PAGE>
INDEX
Page
CONTRACT SPECIFICATIONS 3
DEFINITIONS 4
PURCHASE PAYMENTS 6
THE FIXED OPTION 6
VARIABLE INVESTMENT OPTIONS 7
CONTRACT VALUE 8
CHARGES, FEES AND DEDUCTIONS 10
TRANSFERS 11
WITHDRAWALS 11
CONTRACT LOANS 12
DEATH BENEFIT 12
BENEFICIARY 14
ANNUITY BENEFITS 14
GENERAL PROVISIONS 18
ANNUITY OPTION TABLES 19
Page 22
<PAGE>
================================================================================
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACT
. Investment Experience Reflected in Benefits
. Variable and Fixed Accumulation Before Annuity Date; Variable and Fixed
Annuity Payments Thereafter
. Death Benefit Proceeds Payable Before Annuity Date
. Participating
<PAGE>
EXHIBIT 99.4(b)
Qualified Plan Loan Endorsement
<PAGE>
QUALIFIED PLAN LOAN ENDORSEMENT
This Endorsement is part of your Contract and should be attached to it.
CONTRACT LOANS
If your Contract is issued under a Qualified Plan under Code Section 401(a),
401(k), 403(a) or 403(b) and your Qualified Plan permits, you may request a loan
of all or part of the Loan Amount under the Contract.
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 in good form.
We will normally forward proceeds of your loan to you within seven days after
the effective date of your loan. A $500 loan administrative fee will be deducted
from your loan proceeds.
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 two percentage points lower than the annual loan interest rate charged on
your Contract Debt. 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 once a year
according to your most recent allocation instructions.
As your loan is repaid, the amount of the repayment, (other than a partial
withdrawal to effect a loan repayment), will be transferred back to your
Investment Options, in the same proportion as your most recent allocation
instructions.
Loan Terms -- Each loan must be for at least $1,000. You may have only one loan
outstanding at any time. You may not borrow more than the lesser of:
. 50% of your Contract Value; or
. $50,000 less your highest outstanding Contract Debt during the 12-month
period immediately preceding the effective date of your 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 Contract Debt at an
annual rate, set at the time the loan is made, equal to 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 quarter immediately preceding the calendar
month in which the loan is effective; or
. 5%.
E-LOAN-95
Page 1
<PAGE>
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 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
as established by regulation within the state in which this Contract is
delivered.
Repayment Terms -- Adverse tax consequences may result if you fail to meet the
repayment requirements for your loan. 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, however, 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. Your loan will be considered repaid only when the interest due has
also been paid.
If we do not receive the repayment by the day it is due, a partial withdrawal
equal to the repayment amount due and any applicable withdrawal fee and or
charge will be made from the Contract and paid to us. We will deduct the
portion of the partial withdrawal equal to the unpaid principal amount due from
the Loan Account. We will deduct the portion equal to the interest due and any
withdrawal fee and or charge imposed from your Account Value in the Investment
Options on a proportionate basis based on your relative Account Value in each
Investment Option.
We will treat all payments you send us as purchase payments unless you
specifically indicate that your payment is a loan repayment. Any repayments in
excess of the amount then due will be applied first, to your outstanding
principal, and then to accrued interest.
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
E-LOAN-95
Page 2
<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)
Qualified 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
R90-PEN-V
<PAGE>
EXHIBIT 99.4(e)
403(b) Tax-Sheltered Annuity Rider
<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 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).
<PAGE>
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 Contract 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.
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
Treasury 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(f)
Section 457 Plan Rider
<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 to the 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.
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 a new employee of the Owner, premiums may
1
<PAGE>
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(1)(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, 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
2
<PAGE>
EXHIBIT 99.4(g)
Endorsement for 403 (b) Texas Optional
Retirement Program (ORP)
<PAGE>
ENDORSEMENT
This endorsement is to be attached to and become a part of the contract
(Form 90-53) of each purchaser who is also a participant in the Texas Optional
Retirement Program ("Program").
403 (b) TEXAS OPTIONAL RETIREMENT PROGRAM (ORP)
Notwithstanding any provision of the contract to the contrary, the following
restrictions apply to participants in the Texas Optional Retirement Program,
pursuant to Texas law:
a) loans against the cash value of a contract, surrender of contracts and
other withdrawals to buy an annuity or make payment to you, your estate
or your beneficiary may be made only if you reach the age of 70 1/2,
die, retire or terminate employment in all Texas institutions of higher
education, as defined under Texas law.
b) withdrawals may only be made if we first receive (1) a written statement
from the appropriate institution verifying your vesting status and
termination of employment, and, except in case of your death, (2) a
written statement from you that you are not transferring employment to
another Texas institution of higher education.
c) if you die, retire, or terminate employment in all Texas institutions of
higher education before you are vested in the Program (this currently
requires one year of participation in the Program), any amounts provided
by the State's matching contribution will be refunded to the appropriate
institution and not included in any payment we make.
d) a withdrawal to make payment to an entity providing another funding
vehicle may be made only to the extent permitted under the Program.
We reserve the right to change these restrictions, or to add restrictions,
without your consent, to the extent necessary to maintain compliance with the
laws and regulations applicable to the Program.
Pacific Mutual Life Insurance Company
Chairman and Chief Executive Officer Secretary
E-ORP-9053
<PAGE>
EXHIBIT 99.5(a)
Application Form for Individual Flexible Premium
Variable Accumulation Annuity Contract (Draft)
<PAGE>
[LOGO OF PACIFIC MUTUAL]
DRAFT
PACIFIC ONE APPLICATION
Pacific Mutual Life Insurance Company, PO Box 100060, Pasadena, CA 91189-0060
Payment (or 1035 Tax-Free Exchange or Transfer of Assets Form) must accompany
Application
- -------------------------------------------------------------------------------
1a ANNUITANT (The plan participant must be named here on qualified plans.)
- --------------------------- --------- -------------------------------
First Name Middle Last
- --------------------------------------------------------------------------
Street Address
- --------------------------- --------- -------------------------------
City State Zip
SSN/TIN
--- --- --- --- --- --- --- --- ---
Sex: [_]M [_]F Date of Birth:____/____/____
Phone:
----------------------------
- -------------------------------------------------------------------------------
1b ANNUITANT (Optional, check one) [_] Joint [_] Contingent
- --------------------------- --------- -------------------------------
First Name Middle Last
- --------------------------------------------------------------------------
Street Address
- --------------------------- --------- -------------------------------
City State Zip
SSN/TIN
--- --- --- --- --- --- --- --- ---
Sex: [_]M [_]F Date of birth:____/____/____
Annuitant's Spouse? [_] Yes [_] No
- -------------------------------------------------------------------------------
2a OWNER (If same as Annuitant, check here [_]. Owner and Annuitant same on
some qualified plans.)
- --------------------------- --------- -------------------------------
First Name Middle Last
- --------------------------------------------------------------------------
Street Address
- --------------------------- --------- -------------------------------
City State Zip
SSN/TIN
--- --- --- --- --- --- --- --- ---
Sex: [_]M [_]F Date of birth:____/____/____
Phone:
----------------------------
- -------------------------------------------------------------------------------
2b OWNER (Optional, check one) [_] Joint [_] Contingent
- --------------------------- --------- -------------------------------
First Name Middle Last
- --------------------------------------------------------------------------
Street Address
- --------------------------- --------- -------------------------------
City State Zip
SSN/TIN
--- --- --- --- --- --- --- --- ---
Sex: [_]M [_]F Date of birth:____/____/____
Owner's Spouse? [_] Yes [_] No
- --------------------------------------------------------------------------
3 BENEFICIARY (Use Special Request section or enclose a signed letter of
instruction if you need to provide additional information.)
- --------------------------------------------------------------------------
Beneficiary Name [_] Primary [_] Contingent
- --------------------------------------------------------------------------
Relationship
- --------------------------------------------------------------------------
Beneficiary Name [_] Primary [_] Contingent
- --------------------------------------------------------------------------
Relationship
- --------------------------------------------------------------------------------
4 ALLOCATION OPTIONS
(Allocate your investment. Indicate by either dollar amounts or percentages to
one decimal. Allocations must total 100% or equal total premiums invested.)
Investment Options: Rebalance Variable
------------------ ------------------
Fixed Options?
---------- --------
Money Market [_] Yes
---------- [_] No
High Yield Bond
---------- Frequency:
Managed Bond ---------
---------- [_] Quarterly
Govt Securities [_] Semi-Annually
---------- [_] Annually
Growth LT
----------
Equity Income Start Date:
---------- ----------
Multi-Strategy / /
---------- ---- ---- ----
Equity
----------
Bond and Income
----------
Equity Index
----------
International
----------
----------
----------
----------
- --------------------------------------------------------------------------------
5 ISSUE STATE
---------------------------------------------
Enter the State where application was signed.
- --------------------------------------------------------------------------------
6 INITIAL PREMIUM AMOUNT
$
---------------------
- --------------------------------------------------------------------------------
<PAGE>
7 TYPE OF PLAN (Check non-qualified or indicate qualified type.)
[_] Non-Qualified
___________________________________________________________________
[_] IRA Rollover [_] 401(a) Pension
[_] IRA Transfer [_] 401(k) Profit Sharing
[_] IRA: Tax Yr. 19__ [_] 403(b) Transfer
[_] SEP-IRA: Tax Yr. 19__ [_] Keogh/HR10
[_] Other ________________
- --------------------------------------------------------------------------------
8 REPLACEMENT OF ANNUITY
Will the purchase of this Annuity replace or change any other insurance or
annuity? [_] Yes [_] No
(If yes, or 1035 exchange, write company name and contract number in "Special
Requests" and attach any required state replacement or transfer forms.)
- --------------------------------------------------------------------------------
9 ANNUITY START DATE (Optional) ____________/____/____
Start date cannot be prior to first contract anniversary.
Non-Qualified: if no date is chosen, start date is the Annuitant's 100th
- -------------
birthday.
Qualified: if no date is chosen, start date is April 1 of the calendar year
- ---------
following the year the Annuitant reaches age 70 1/2.
- --------------------------------------------------------------------------------
10 SPECIAL REQUESTS
- --------------------------------------------------------------------------------
11 TELEPHONE AUTHORIZATION (Check box and initial to authorize telephone
requests.) [_] ____________________ [_] ______________________
Please act on telephone instructions from any person(s) purporting to have
authority to make transfers between accounts, allocation changes or other
transactions. Pacific Mutual will employ reasonable procedures to confirm that
instructions communicated by telephone are authorized. So long as these
procedures are followed Pacific Mutual, any of its affiliates, Pacific Select
Fund, or any directors, trustees, officers, employees, representatives or agents
of the aforementioned who act on their behalf, will not be subject to any claim,
liability, loss or cost if any request is acted on in good faith upon telephone
instructions Pacific Mutual reasonably believes to be genuine in reliance on its
procedures and this signed authorization.
- --------------------------------------------------------------------------------
12 DOLLAR COST AVERAGING
Please transfer $________ or ________% annual of the "Source" account beginning
on __________/____/____ as indicated. (Minimum $250, "Source" account value must
be at least $10,000; cannot begin earlier than 30 days after issue date.)
Source: (Choose one) Target: (Choose one or more, different from
- ------ ------
"Source." Indicate dollars or percentages.)
[_] Fixed Fixed ______________
[_] Money Market Money Market ______________
[_] High Yield Bond High Yield Bond ______________
[_] Managed Bond Managed Bond ______________
[_] Govt. Securities Govt Securities ______________
[_] Growth LT Growth LT ______________
[_] Equity Income Equity Income ______________
[_] Multi-Strategy Multi-Strategy ______________
[_] Equity Equity ______________
[_] Bond and Income Bond and Income ______________
[_] Equity Index Equity Index ______________
[_] International International ______________
[_] ______________
[_] ______________
[_] ______________
Transfer Frequency: (Choose one)
- ------------------
[_] Monthly [_] Quarterly [_] Semi-Annually [_] Annually
Term: [_] _____ Months (Enter no. of months)
- ---- [_] _____ Years (Enter no. of years)
[_] Until "From" account is 100% depleted
- --------------------------------------------------------------------------------
13 PRE-AUTHORIZED WITHDRAWALS
Please provide me payments of $___________ or ________% annual from my contract
value beginning on ________/____/____ as indicated. (Minimum $1,000; cannot
begin earlier than 30 days after issue date.)
Source: (Choose one or more. Federal Taxes:
- ------ Indicate dollars or -------------
-- [_] Do Not Withhold
percentages.) [_] Withhold ______%
Fixed _________ (If not specified, a minimum 10% Federal tax
Money Market _________ on non-qualified plans, 20% on qualified
High Yield Bond _________ plans, will be withheld. State mandated
Managed Bond _________ income tax will be withheld where required
Govt Securities _________ by law.)
Growth LT _________
Equity Income _________ Note:
Multi-Strategy _________ ----
Equity _________ Payment will be made and sent to Owner unless
Bond and Income _________ otherwise specified in Special Requests
Equity Index _________ section. Payment will be prorata from all
International _________ Investment Options if none are elected and
_________ will be less any applicable taxes.
_________
_________
Withdrawal Frequency: (Choose one)
- --------------------
[_] Monthly [_] Quarterly [_] Semi-Annually [_] Annually
Term: [_] _____ Months (Enter no. of months)
- ---- [_] _____ Years (Enter no. of years)
[_] Until "Source" account is 100% depleted
- --------------------------------------------------------------------------------
<PAGE>
[LOGO OF PACIFIC MUTUAL]
PACIFIC ONE APPLICATION INSTRUCTIONS
- --------------------------------------------------------------------------------
To complete this form:
Please print clearly in black or dark ink. Provide all requested information.
- --------------------------------------------------------------------------------
1 Annuitants/Owners: There are many combinations of owner and annuitant
2 registrations. Joint owners cannot be named on
qualified plans. Other combinations may result in
different consequences. For example, the death of
an owner/annuitant has different consequences than
the death of a non-owner annuitant.
Use the Special Requests section to clarify
registrations. Some examples include: naming both
contingent and joint annuitants; owner as
annuitant's employer; joint owner same as joint
annuitant, etc.
Spousal signatures may be required for certain
actions in qualified plans. Please consult a tax
advisor to properly structure qualified plans and
effect transfers.
- --------------------------------------------------------------------------------
3 Beneficiaries: Beneficiaries will be joint if no boxes are
checked. Joint beneficiaries will share equally
with the rights of survivorship. In the event of
death, and the spouse is a joint beneficiary, the
contract may not be continued. Beneficiary
designations may be irrevocable. Please use the
Special Requests section to indicate this option.
- --------------------------------------------------------------------------------
4 Allocation Options: The Fixed Option is not available for rebalancing.
If rebalancing is chosen, then earnings sweeps may
be made only from the Fixed Option and not the
Money Market.
- --------------------------------------------------------------------------------
5 Issue State: Indicate the state where the application is signed.
- --------------------------------------------------------------------------------
6 Initial Premium Amount: Indicate in U.S. dollars the initial premium.
- --------------------------------------------------------------------------------
7 Type Of Plan: The minimum $25,000 must be met. Example: $23,000
IRA rollover and $2,000 annual contribution. Check
both IRA Rollover and IRA: Tax Yr. 19__ boxes.
- --------------------------------------------------------------------------------
8 Replacement Of Annuity: For 1035 exchanges, a transfer of assets form must
also be completed and attached.
- --------------------------------------------------------------------------------
9 Annuity Start Date: For qualified plans, the start date of annuities
over age 70 1/2 will be the next birthday.
- --------------------------------------------------------------------------------
10 Special Requests: Use this section to indicate unique registrations
and other special instructions.
- --------------------------------------------------------------------------------
11 Telephone Authorization: If the contract is jointly owned, both owners must
check and initial.
- --------------------------------------------------------------------------------
12 Dollar Cost Averaging: Please select different "target" accounts than
"source" accounts. The $250 minimum applies only to
the first automatic transfer. Subsequent transfers
may be less if percentages are chosen. Dollar cost
averaging and earnings sweep cannot occur at the
same time.
- --------------------------------------------------------------------------------
13 Pre-Authorized Payments will be made prorata from all investment
Withdrawals: options if source accounts are not indicated. Taxes
will be taken from payments. Withdrawals may not be
taken from some qualified plans (403(b) and
402(g)), except in the case of change of employer,
death, disability or hardship.
- --------------------------------------------------------------------------------
14 Pre-Authorized Checking: To begin the program, a minimum amount must be
submitted, depending on the frequency selected.
- --------------------------------------------------------------------------------
15 Earnings Sweep: This option may not be used simultaneously with
dollar cost averaging. Earnings sweeps only from
the Fixed Option are available with rebalancing.
Earnings sweeps from either the Money Market or the
Fixed Option are available without rebalancing.
- --------------------------------------------------------------------------------
16 Statement Of Applicant: This section contains information about the
contract, if issued. Please read it carefully. Some
provisions may conflict with qualified plans or
with applicable laws and regulations.
- --------------------------------------------------------------------------------
17 Statement Of Agent: Your agent must complete and sign this section. The
license ID applies to Florida only.
<PAGE>
*Section 16 and 17 must be complete before contract can be issued*
14. PRE-AUTHORIZED CHECKING (Please attach a voided check.)
Collect $_________ by initiating automatic withdrawals from my account as
indicated on the attached voided check commencing on __/__/__.
(Choose one) Minimums
[_] Monthly $2,000
[_] Quarterly $6,000
[_] Semi-Annually $12,000
[_] Annually $24,000
(To begin the plan, the minimum amount for the frequency above must accompany
this application. First transaction can occur 30 days after contract date. If no
date is chosen or date is too early, monthly withdrawals will commence 30 days
after your Contract is issued.)
15. EARNINGS SWEEP
Please sweep all earnings of the "Source" account beginning on __/__/__ as
indicated. (Minimum source account value $10,000; cannot begin earlier than
30 days after issue date.)
Source: Target: (Choose one or more.
- ------ ------ Indicate percentages.)
(Choose one)
[_] Fixed
[_] Money Market High Yield Bond _____
Transfer Frequency: Managed Bond _____
- ------------------
(Choose one; earnings Govt. Securities _____
swept from previous
period only) Growth LT _____
[_] Monthly Equity Income _____
[_] Quarterly Multi-Strategy _____
[_] Semi-Annually
[_] Annually Equity _____
Term: Bond and Income _____
- ----
[_] ___ Months Equity Index _____
(Enter no. of months) International _____
[_] ___ Years _____
(Enter no. of years) _____
[_] Until "Source" account
is 100% depleted
16. STATEMENT OF APPLICANT
I/We believe this Contract will meet my/our financial objectives. I/We
understand that Contract values may increase or decrease depending on the
investment experience of the Variable Accounts. Contract Values under the
Variable Accounts are variable and are not guaranteed as to the fixed dollar
amounts.
I/We have received prospectuses. I/We hereby represent my answers to the above
questions to be correct and true to the best of my knowledge and belief, and
agree that this application will be part of the annuity Contract issued by
Pacific Mutual. I/We acknowledge that corrections to my/our Contract may be made
from the application. My/Our acceptance of this Contract constitutes acceptance
of these corrections. 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.
The following is not applicable to Maryland residents: The Company is required
to provide to the owner, within reasonable time, reasonable factual information
regarding the benefits and provisions of the annuity contract. Any person who
knowingly and with intent to injure, defraud, or deceive any insurer, files a
statement of claim or an application containing any false, incomplete, or
misleading information is guilty of a felony of the third degree. Any person who
knowingly and with intent to defraud any insurance company or other person
files an application for insurance containing any materially false information
or conceals, for the purpose of misleading, information concerning any fact
material thereto commits a fraudulent insurance act which is a crime. Any person
who includes any false or misleading information on an application for an
insurance policy, is subject to civil and criminal penalties. NOTICE: ANY PERSON
WHO, WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS FACILITATING A FRAUD AGAINST
AN INSURER, SUBMITS AN APPLICATION OR FILES A CLAIM CONTAINING A FALSE OR
DECEPTIVE STATEMENT IS GUILTY OF INSURANCE FRAUD. I/We understand that all
payments and values provided by the Contract may vary as to dollar amount to the
extent that they are based on the investment experience of the selected
portfolio(s). DISCLOSURE OF GUARANTY FUND NON-PARTICIPATION. In the event the
Company is unable to fulfill its contractual obligation under this application,
the policyholder is not protected by an insurance guaranty fund or other
solvency protection arrangement.
My/Our signature(s) also certifies/certify, under penalty of perjury, that
my/our taxpayer identification number(s) provided above is/are correct and that
I am not subject to backup withholding.
- ------------------------------ ------------------------------- --------------
Owner Signature (If different Annuitant Signature Date
from Annuitant)
- ------------------------------ ------------------------------- --------------
Joint/Contingent Owner Joint/Contingent Owner Date
Signature Signature
17. STATEMENT OF AGENT
Will this Contract change any existing life insurance or annuity in this or any
other company? [_] Yes [_] No
If yes, explain under Special Requests. I certify that I am authorized and
qualified to discuss this Contract.
- ------------------------ ------------------------- -------------------------
Agent Full Name (Print) Agent Signature Agent SSN (Required)
( )
- ------------------------ ------------------------- -------------------------
Agent Phone Number Broker/Dealer Name License ID (Florida Only)
<PAGE>
EXHIBIT 99.5(b)
Variable Annuity PAC APP
<PAGE>
PACIFIC MUTUAL VARIABLE ANNUITY PAC APP
PAC APP is not available for transfers, 1035 exchanges and 401, 403, 457 and
Keogh plans. Please use the standard application
1 ANNUITANT
First Name Middle Last
Street Address
City State Zip
SS# Date of Birth Sex M F
2 OWNER
First Name Middle Last
Street Address
City State Zip
SS# Date of Birth Sex M F
Check one Joint Contingent
First Name Middle Last
SS# Date of Birth Sex M F
3 ANNUITANT Optional, check one Joint Contingent
First Name Middle Last
Address
SS# Date of Birth Sex M F
4 BENEFICIARY
Annuitant Beneficiary Relationship To Owner
Owner Beneficiary Relationship To Owner
5 TRADE INFORMATION Product: Portfolio One
Date Premium Submitted State of Sale
Client Account # Contract # (for additional payments only)
6 TYPE OF PLAN
Non-Qualified OR Qualified (check appropriate box below)
IRA Rollover IRA: Tax Yr. 19__
SEP-IRA: Tax Yr. 19__
7 ALLOCATION OPTIONS
Allocate payment of $________ as indicated below. (Allocations must total 100%
or equal total premium invested.)
___ Fixed Account ___ Equity Income ___
___ Money Market ___ Multi-Strategy ___
___ High Yield Bond ___ Equity ___
___ Managed Bond ___ Bond and Income ___
___ Govt. Securities ___ Equity Index
<PAGE>
___ Growth LT ___ International
8 DEALER INFORMATION
Will the purchase of this Annunity replace or change any other insurance or
annuity? [_] Yes [_] No
Registered Representative Name
SS#
9 REBALANCING (Optional)
The fixed account is not available for
rebalancing. Quarterly Semi-Annually
Annually
10 SPECIAL REMARKS
11 REPLACEMENT OF ANNUITY
Will the purchase of this Annunity replace or change any other insurance or
annuity? [_] Yes [_] No
255-5A-2 Pacific Mutual Life Insurance Company -- P.O. Box 100060,
Pasadena, CA 91189-0060
Bar Code
<PAGE>
EXHIBIT 99.5(c)
Application/Confirmation Form
<PAGE>
PACIFIC MUTUAL APPLICATION/CONFIRMATION FORM
<TABLE>
<CAPTION>
<C> <C> <C>
[client name] Initial premium [premium]
[contract number] Issue date [date], State Of Sale [state of sale]
</TABLE>
This form, when returned to Pacific Mutual Life Insurance Company, completes the
transaction by confirming your application for, and receipt of, your Contract.
Please verify that this information is correct; sign and date the form at the
bottom, and return it to Pacific Mutual in the enclosed postage-paid envelope.
Please return this form promptly. Certain transactions on this policy cannot be
processed prior to the receipt of this form.
<TABLE>
<CAPTION>
<C> <C>
ANNUITANT OWNER
[name] [name]
[address1] [address1]
[address2] [address2]
[city, state zip] [city, state zip]
[SS#], [DOB], [sex] [SS#], [DOB], [sex]
[co-annuitant name if given] [co-owner name if given]
[address1] [address1]
[address2] [address2]
[city, state zip] [city, state zip]
[SS# if given], [DOB if given], [sex if given] [SS# if given], [DOB if given], [sex if given]
ALLOCATION OPTIONS BENEFICIARY/BENEFICIARIES
[initial premium] [primary/contingent]
___ Fixed Account ___ Bond and Income [name]
___ Money Market ___ Equity Index [address]
___ High Yield Bond ___ International
___ Managed Bond ___ TYPE OF PLAN [non-qualified/qualified/type]
___ Govt. Securities ___
___ Growth LT ___ DEALER INFORMATION
___ Equity Income ___ [rep name], [rep #]
___ Multi-Strategy
___ Equity REBALANCING [yes/no], [frequency]
</TABLE>
- --------------------------------------------------------------------------------
1 TELEPHONE AUTHORIZATION Check box and initial to authorized telephone
requests. ___
Please act on telephone instructions from any person purporting to have
authority to make transfers between accounts or allocation changes. Pacific
Mutual will employ reasonable procedures to confirm that instructions
communicated by telephone are authorized. So long as these procedures are
followed Pacific Mutual, any of its affiliates, Pacific Select Fund, or any
directors, trustees, officers, employees, representatives or agents of the
aforementioned who act on their behalf, will not be subject to: any claim;
liability; loss; or cost if: any request is acted on in good faith upon
telephone instructions Pacific Mutual reasonably believes to be genuine in
reliance on its procedures;
<PAGE>
and this signed authorization.
________________________________________________________________________________
2 STATEMENT OF APPLICANT
I/We believe this Contract will meet my/our financial objectives. I/We
understand that Contract values may increase or decrease depending on the
investment experience of the Variable Accounts. Accumulated Values under the
Variable Accounts are variable and are not guaranteed as to the fixed dollar
amounts. I/We have received the Contract referenced above and hereby affirm the
information to be true to the best of my/our knowledge and belief. I/We agree
that this confirmation form will be part of the Contract issued by Pacific
Mutual ("the Company"). I/We have reviewed the Contract and acknowledge that
corrections may have been made from the application. My/Our acceptance of this
Contract constitutes acceptance of those corrections. 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. My/Our signature(s) also
certifies/certify, under penalty of perjury, that my/our taxpayer identification
number(s) provided above is/are correct. I/We certify that this Contract was
sold and/or solicited in the state of [ ].
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------------------- ------------------------------------ --------
Owner Signature (if different from Annuitant) Annuitant Signature Date
- --------------------------------- ------------------------------------ --------
Contingent Owner Signature Joint/Contingent Annuitant Signature Date
</TABLE>
254-5A
<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
4
<PAGE>
and effect, until an instrument revoking it, or a duly executed proxy bearing a
later date, is filed with the secretary.
SEC. 9. Inspectors of Election. - In advance of any meeting of members,
the board of directors shall appoint one or three inspectors of election to act
at such meeting or any adjournment or adjournments thereof. The inspector or
inspectors of election shall determine the number of members present or
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes, ballots or consents, hear and
determine all challenges and questions in any way arising in connection with the
right to vote, count and tabulate all votes or consents, determine the result of
and do such acts as may be proper to conduct the election or vote with fairness
to all members. The inspector or inspectors of elections shall perform their
duties impartially, in good faith, to the best of their ability and as
expeditiously as is practical. On request of the chairman of the meeting or of
any member or his proxy, the inspector or inspectors shall make a report in
writing of any challenge or question or matter determined by them and execute a
certificate of any fact found by them. If there be three inspectors of
election, the decision, act or certificate of a majority shall be effective in
all aspects as the decision, act or certificate of all, an shall be final and
conclusive as to all matters passed upon and determined. If there be one
inspector of election, his decision, act or certificate shall be final and
conclusive as to all matters passed upon and determined. In case any person
appointed as inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment made by the board of directors in advance of the
convening of the meeting, or at the meeting by the person or officer acting as
chairman.
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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(a)
Fund Participation Agreement
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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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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: BY:
Name: AUDREY L. MILFS Name: THOMAS C. SUTTON
Title: SECRETARY Title: PRESIDENT
PACIFIC EQUITIES NETWORK
ATTEST: BY:
Name: AUDREY L. MILFS Name: ARTHUR M. KESSELHAUT
Title: SECRETARY Title: PRESIDENT
PACIFIC MUTUAL LIFE INSURANCE CO.
ATTEST: BY:
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: By:
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: By:
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: By:
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: By:
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: By:
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: By:
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: President
19
<PAGE>
EXHIBIT 99.8(b)
Addendum to Fund Participation Agreement
(to Add Growth LT Series)
<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: By:
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: By:
Name: Audrey L. Milfs Name: Glenn S. Schafer
Title: Secretary Title: President
Attest: By:
Name: Audrey L. Milfs Name: Diane N. Ledger
Title: Secretary Title: Assistant Vice President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: By:
Name: Diane N. Ledger Name: William D. Cvengros
Title: Assistant Vice President Title: Chief Investment Officer
Attest: By:
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
2
<PAGE>
EXHIBIT 99.8(c)
Addendum to Fund Participation Agreement
(to add Equity and Bond and Income Series)
<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: By:
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: By:
Name: Audrey L. Milfs Name: Glenn S. Schafer
Title: Secretary Title: President
Attest: By:
Name: Audrey L. Milfs Name: Diane N. Ledger
Title: Secretary Title: Assistant Vice President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: By:
Name: Diane N. Ledger Name: William D. Cvengros
Title: Assistant Vice President Title: Chief Investment Officer
Attest: By:
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
2
<PAGE>
EXHIBIT 99.9
Opinion and Consent of legal officer of Pacific
Mutual as to the legality of Contracts being
registered.
<PAGE>
EXHIBIT 9
October 17, 1995
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
Separate Account A of Pacific Mutual Life Insurance Company on September 7,
1994, by resolution of the Board of Directors of Pacific Mutual on November 22,
1989, and Memorandum dated September 7, 1994 concerning Separate Account A as
the separate account for assets applicable to Pacific One 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 Separate Account A with the Securities and Exchange Commission (File
No. 33-88458) under the Securities Act of 1933, as amended, for the registration
of interests in the variable annuity contracts to be issued with respect to
Separate Account A.
I have made such examination of the law and examined such corporate records and
such other documents as in my judgment are necessary and appropriate to enable
me to render the following opinion that:
1. Pacific Mutual has been duly organized under the laws of the State of
California and is a validly existing corporation.
2. Pacific Select Separate Account A 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 Separate Account A equal to
the reserves and other liabilities under the Pacific One Contracts and
any other contracts issued by Pacific Mutual that are supported by
Separate Account A is not chargeable with liabilities arising out of
any other business Pacific Mutual may conduct.
4. The Pacific One 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/ SHARON A. CHEEVER
Sharon A. Cheever, Esq.
Vice President and
Investment Counsel
<PAGE>
EXHIBIT 99.10(a)
Consent of Deloitte & Touche LLP
<PAGE>
Deloitte & Touche LLP
Suite 1200 Telephone: (714) 436-7100
695 Town Center Drive Facsimile: (714) 436-7200
Costa Mesa, California 92626-1924
CONSENT OF INDEPENDENT AUDITORS
Pacific Mutual Life Insurance Company:
We hereby consent to the use in Pre-Effective Amendment No. 1 under the
Securities Act of 1933 and Amendment No. 1 under the Investment Company Act of
1940 Registration Statement No. 33-88458 of Separate Account A (for the offering
of Pacific One) on Form N-4 of our report dated February 21, 1995, related to
Pacific Mutual Life Insurance Company's Financial Statements for the year ended
December 31, 1994, which is included in the Statement of Additional Information
of such Registration Statement, and to references to us under the heading
"Financial Statements" in the Statement of Additional Information for Separate
Account A which are part of such Registration Statement.
Deloitte & Touche LLP
October 17, 1995
Deloitte Touche
Tohmatsu
International
<PAGE>
EXHIBIT 99.10(b)
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
<PAGE>
EXHIBIT 99.13
Performance Calculations
<PAGE>
PACIFIC SELECT FUND
Support Variable Annuity Separate Account "A" Prospectus -
Separate Account Performance Calculation
<TABLE>
<CAPTION>
Money Managed Gov't High Yield Growth Equity
Market Bond Securities Bond LT Income
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date: 01/04/88 01/04/88 01/04/88 01/04/88 01/04/94 01/04/88
Valuation Date: 12/31/94 12/31/94 12/31/94 12/31/94 12/31/94 12/31/94
# of Days Since Inception: 2,554 2,554 2,554 2,554 362 2,554
Initial Investment: 80,000.00 80,000.00 80,000.00 80,000.00 80,000.00 80,000.00
Annual M&E and Admin. Exp. Rate: 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
------------------------------------------------------------------------------------------
Total Return 1984 (Before Exp.)
Value At 12/31/84
Contract Fee
Value After Fee
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1985 (Before Exp.)
Value At 12/31/85
Contract Fee
Value After Fee
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1986 (Before Exp.)
Value At 12/31/86
Contract Fee
Value After Fee
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1987 (Before Exp.)
Value At 12/31/87
Contract Fee
Value After Fee
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1988 (Before Exp.) 5.85% 7.11% 6.65% 8.30% 8.25%
Value 12/31/88 83,560.00 84,568.00 84,200.00 85,520.00 85,480.00
Contract Fee 40.00 40.00 40.00 40.00 40.00
Value After Fee 83,520.00 84,528.00 84,160.00 85,480.00 85,440.00
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1989 (Before Exp.) 8.73% 14.74% 14.61% 4.16% 29.22%
Value At 12/31/89 89,642.02 95,804.04 95,277.54 87,839.25 109,209.41
Contract Fee 40.00 40.00 40.00 40.00 0.00
Value After Fee 89,602.02 95,764.04 95,237.54 87,799.25 109,209.41
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1990 (Before Exp.) 7.92% 8.52% 8.01% 0.38% -7.54%
Value At 12/31/90 95,444.07 102,582.43 101,532.74 86,903.70 99,446.09
Contract Fee 40.00 0.00 0.00 40.00 40.00
Value After Fee 95,404.07 102,582.43 101,532.74 86,863.70 99,406.09
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1991 (Before Exp.) 5.74% 17.03% 16.67% 24.58% 31.42%
Value At 12/31/91 99,544.60 118,616.07 117,036.79 106,998.70 129,247.79
Contract Fee 40.00 0.00 0.00 0.00 0.00
Value After Fee 99,504.60 118,616.07 117,036.79 106,998.70 129,247.79
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1992 (Before Exp.) 3.22% 8.68% 7.52% 18.72% 5.36%
Value At 12/31/92 101,315.59 127,251.32 124,199.44 125,530.88 134,366.01
Contract Fee 0.00 0.00 0.00 0.00 0.00
Value After Fee 101,315.59 127,251.32 124,199.44 125,530.88 134,366.01
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Bond & Multi- Equity Inter-
Equity Income Strategy Index national
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception Date: 01/01/84 01/01/84 01/04/88 01/30/91 01/04/88
Valuation Date: 12/31/94 12/31/94 12/31/94 12/31/94 12/31/94
# of Days Since Inception: 4,018 4,018 2,554 1,432 2,554
Initial Investment: 80,000.00 80,000.00 80,000.00 80,000.00 80,000.00
Annual M&E and Admin. Exp. Rate: 1.40% 1.40% 1.40% 1.40% 1.40%
------------------------------------------------------------------------------------------
Total Return 1984 (Before Exp.) 9.80% 14.76%
Value At 12/31/84 86,720.00 90,688.00
Contract Fee 40.00 40.00
Value After Fee 86,680.00 90,648.00
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1985 (Before Exp.) 30.02% 27.61%
Value At 12/31/85 111,487.82 114,406.84
Contract Fee 0.00 0.00
Value After Fee 111,487.82 114,406.84
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1986 (Before Exp.) 20.92% 21.39%
Value At 12/31/86 133,250.24 137,276.77
Contract Fee 0.00 0.00
Value After Fee 133,250.24 137,276.77
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1987 (Before Exp.) 2.18% -2.09%
Value At 12/31/87 134,289.59 132,485.81
Contract Fee 0.00 0.00
Value After Fee 134,289.59 132,485.81
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1988 (Before Exp.) 7.19% 6.37% 6.85% 17.69%
Value 12/31/88 142,064.96 139,070.35 84,360.00 93,032.00
Contract Fee 0.00 0.00 40.00 40.00
Value After Fee 142,064.96 139,070.35 84,320.00 92,992.00
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1989 (Before Exp.) 30.12% 17.04% 23.42% 20.51%
Value At 12/31/89 182,866.01 160,820.96 102,887.26 110,762.77
Contract Fee 0.00 0.00 0.00 0.00
Value After Fee 182,866.01 160,820.96 102,887.26 110,762.77
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1990 (Before Exp.) -2.55% 3.27% -1.47% -13.48%
Value At 12/31/90 175,642.80 163,828.31 99,934.40 94,281.27
Contract Fee 0.00 0.00 40.00 40.00
Value After Fee 175,642.80 163,828.31 99,894.40 94,241.27
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1991 (Before Exp.) 29.77% 24.32% 24.03% 24.88% 10.92%
Value At 12/31/91 225,472.67 201,377.76 122,500.50 98,784.00 103,213.04
Contract Fee 0.00 0.00 0.00 40.00 0.00
Value After Fee 225,472.67 201,377.76 122,500.50 98,744.00 103,213.04
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1992 (Before Exp.) 6.30% 8.09% 5.57% 6.95% -9.78%
Value At 12/31/92 236,520.83 214,849.93 127,608.77 104,224.29 91,673.82
Contract Fee 0.00 0.00 0.00 0.00 40.00
Value After Fee 236,520.83 214,849.93 127,608.77 104,224.29 91,633.82
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
PACIFIC SELECT FUND
Support Variable Annuity Separate Account "A" Prospectus -
Separate Account Performance Calculation
<TABLE>
<CAPTION>
Money Managed Gov't High Yield Growth Equity
Market Bond Securities Bond LT Income
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Return 1993 (Before Exp.) 2.58% 11.63% 10.79% 18.01% 8.29%
Value At 12/31/93 102,511.11 140,269.13 135,861.76 146,381.55 143,623.82
Contract Fee 0.00 0.00 0.00 0.00 0.00
Value After Fee 102,511.11 140,269.13 135,861.76 146,381.55 143,623.82
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1994 (Before Exp.) 3.76% -4.36% -5.10% 0.42% 13.25% -0.28%
Value At 12/31/94 104,930.37 132,189.63 127,030.75 144,947.01 89,480.00 141,210.94
Contract Fee 0.00 0.00 0.00 0.00 40.00 0.00
Value After Fee 104,930.37 132,189.63 127,030.75 144,947.01 89,440.00 141,210.94
- ---------------------------------------------------------------------------------------------------------------------------
One Year Returns 2.36% -5.76% -6.50% -0.98 11.80% -1.68%
(Less than 1 Yr)
Three Years Cumulative Returns 5.45% 11.44% 8.54% 35.47% N/A 9.26%
Annualized 1.79% 3.68% 2.77% 10.65% N/A 2.99%
Five Years Cumulative Returns 17.11% 38.04% 33.38% 65.09% N/A 29.30%
Annualized 3.21% 6.66% 5.93% 10.55% N/A 5.27%
Ten Years Cumulative Returns N/A N/A N/A N/A N/A N/A
Annualized N/A N/A N/A N/A N/A N/A
Cumulative Returns Since Inception 31.16% 65.24% 58.79% 81.18% 11.80% 76.51%
Annualized 3.95% 7.44% 6.83% 8.87% 11.90% 8.46%
<CAPTION>
Bond & Multi- Equity Inter-
Equity Income Strategy Index national
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Return 1993 (Before Exp.) 16.06% 19.39% 9.25% 9.38% 30.02%
Value At 12/31/93 271,194.78 253,501.43 137,626.06 112,541.39 117,859.42
Contract Fee 0.00 0.00 0.00 0.00 0.00
Value After Fee 271,194.78 253,501.43 137,626.06 112,541.39 117,859.42
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1994 (Before Exp.) -2.87% -8.36% -1.50% 1.05% 3.01%
Value At 12/31/94 259,614.77 228,759.69 133,634.91 112,147.50 119,756.96
Contract Fee 0.00 0.00 0.00 0.00 0.00
Value After Fee 259,614.77 228,759.69 133,634.91 112,147.50 119,756.96
- ---------------------------------------------------------------------------------------------------------------------------
One Year Returns -4.27% -9.76% -2.90% -0.35% 1.61%
Three Years Cumulative Returns 15.14% 13.60% 9.09% 13.57% 16.03%
Annualized 4.81% 4.34% 2.94% 4.33% 5.08%
Five Years Cumulative Returns 41.97% 42.24% 29.88% N/A 8.12%
Annualized 7.26% 7.30% 5.37% N/A 1.57%
Ten Years Cumulative Returns 199.51% 152.36% N/A N/A N/A
Annualized 11.59% 9.70% N/A N/A N/A
Cumulative Returns Since Inception 224.52% 185.95% 67.04% 40.18% 49.70%
Annualized 11.29% 10.01% 7.61% 8.99% 5.94%
</TABLE>
Remark: First year information is for the period from the inception date
(commencement of operations) to the end of that year (December 31).
2
<PAGE>
PACIFIC SELECT FUND
Support Variable Annuity Separate Account "A" Prospectus - Various Benchmark
Performance Calculations
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
----------- ------------ ------------ -------------
A. Annualized Rates of Return for
Periods Ended December 31, 1994:
<S> <C> <C> <C> <C>
Donoghue MF 3.76% 3.37% 5.11% N/A
EAFE 7.80% 7.86% 1.50% 17.54%
First Boston -0.97% 11.16% 13.08% N/A
LBG/Bond -3.37% 4.66% 7.53% N/A
LBG/C Bond -3.51% 4.85% 7.70% 9.84%
Russell 2500 -1.05% 10.22% 10.86% N/A
S&P 500 1.27% 6.23% 8.66% 14.37%
<CAPTION>
B. Cumulative Rates of Return for
Periods Ended December 31, 1994:
(Computed based on the formula below)
<S> <C> <C> <C> <C>
Donoghue MF 3.76% 10.45% 28.30% N/A
EAFE 7.80% 25.48% 7.73% 403.33%
First Boston -0.97% 37.36% 84.90% N/A
LBG/Bond -3.37% 14.64% 43.76% N/A
LBG/C Bond -3.51% 15.27% 44.90% 155.63%
Russell 2500 -1.05% 33.90% 67.45% N/A
S&P 500 1.27% 19.88% 51.48% 282.93%
</TABLE>
- ---------------------------
FORMULA FOR CALCULATING
-----------------------
CUMULATIVE RATES
----------------
A=Annualized Return
C=Cumulative Return
Y=# of Years
A=[(C+1) circumflex (1/Y)]-1
A+1=(C+1) circumflex (1/Y)
(A+1) circumflex Y=C+1
C=[(A+1) circumflex Y]-1
- ---------------------------
1
<PAGE>
<TABLE>
<CAPTION>
Support Variable Annuity - Separate Account "A" SEC Filing
A. Annualized Rates of Return for Periods Ended December 31, 1994
- -----------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years Since Inception
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market 2.36% 1.79% 3.21% N/A 3.95%
- -----------------------------------------------------------------------------------------------------
Managed Bond -5.76% 3.68% 6.66% N/A 7.44%
- -----------------------------------------------------------------------------------------------------
Government Securities -6.50% 2.77% 5.93% N/A 6.83%
- -----------------------------------------------------------------------------------------------------
High Yield Bond -0.98% 10.65% 10.55% N/A 8.87%
- -----------------------------------------------------------------------------------------------------
Growth LT 11.90% N/A N/A N/A 11.90%
- -----------------------------------------------------------------------------------------------------
Equity Income -1.68% 2.99% 5.27% N/A 8.46%
- -----------------------------------------------------------------------------------------------------
Equity -4.27% 4.81% 7.26% 11.59% 11.29%
- -----------------------------------------------------------------------------------------------------
Bond & Income -9.76% 4.34% 7.30% 9.70% 10.01%
- -----------------------------------------------------------------------------------------------------
Multi-Strategy -2.90% 2.94% 5.37% N/A 7.61%
- -----------------------------------------------------------------------------------------------------
Equity Index -0.35% 4.33% N/A N/A 8.99%
- -----------------------------------------------------------------------------------------------------
International 1.61% 5.08% 1.57% N/A 5.94%
Donoghue MF 3.76% 3.37% 5.11% N/A N/A
- -----------------------------------------------------------------------------------------------------
EAFE 7.80% 7.86% 1.50% 17.54% N/A
- -----------------------------------------------------------------------------------------------------
First Boston -0.97% 11.16% 13.08% N/A N/A
- -----------------------------------------------------------------------------------------------------
LBG/Bond -3.37% 4.66% 7.53% N/A N/A
- -----------------------------------------------------------------------------------------------------
LBG/C Bond -3.51% 4.85% 7.70% 9.84% N/A
- -----------------------------------------------------------------------------------------------------
Russell 2500 -1.05% 10.22% 10.86% N/A N/A
- -----------------------------------------------------------------------------------------------------
S&P 500 1.27% 6.23% 8.66% 14.37% N/A
</TABLE>
B. Cummulative Rates of Return for Periods Ended December 31, 1994
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years Since Inception
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market 2.36% 5.45% 17.11% N/A 31.16%
- -----------------------------------------------------------------------------------------------------
Managed Bond -5.76% 11.44% 38.04% N/A 65.24%
- -----------------------------------------------------------------------------------------------------
Government Securities -6.50% 8.54% 33.38% N/A 58.79%
- -----------------------------------------------------------------------------------------------------
High Yield Bond -0.98% 35.47% 65.09% N/A 81.18%
- -----------------------------------------------------------------------------------------------------
Growth LT (1) 11.80% N/A N/A N/A 11.80%
- -----------------------------------------------------------------------------------------------------
Equity Income -1.68% 9.26% 29.30% N/A 76.51%
- -----------------------------------------------------------------------------------------------------
Equity -4.27% 15.14% 41.97% 199.51% 224.52%
- -----------------------------------------------------------------------------------------------------
Bond & Income -9.76% 13.60% 42.24% 152.36% 185.95%
- -----------------------------------------------------------------------------------------------------
Multi-Strategy -2.90% 9.09% 29.88% N/A 67.04%
- -----------------------------------------------------------------------------------------------------
Equity Index -0.35% 13.57% N/A N/A 40.18%
- -----------------------------------------------------------------------------------------------------
International 1.61% 16.03% 8.12% N/A 49.70%
Donoghue MF 3.76% 10.45% 28.30% N/A N/A
- -----------------------------------------------------------------------------------------------------
EAFE 7.80% 25.48% 7.73% 403.33% N/A
- -----------------------------------------------------------------------------------------------------
First Boston -0.97% 37.36% 84.90% N/A N/A
- -----------------------------------------------------------------------------------------------------
LBG/Bond -3.37% 14.64% 43.76% N/A N/A
- -----------------------------------------------------------------------------------------------------
LBG/C Bond -3.51% 15.27% 44.90% 155.63% N/A
- -----------------------------------------------------------------------------------------------------
Russell 2500 -1.05% 33.90% 67.45% N/A N/A
- -----------------------------------------------------------------------------------------------------
S&P 500 1.27% 19.88% 51.48% 282.93% N/A
</TABLE>
(1) Cumulative return is for the period from January 4, 1994
(commencement of operations) to December 31, 1994.
<PAGE>
PACIFIC CORINTHIAN VARIABLE FUND
Total Return Year to Date
Bond and Income Series
- ----------------------
<TABLE>
<CAPTION>
($) Total Share Total Shares Total
Date Div/Share NAV/Sh Div Rec'd Rec'd Owned Value
<S> <C> <C> <C> <C> <C> <C>
12/31/93 13.046607 1.000 1.000 $13.05
01/31/94 0.0710954 13.317657 0.07 0.005 1.005 $13.39
02/28/94 0.6745144 12.129527 0.68 0.056 1.061 $12.87
03/31/94 0.0690597 11.537376 0.07 0.006 1.068 $12.32
04/30/94 0.0658098 11.232058 0.07 0.006 1.074 $12.06
05/31/94 0.0708977 11.033858 0.08 0.007 1.081 $11.92
06/30/94 0.0694475 10.917000 0.08 0.007 1.088 $11.87
07/31/94 0.0694012 11.220469 0.08 0.007 1.094 $12.28
08/31/94 0.0699320 11.059854 0.08 0.007 1.101 $12.18
09/30/94 0.0700774 10.610582 0.08 0.007 1.109 $11.76
10/31/94 0.0705241 10.513299 0.08 0.007 1.116 $11.73
11/30/94 0.0706726 10.476844 0.08 0.008 1.124 $11.77
12/31/94 0.2174179 10.423590 0.24 0.023 1.147 $11.96
Total Value of a share @ 12/30/94 $11.96
</TABLE>
Year to Date TR (11.96-13.05)/13.05 -8.36%
Equity
- ------
<TABLE>
<CAPTION>
($) Total Share Total Shares Total
Date Div/Share NAV/Sh Div Rec'd Rec'd Owned Value
<S> <C> <C> <C> <C> <C> <C>
12/31/93 14.941376 1.000 $14.94
01/31/94 0.0012806 15.599130 0.00 0.000 1.000 $15.60
02/28/94 0.1743659 15.288211 0.17 0.011 1.011 $15.46
03/31/94 0.0034810 14.571105 0.00 0.000 1.012 $14.74
04/30/94 0.0028695 14.629531 0.00 0.000 1.012 $14.80
05/31/94 0.0215172 14.736860 0.02 0.001 1.013 $14.93
06/30/94 0.0132887 14.109000 0.01 0.001 1.014 $14.31
07/31/94 0.0052127 14.209388 0.01 0.000 1.015 $14.42
08/31/94 0.0341456 14.873153 0.03 0.002 1.017 $15.13
09/30/94 0.0125200 14.270171 0.01 0.001 1.018 $14.53
10/31/94 0.0019013 14.778154 0.00 0.000 1.018 $15.05
11/30/94 0.0525285 14.293964 0.05 0.004 1.022 $14.61
12/31/94 14.202413 0.00 0.000 1.022 $14.51
Total Value of a share @ 12/30/94 $14.51
</TABLE>
Year to Date TR (14.51-14.94)/14.94 -2.87%
