<PAGE>
As filed with the Securities and Exchange Commission on April 19, 1996
Registration No. 33-88460
811-8946
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
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. James B. Kimmel, Esq.
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
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 has previously registered an indefinite number or amount of
separate account units.
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.
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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 ALLOCATED --Transfers;
CHARGES, FEES AND DEDUCTIONS;
WITHDRAWALS -- Optional Withdrawal
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
ALLOCATED; RETIREMENT BENEFITS AND
OTHER PAYOUTS -- Choosing Your
Annuity Option, -- Your Annuity
Payments, -- Death Benefits;
ADDITIONAL INFORMATION -- Voting
Rights, -- Changes to Your Contract,
-- Changes to ALL Contracts, --
Inquiries and Submitting Forms
and Requests, -- Timing of
Payments and Transactions
8. Annuity Period RETIREMENT BENEFITS AND OTHER PAYOUTS
9. Death Benefit RETIREMENT BENEFITS AND OTHER PAYOUTS
-- Death Benefits --Mandatory
Distribution on Death
10. Purchases and Contract Value SUMMARY - How Do I Purchase a
Contract; PURCHASING YOUR CONTRACT;
HOW YOUR PAYMENTS ARE ALLOCATED;
PACIFIC MUTUAL AND THE SEPARATE
ACCOUNT -- Pacific Mutual; THE
GENERAL ACCOUNT -- Withdrawals and
Transfers
11. Redemptions SUMMARY -- Can I Withdraw My
Contract Value?, -- Can I Return My
Contract?; CHARGES, FEES AND
DEDUCTIONS; WITHDRAWALS; ADDITIONAL
INFORMATION -- Timing of Payments and
Transactions; THE GENERAL ACCOUNT --
Withdrawals and Transfers
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 Mutual Distributors, Inc.
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>
[PASTE-UP LOGO]
PROSPECTUS
FOR
PACIFIC PORTFOLIOS
ISSUED BY
PACIFIC MUTUAL LIFE INSURANCE COMPANY
DATED , 1996
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PROSPECTUS
FOR
PACIFIC SELECT FUND
DATED APRIL 1, 1996
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PACIFIC PORTFOLIOS
AN INDIVIDUAL FLEXIBLE PREMIUM DEFERRED
VARIABLE ANNUITY CONTRACT
ISSUED BY PACIFIC MUTUAL LIFE INSURANCE
COMPANY
MAILING ADDRESS: P.O. BOX 7187
[logo] PASADENA, CALIFORNIA 91109-7187
1-800-722-2333
This Prospectus describes Pacific Portfolios (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 through Pacific Mutual's General
Account.
Thirteen Variable Investment Options are currently available; each 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
Aggressive Equity Portfolio International Portfolio
Growth LT Portfolio Emerging Markets Portfolio
Equity Income Portfolio
In addition, the following Options each provide a fixed rate of return and
are funded through Pacific Mutual's General Account:
Fixed Option
Guaranteed Interest Options with the following Guarantee
Terms:
Three-Year
Six-Year
Ten-Year
THIS PROSPECTUS PROVIDES INFORMATION THAT YOU SHOULD KNOW BEFORE PURCHASING 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 ("SAI"), dated , 1996. You may obtain a free copy of the SAI by
writing or calling Pacific Mutual. The information contained in the SAI is
incorporated by reference into this Prospectus. The table of contents for the
SAI appears on page 39 of this Prospectus.
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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 SAI (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:
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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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 and GIOs............................................... 12
PURCHASING YOUR CONTRACT................................................... 12
How to Apply for Your Contract........................................... 12
Making Your Purchase Payments............................................ 13
HOW YOUR PAYMENTS ARE ALLOCATED............................................ 13
Choosing Your Investment Options......................................... 13
Investing in Variable Investment Options................................. 13
When Your Investment is Effective........................................ 14
Transfers................................................................ 14
CHARGES, FEES AND DEDUCTIONS............................................... 15
Withdrawal Charge........................................................ 15
Premium Taxes............................................................ 16
Annual Fee............................................................... 17
Waivers and Reduced Charges.............................................. 17
Mortality and Expense Risk Charge........................................ 17
Administrative Fee....................................................... 18
Expenses of the Fund..................................................... 18
RETIREMENT BENEFITS AND OTHER PAYOUTS...................................... 18
Selecting Your Annuitant................................................. 18
Annuitization............................................................ 18
Choosing Your Annuity Date ("Annuity Start Date")........................ 19
Default Annuity Date and Options......................................... 19
Choosing Your Annuity Option............................................. 20
Your Annuity Payments.................................................... 21
Death Benefits........................................................... 21
WITHDRAWALS................................................................ 23
Optional Withdrawals..................................................... 23
Tax Consequences of Withdrawals.......................................... 25
Short-Term Cancellation Right ("Free Look").............................. 25
PACIFIC MUTUAL AND THE SEPARATE ACCOUNT.................................... 25
Pacific Mutual........................................................... 25
Separate Account A....................................................... 26
FEDERAL TAX STATUS......................................................... 26
Taxes Payable by Contract Owners: General Rules.......................... 27
Qualified Contracts...................................................... 28
Loans.................................................................... 29
</TABLE>
2
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Withholding.............................................................. 31
Impact of Federal Income Taxes........................................... 31
Taxes on Pacific Mutual.................................................. 32
ADDITIONAL INFORMATION..................................................... 32
Voting Rights............................................................ 32
Changes to Your Contract................................................. 32
Changes to ALL Contracts................................................. 33
Inquiries and Submitting Forms and Requests.............................. 34
Telephone Transactions................................................... 34
Timing of Payments and Transactions...................................... 35
Confirmations Statements and Other Reports to Contract Owners............ 35
Financial Statements..................................................... 36
THE GENERAL ACCOUNT........................................................ 36
General Information...................................................... 36
Guarantee Terms.......................................................... 36
Withdrawals and Transfers................................................ 37
CONTENTS OF THE SAI........................................................ 39
APPENDIX A: STATE LAW VARIATIONS........................................... 40
APPENDIX B: MARKET VALUE ADJUSTMENT........................................ 41
</TABLE>
3
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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
Variable Investment Option, the Fixed Option or to a GIO.
Annual Fee--A $40 fee charged each year on your Contract Anniversary and at
the time of a full withdrawal, if your Net Contract Value is less than $50,000
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 ("Annuity Start Date")--The date specified in your Contract, or
the date you later elect, if any, for the start of annuity payments if the
Annuitant (or Joint Annuitants) is (or are) still living and your Contract is
in force; or if earlier, the date that annuity payments actually begin.
Annuity Option--Any one of the income options available for 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, if the Annuitant dies after the Annuity Date.
Business Day--Any day on which the value of an amount invested in a Variable
Investment Option is determined, which currently includes each day that the
New York Stock Exchange is open for trading and on which our administrative
offices are open. The New York Stock Exchange is closed on weekends and on the
following holidays: New Year's Day, President's Day, Good Friday, Memorial
Day, July Fourth, Labor Day, Thanksgiving Day and Christmas Day. We may choose
to close on other holidays, a day immediately preceding or following a
national holiday, or in emergency situations. 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 SAI.
Each Business Day ends at 4:00 p.m. Eastern time or at the close of the New
York Stock Exchange, if earlier.
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 will succeed to the
rights as 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
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Contract Owner--Generally, a person who purchases a Contract and makes the
Purchase Payments. A Contract Owner has all rights in the Contract, 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--As of the end of any Business Day, the sum of your Variable
Account Value, Fixed Option Value, GIO Value and the Loan Account Value.
Contract Year--A year that starts on the Contract Date or on a Contract
Anniversary.
Earnings--As of the end of any Business Day, your Earnings equal your Contract
Value less your aggregate Purchase Payments which are reduced by withdrawals
of prior Purchase Payments.
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 our General
Account and receive interest at rates declared periodically, but not less than
an annual rate of 3%.
Fixed Option Value--The aggregate amount of your Contract Value allocated to
the Fixed Option.
Fund--Pacific Select Fund.
General Account--Our 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 at the time of
allocation for the Guarantee Term on amounts allocated to the Fixed Option or
a Guaranteed Interest Option. All Guaranteed Interest Rates are expressed as
annual rates and interest is accrued daily. The rate will not be less than an
annual rate of 3%.
Guaranteed Interest Option ("GIO")--If you allocate all or part of your
Purchase Payments or Contract Value to one or more GIOs, such amounts are
subject to a particular Guaranteed Interest Rate for the Guarantee Term
selected. GIO amounts are held in our General Account and are subject to a
Market Value Adjustment if annuitized, withdrawn or transferred prior to the
end of the Guarantee Term. Each new allocation will receive the Guaranteed
Interest Rate then applicable to new allocations for the selected Guarantee
Term.
GIO Value--The aggregate amount of your Contract Value allocated to all GIOs.
Guarantee Term--The period during which an amount you allocate to the Fixed
Option or to a GIO earns a Guaranteed Interest Rate. These terms are up to
one-year for the Fixed Option and three-, six- and ten-years for the GIOs.
GIO Term Value--The aggregate amount under your Contract allocated to all GIOs
that have the same length Guarantee Term. The GIO Term Value is based on the
original Guarantee Term, not the time remaining in the Guarantee Term. The GIO
Term Value is used in determining which GIOs will be accessed when you make a
withdrawal or transfer.
Investment Option--A Variable Account, the Fixed Option or a GIO offered under
the Contract.
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.
Loan Account Value--The amount transferred from your Investment Options to the
General Account to secure a Contract Loan, increased by interest earned and
decreased by any principal repayments and/or withdrawals or transfers of
interest earned.
Market Value Adjustment ("MVA")--The adjustment made to any amount annuitized,
transferred or withdrawn from a GIO prior to the end of its Guarantee Term.
This adjustment reflects the impact of changes in applicable interest rates
between the time the Purchase Payment(s) and/or Contract Value is allocated to
a specific GIO and the time of the annuitization, withdrawal or transfer.
5
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Net Contract Value--Your Contract Value less Contract Debt.
Non-Qualified Contract--A Contract other than a Qualified Contract.
Portfolio--A separate portfolio of the Fund.
Primary Annuitant--The individual that is named in your Contract, the events
in the life of whom are of primary importance in affecting the timing or
amount of annuity payments under the Contract.
Purchase Payment--An amount paid to us 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, 403, 408 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.
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, is
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 Account Value in that Subaccount. The value of Subaccount Units is
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
SAI. 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
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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 SAI, and in the Contract itself. Endorsements to your
Contract may contain variations from the standardized information in this
Prospectus. In addition, certain variations due to requirements particular to
the issue 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 Portfolios (the "Contract") is an annuity
contract 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? Your initial purchase payment must be at least
$5,000 to buy a Non-Qualified Contract ($2,000 for a Qualified Contract). After
this initial payment you may make additional payments but you are not required
to do so. Your initial payment 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.
Thirteen of the Investment Options are Variable Investment Options available
through Separate Account A. Each Variable Investment Option invests in a
corresponding Portfolio of the Fund. We are the investment adviser to the Fund,
and we and the Fund have retained other portfolio managers for eleven of the
Portfolios. You bear the investment risk associated with the Variable
Investment Options, and you should expect your Contract Value allocated to
these Variable Investment Options and the value of any Subaccount Annuity Units
attributed to any variable annuity payments to fluctuate. See HOW YOUR PAYMENTS
ARE ALLOCATED.
Also available are a Fixed Option and the Guaranteed Interest Option with
Guarantee Terms of three-, six- and ten-years. Each of these options provides a
fixed annual interest rate of at least 3%; the portion of your Purchase
Payments or Contract Value allocated to the Fixed Option or the GIOs is held in
our General Account. You may select as many Investment Options as you wish up
to the Annuity Date. After the Annuity Date, the Variable Investment Options
may be selected if you choose variable annuity payments.
CAN I CHANGE MY INVESTMENT OPTIONS? You may transfer amounts from any
Investment Option to another 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. Certain restrictions apply to the Fixed Option and
GIOs. You may transfer amounts automatically using dollar cost averaging,
automatic portfolio rebalancing, or an earnings sweep. Transaction fees may be
imposed in the future for excessive transfers. See HOW YOUR PAYMENTS ARE
ALLOCATED--TRANSFERS and THE GENERAL ACCOUNT--WITHDRAWALS AND TRANSFERS in this
Prospectus and THE CONTRACTS AND THE SEPARATE ACCOUNT--SYSTEMATIC TRANSFER
PROGRAMS in the SAI.
WHAT CHARGES WILL I PAY? An Administrative Fee equal to an annual factor
expressed as a decimal (where 1.00 is equal to 100%) of 0.0015, and a mortality
and expense risk charge ("Risk Charge") equal to an annual factor 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 is charged each year and at the time of a full
withdrawal if your Net Contract Value is less than $50,000. When you withdraw
amounts attributed to Purchase Payments from your Contract Value, you may be
subject to a contingent deferred sales charge (or "withdrawal charge") of up to
7%, which is determined by the amount of your withdrawal and the length of time
you held the Purchase Payment considered withdrawn under your Contract. You may
also be subject to other fees. See CHARGES, FEES AND DEDUCTIONS.
7
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CAN I WITHDRAW MY CONTRACT VALUE? Generally, you may withdraw all or part of
your Contract Value at any time on or prior to your Annuity Date. Certain
restrictions are imposed on withdrawals from the Fixed Option, the GIOs and
certain Qualified Contracts. In addition, amounts you withdraw from a GIO are
subject to the Market Value Adjustment ("MVA"). Withdrawals may be subject to
fees and charges, taxation and, in certain circumstances, a tax penalty. See
WITHDRAWALS, FEDERAL TAX STATUS and THE GENERAL ACCOUNT--WITHDRAWALS AND
TRANSFERS.
CAN I RETURN MY CONTRACT? For a limited time, usually 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 WITHDRAWALS--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 ADDITIONAL INFORMATION--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 the Fund. In addition to the charges and expenses described below,
a charge for premium taxes and/or other taxes may apply. See CHARGES, FEES AND
DEDUCTIONS--PREMIUM TAXES in this Prospectus, the discussion under ORGANIZATION
AND MANAGEMENT OF THE FUND in the Fund's Prospectus, and INVESTMENT ADVISER and
PORTFOLIO MANAGEMENT AGREEMENTS in the Fund's SAI.
<TABLE>
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CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchase Payments........................ None
Maximum Withdrawal Charge/1/ .................................... 7.0%
(computed as a percentage of Purchase Payments)
Withdrawal Transaction Fee/2/.................................... None
Transfer Fee/3/.................................................. None
ANNUAL FEE/4/.................................................... $40.00
SEPARATE ACCOUNT A ANNUAL EXPENSES
(as a percentage of average daily account value)
Mortality and Expense Risk Charge................................ 1.25%
Administrative Fee............................................... 0.15%
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Total Separate Account A Annual Expenses......................... 1.40%
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/1/ The withdrawal charge, also called a "contingent deferred sales charge," may
not apply or may be reduced under certain circumstances. See CHARGES, FEES
AND DEDUCTIONS.
/2/ We reserve the right to impose a transaction fee in the future of up to $15
per withdrawal on partial withdrawals in excess of 15 in any Contract Year.
See WITHDRAWALS--OPTIONAL WITHDRAWALS.
/3/ We reserve the right to impose a transaction fee in the future of up to $15
per transfer on transfers in excess of 15 in any Contract Year. See HOW YOUR
PAYMENTS ARE ALLOCATED--TRANSFERS.
/4/ 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
Net Contract Value is at least $50,000 on that date.
8
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PACIFIC SELECT FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS)
<TABLE>
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OTHER EXPENSES
ADVISORY (AFTER TOTAL
FEE REIMBURSEMENTS) EXPENSES
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Money Market.................................. .40% .13% .53%
High Yield Bond............................... .60% .17% .77%
Managed Bond.................................. .60% .16% .76%
Government Securities......................... .60% .22% .82%
Aggressive Equity............................. .80% .19% .99%
Growth LT..................................... .75% .19% .94%
Equity Income................................. .65% .18% .83%
Multi-Strategy................................ .65% .19% .84%
Equity........................................ .65% .15% .80%
Bond and Income............................... .60% .20% .80%
Equity Index.................................. .25% .17% .42%
International................................. .85% .27% 1.12%
Emerging Markets.............................. 1.10% .25% 1.35%
</TABLE>
Example: If, at the end of the indicated time period, you withdraw your
entire Variable Account Value or your entire Contract Value, 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..................................................... $84 $118
High Yield Bond.................................................. $86 $125
Managed Bond..................................................... $86 $125
Government Securities............................................ $87 $126
Aggressive Equity................................................ $89 $133
Growth LT........................................................ $88 $130
Equity Income.................................................... $87 $127
Multi-Strategy................................................... $87 $127
Equity........................................................... $86 $126
Bond and Income.................................................. $86 $126
Equity Index..................................................... $82 $114
International.................................................... $93 $144
Emerging Markets................................................. $92 $142
</TABLE>
Example: If, at the end of the indicated time period, you neither withdraw
your entire Variable Account Value nor your entire Contract Value, whether
you annuitize or not, 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..................................................... $21 $64
High Yield Bond.................................................. $23 $71
Managed Bond..................................................... $23 $71
Government Securities............................................ $24 $72
Aggressive Equity................................................ $26 $79
Growth LT........................................................ $25 $76
Equity Income.................................................... $24 $73
Multi-Strategy................................................... $24 $73
Equity........................................................... $23 $72
Bond and Income.................................................. $23 $72
Equity Index..................................................... $19 $60
International.................................................... $30 $90
Emerging Markets................................................. $29 $88
</TABLE>
9
<PAGE>
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 Fund Portfolios
reflect expenses for the year ending December 31, 1995. The Aggressive Equity
and Emerging Markets Portfolios did not begin operations until April 1, 1996
and their estimated "other expenses" reflect the policy, adopted by us as
Investment Adviser to the Fund, to waive our fees and reimburse expenses so
that operating expenses (exclusive of advisory fees, additional custodial fees
associated with holding foreign securities, foreign taxes on dividends,
interest or capital gains, and extraordinary expenses) expressed as a decimal
(where 1.00 is equal to 100%) are no greater than 0.0025 of average daily net
assets per year. We began this policy in 1989 and intend to continue this
policy until at least December 31, 1997, but may discontinue it after that
time. In the absence of this policy, it is estimated that such expenses for
the Emerging Markets Portfolio would exceed this expense cap in 1996. No
reimbursement to the Portfolios was necessary for the Fund's fiscal year 1995.
The Annual Fee is reflected in the examples, using an assumed Contract Value
of $40,000. No Annual Fee is deducted from annuitized amounts or if your Net
Contract Value is at least $50,000.
WHY BUY A CONTRACT
Your Pacific Portfolios Contract (your "Contract") is an annuity contract that
provides you with flexibility in tax-deferred retirement planning or other
long-term financial planning. You may select among thirteen Variable
Investment Options, one Fixed Option, and the Guaranteed Interest Option with
three different Guarantee Terms. You may choose to add to your Contract Value
at any time before the Annuity Date, and your additional Purchase Payments 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 number of years.
If you purchase a Contract with after-tax dollars ("Non-Qualified Contract")
or if your Contract is purchased through a Qualified Plan or IRA ("Qualified
Contract"), your earnings on the Contract are not subject to tax until amounts
are withdrawn or distributed (including annuity payments). See FEDERAL TAX
STATUS.
YOUR INVESTMENT OPTIONS
You may choose among thirteen different Variable Investment Options, the Fixed
Option and among the three Guarantee Terms under the Guaranteed Interest
Option.
YOUR VARIABLE INVESTMENT OPTIONS
Separate Account A, a separate account of Pacific Mutual, currently offers you
thirteen "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
. Aggressive Equity Subaccount
. Growth LT Subaccount
. Equity Income Subaccount
. Multi-Strategy Subaccount
. Equity Subaccount
. Bond and Income Subaccount
. Equity Index Subaccount
. International Subaccount
. Emerging Markets Subaccount
10
<PAGE>
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. Will
management. normally maintain an
average portfolio
duration of 3-7 years.
- ------------------------------------------------------------------------------------------
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). Will
normally maintain an
average portfolio
duration of 3-7 years.
- ------------------------------------------------------------------------------------------
Aggressive Equity Capital appreciation. Stocks of small- and Columbus Circle
medium-sized Investors
companies.
- ------------------------------------------------------------------------------------------
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
into or exchangeable
for common stocks.
- ------------------------------------------------------------------------------------------
Bond and Income High level of current Investment grade debt Greenwich Street
income consistent with securities. Advisors
prudent investment
management and
preservation of
capital.
- ------------------------------------------------------------------------------------------
Equity Index Investment results Stocks included in the Bankers Trust Company
that correspond to the Standard & Poor's 500
total return Composite Stock Price
performance of common Index (the "S&P 500").
stocks publicly traded
in the U.S.
- ------------------------------------------------------------------------------------------
International Long-term capital Equity securities of Templeton Investment
appreciation. corporations domiciled Counsel, Inc.
outside the U.S.
- ------------------------------------------------------------------------------------------
Emerging Markets Long-term growth of Common stocks of Blairlogie Capital
capital. companies domiciled in Management
emerging market
countries.
- ------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
The Investment Adviser
We are the investment adviser for the Fund. Pacific Mutual and the Fund have
retained other portfolio managers, supervised by Pacific Mutual, for eleven 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 for each Subaccount, current and
effective yields for the Money Market Subaccount, and yields for the other
fixed income 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 withdrawal
charges, Annual Fees or any charge for premium and/or other taxes; data that
do not reflect these charges may show more favorable performance.
The SAI 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 SAI 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.
YOUR FIXED OPTION AND GIOS
The Fixed Option and the GIOs offer you a guaranteed minimum interest rate on
the amounts you allocate to these Options. Amounts you allocate to these
Options, and your earnings credited are held in Pacific Mutual's General
Account. The GIOs are available in three-, six-, and ten-year terms. If you
annuitize, transfer or withdraw amounts allocated to a GIO before its
Guarantee Term has expired, these amounts are adjusted by the MVA. For more
detailed information about these Options, see THE GENERAL ACCOUNT 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, we will issue your
Contract within 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.
You may also 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. The maximum age of a Contract Owner, including Joint
and Contingent Owners, for which a Contract will be issued is 85. The Contract
Owner's age is calculated as of his or her attained birthday.
12
<PAGE>
MAKING YOUR PURCHASE PAYMENTS
Making Your Initial Payment
Your initial Purchase Payment must be at least $5,000 if you are buying a Non-
Qualified Contract, and at least $2,000 if you are buying a Qualified
Contract. 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 $400 per month for
Non-Qualified Contracts, and at least $150 per month for Qualified Contracts).
If you choose PAC, you must make your first installment payment when you
submit your application. Further requirements for 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 $250 for Non-Qualified Contracts
and $50 for Qualified Contracts.
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 payment of
any withdrawal proceeds and any refund during your "free look" period may be
delayed until your check has cleared.
HOW YOUR PAYMENTS ARE ALLOCATED
CHOOSING YOUR INVESTMENT OPTIONS
You may allocate your Purchase Payments among the thirteen Subaccounts, the
Fixed Option and the GIOs. 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 WITHDRAWALS--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.
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 $600 to the Government Securities Subaccount. At the
end of the Business Day on which your allocation is effective, the value of
one Unit in the Government Securities Subaccount is $15. As a result, 40
Subaccount Units are credited to your Contract for your $600.
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.
13
<PAGE>
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 SAI contains a detailed discussion of these
calculations.
WHEN YOUR INVESTMENT IS EFFECTIVE
The day your allocation 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 allocation is effective on the day we receive your
Purchase Payment in proper form.
TRANSFERS
Once your payments are allocated to the Investment Options you selected, you
may transfer your Contract Value less Loan Account Value from any Investment
Option to any other. Certain restrictions apply to the Fixed Option and GIOs.
See THE GENERAL ACCOUNT--WITHDRAWALS AND TRANSFERS. Transfer requests are
normally effective on the Business Day we receive them in proper form. If your
Contract was issued in a state that requires refund of Purchase Payments under
your Free Look Right, transfers may only be made after your Free Look Transfer
Date. See WITHDRAWALS--SHORT-TERM CANCELLATION RIGHT ("FREE LOOK").
No transfer fee 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 per transfer may apply to transfers in excess
of 15 in any Contract Year. Transfers under the dollar cost averaging and
earnings sweep options are counted toward your total transfers in a Contract
Year. Any such fee would be charged against your Investment Options
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 the 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 Annuity Units in any Subaccount(s) to any other Subaccount(s)
after annuitization are limited to four in any twelve-month period. See THE
GENERAL ACCOUNT--WITHDRAWALS AND TRANSFERS and THE CONTRACTS AND THE SEPARATE
ACCOUNT in the SAI.
Dollar Cost Averaging
Dollar cost averaging is a method in which you buy securities in a series of
regular purchases instead of in a single purchase. This allows you to average
the securities' prices over time, and may permit a "smoothing" of abrupt peaks
and drops in price. Prior to your Annuity Date, you may use dollar cost
averaging to transfer
14
<PAGE>
amounts, over time, from any Variable Investment Option or the Fixed Option
with an Account Value of at least $5,000 to one or more other Investment
Options. Each transfer must be for at least $250. The GIOs are not available
for dollar cost averaging. Detailed information appears in the SAI.
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 values in the
elected Subaccounts 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 and the GIOs
are not available for rebalancing. Detailed information appears in the SAI.
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 SAI.
CHARGES, FEES AND DEDUCTIONS
WITHDRAWAL CHARGE
No sales charge is imposed on any Purchase Payment. Your Purchase Payments
may, however, be subject to a withdrawal charge; this charge may apply to
amounts you withdraw under your Contract, depending on the length of time each
Purchase Payment has been invested and on the amount you withdraw. No
withdrawal charge is imposed on (i) amounts annuitized after the first
Contract Year, (ii) payments of death benefits, (iii) withdrawals by Contract
Owners to meet the minimum distribution rules for Qualified Contracts as they
apply to amounts held under the Contract, or, (iv) subject to medical evidence
satisfactory to us, after the first Contract Anniversary, full or partial
withdrawals if the Annuitant has been diagnosed with a medically determinable
condition that results in a life expectancy of twelve (12) months or less.
Free Withdrawals
We will not impose a withdrawal charge on withdrawals of your Earnings, or on
withdrawals of amounts held under your Contract for at least six Contract
Years. In addition, we will not impose a withdrawal charge on your withdrawal
of up to 10% of your remaining Purchase Payments that would otherwise be
subject to the withdrawal charge. Our calculations of the withdrawal charge
deduct this "free 10%" from your "oldest" Purchase Payment that is still
otherwise subject to the charge.
Example: You make an initial Purchase Payment of $10,000 in Contract Year
1, and make additional Purchase Payments of $1,000 and $6,000 in Contract
Year 2. With Earnings, your Contract Value in Contract Year 3 is $19,000.
In Contract Year 3, you may withdraw $3,700 free of the withdrawal charges
(your total Purchase Payments were $17,000, so 10% of that total equals
$1,700, plus you had $2,000 of Earnings). After this withdrawal, your
Contract Value is $15,300 (all attributable to Purchase Payments). In
Contract Year 4, your Contract Value falls to $12,500; you may withdraw
$1,530 (10% of $15,300) free of any withdrawal charges.
15
<PAGE>
How the Charge is Determined
The amount of the charge depends on how long each Purchase Payment was held
under your Contract. Each Purchase Payment you make is considered to have a
certain "age," depending on the length of time since that payment was
effective. A payment is "one year old" or has an "age of one" from the day it
is effective until your next Contract Anniversary; beginning on that Contract
Anniversary, your payment will have an "age of two" for a full Contract Year.
When you withdraw an amount subject to the withdrawal charge, the "age" of the
Purchase Payment you withdraw determines the level of withdrawal charge as
follows:
<TABLE>
<CAPTION>
"AGE" OF PAYMENT WITHDRAWAL
IN YEARS CHARGE
---------------- ----------
<S> <C>
1........................................................ 7%
2........................................................ 7%
3........................................................ 6%
4........................................................ 5%
5........................................................ 3%
6........................................................ 1%
7 or more................................................ 0%
</TABLE>
We calculate your withdrawal charge by assuming that your Earnings are
withdrawn first, followed by amounts attributed to Purchase Payments with the
"oldest" Payment withdrawn first. The withdrawal charge will be deducted
proportionally among all Investment Options from which the withdrawal occurs.
Any applicable Annual Fee will be deducted after the withdrawal charge is
calculated. In addition, amounts you withdraw from your GIO(s) will be subject
to the MVA. See THE GENERAL ACCOUNT--WITHDRAWALS AND TRANSFERS.
We pay sales commissions and other expenses associated with promotion and
sales of the Contracts to broker-dealers. The withdrawal charge is designed to
reimburse us for these costs, although we expect that our actual expenses will
be greater than the amount of the withdrawal charge. Broker-dealers may
receive aggregate commissions of up to 7.5% of your aggregate Purchase
Payments.
Under certain circumstances and in exchange for lower initial commissions,
certain sellers of Contracts may be paid a persistency trail commission which
will take into account, among other things, the length of time Purchase
Payments have been held under a Contract, and Account Values. A trail
commission is not anticipated to exceed 1.00%, on an annual basis, of the
Account Values considered in connection with the trail commission. We 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.
Transfers
Transfers of all or part of your Account Value from one Investment Option to
another is not considered a withdrawal of an amount from your Contract, so no
withdrawal charge is imposed at the time of transfer. See HOW YOUR PAYMENTS
ARE ALLOCATED--TRANSFERS. However, amounts transferred from a GIO before its
Guarantee Term has expired are subject to the MVA. See THE GENERAL ACCOUNT--
WITHDRAWALS AND TRANSFERS and MARKET VALUE ADJUSTMENTS.
PREMIUM TAXES
Depending on (among other factors) your state of residence, a tax may be
imposed on your Purchase Payments at the time your payment is made, at the
time of a partial or full 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 0% to 3.5% are currently in effect, but may change in the
future. Some local jurisdictions also impose a tax.
16
<PAGE>
If we pay any taxes attributable to Purchase Payments ("premium taxes") on
your behalf, we will impose a similar charge 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 withdrawal, at the time any death benefit
proceeds are paid, or when 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 we
have 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, that in our sole discretion we deem
appropriate.
We 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 our 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
We 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 Net Contract Value,
if your Net Contract Value is less than $50,000 on that date. The fee is not
imposed on amounts you annuitize or on payment of death benefit proceeds. 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
your Contract.
Your Annual Fee will be charged proportionately against your Investment
Options. 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.
WAIVERS AND REDUCED CHARGES
Officers, directors and employees of Pacific Mutual and our affiliates,
registered representatives and employees of broker-dealers with a current
selling agreement with us and their affiliates, and employees of affiliated
asset management firms ("Eligible Employees") and immediate family members of
Eligible Employees are eligible for certain waivers and/or credits. Eligible
Employees and their immediate family members may purchase a Contract without
regard to minimum Purchase Payment requirements. In addition, we may credit an
additional amount to the Contract Value of these Contracts. We may reduce or
waive the withdrawal charge or Annual Fee or credit additional amounts in
situations that reduce the administrative expenses, such as the sale of
several Contracts to the same Contract Owner(s), sales of large Contracts and
group sales or in situations that reduce selling and/or maintenance costs
associated with the Contracts.
MORTALITY AND EXPENSE RISK CHARGE
We assess 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 an 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." We also
bear 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 factor expressed as a decimal
(where 1.00 is equal to 100%) 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.
17
<PAGE>
The Risk Charge will stop at annuitization if you select a fixed annuity; the
Risk Charge 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.
We will realize a gain if the Risk Charge exceeds our actual cost of expenses
and benefits, and will suffer a loss if such actual costs exceed the Risk
Charge. Any gain will become part of our General Account; we may use it for
any reason, including covering sales expenses on the Contracts.
ADMINISTRATIVE FEE
We charge 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 you and
to regulatory authorities.
The Administrative Fee is assessed daily at an annual factor expressed as a
decimal (where 1.00 is equal to 100%) of 0.0015 of the assets of each
Subaccount. This fee is guaranteed not to increase 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 THE FUND
Your Variable Account Value reflects advisory fees and other expenses incurred
by the various Portfolios of the 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 SAI.
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. We will send the annuity payments to the
payee that you designate. If you are buying a Qualified Contract, you must be
the sole Annuitant; if you are buying a Non-Qualified Contract you may choose
yourself and/or another person. Whether you choose to have a sole or two Joint
Annuitants, you may choose a Contingent Annuitant; more information on these
options is provided in the SAI. You will not be able to add or change a sole
or Joint Annuitant after your Contract is issued; however, if a Qualified
Contract, you may add a Joint Annuitant at the time of annuitization. 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. You may not choose
an Annuitant who has reached his or her 86th birthday at the time your
Contract is issued. This restriction applies to Joint and Contingent
Annuitants as well as to a sole Annuitant. When adding or changing Contingent
Annuitants, the newly named Contingent Annuitant must be less than age 86 at
the time of change or addition. In addition, we reserve the right to require
proof of age or survival of the Annuitant(s).
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 Net Contract Value, less any applicable MVAs, any transaction fee, and
any applicable charge for premium taxes and/or other taxes, as long as the net
amount you annuitize is at least $10,000, subject to any state exceptions. 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, any applicable withdrawal charge, any
applicable MVA and any Annual Fee. We will distribute your Net Contract Value,
less any applicable charge for premium taxes and/or other taxes,
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any applicable withdrawal charge, any Annual Fee, any applicable MVA and any
transaction fee, to you in a single sum if the net amount of your Contract
Value available to convert to an annuity is less than $10,000 on your Annuity
Date. Distributions under your Contract may have tax consequences. You should
consult a qualified tax adviser for information on annuitization.
CHOOSING YOUR ANNUITY DATE ("ANNUITY START DATE")
You should choose your Annuity Start Date when you submit your application or
we will apply a default Annuity Date to your Contract.
You may change your Annuity Date by notifying us, in proper form, at least ten
Business Days prior to the earlier of your old Annuity Date or your new
Annuity Date.
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 however, to meet
IRS minimum distribution rules, your Annuity Date may need to be earlier; 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. 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 attained age 59 1/2.
See FEDERAL TAX STATUS.
If you annuitize only a portion of your Net 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 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.
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; however some states' laws may require a different Annuity Date. 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 your Annuitant
attains age 70 1/2; if your Annuitant has already attained age 70 1/2 on the
Contract Date, the 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 Net Contract Value, less any applicable MVA,
transaction fees and/or charges for premium taxes and/or other taxes, will be
annuitized (if this net amount is at least $10,000) as follows: the net amount
from your Fixed Option Value and GIO Value will be converted into a fixed-
dollar annuity and the net amount from 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.
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CHOOSING YOUR ANNUITY OPTION
You may make three basic decisions about your annuity payments. First, you may
choose whether you want those payments to be a fixed-dollar amount and/or a
variable-dollar amount. Second, you may choose the form of annuity payments
(see ANNUITY OPTIONS). Third, you may decide how often you want annuity
payments to be made (the "frequency" of the payments). You may not change
these selections after annuitization.
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.
Any net amount you convert to a fixed annuity will be held in our General
Account, (but not under the Fixed Option or GIOs).
If you select a variable annuity, you may choose as many Variable Investment
Options 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. How your
Contract converts into a variable annuity is explained in more detail in THE
CONTRACTS AND THE SEPARATE ACCOUNT in the SAI.
Annuity Options
Four Annuity Options are currently available under the Contracts, although
additional options may become available in the future.
. Life Only. Periodic payments are made to the payee during the
Annuitant's lifetime. Payments stop when the Annuitant dies.
. Life with Period Certain. Periodic payments are made to the payee during
the Annuitant's 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 payee 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.
Frequency of Payments
You may choose to have annuity payments made monthly, quarterly, semiannually,
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.
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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.
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.
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 Net 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 and smaller for
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 guaranteed income factors in our tables are
based on an annual interest rate of 3% and the 1983a Annuity Mortality Table
with the ages set back 10 years. If you elect a fixed annuity, fixed annuity
payments will be based on the periodic income factors in effect for your
Contract on the Annuity Date which are at least the guaranteed income factors
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 with the ages
set back 10 years. If you elect a variable annuity, your initial variable
annuity payment will be based on the applicable variable annuity income
factors 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
more favorable threshold for increases and decreases. If the actual net
investment performance is a constant 5% annually, annuity payments will be
level. The assumed investment return is explained in more detail in the SAI
under THE CONTRACTS AND THE SEPARATE ACCOUNT.
DEATH BENEFITS
A death benefit may be payable on proof of death before the Annuity Date of
the Annuitant or of any Contract Owner while the Contract is in force. The
amount of the death benefit will be paid according to the DEATH BENEFIT
PROCEEDS section.
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. The death benefit proceeds will be payable in a single sum, as
an annuity, or in accordance with IRS regulations (see MANDATORY DISTRIBUTION
ON DEATH). Any such annuity is subject to all restrictions (including minimum
amount requirements) as are other annuities under this Contract; 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 SAI.
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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 five 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 one 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 the designated recipient is the Beneficiary; if
no Beneficiary is living, the designated recipient is the Owner's estate. If
the Contract Owner was an Annuitant, the designated recipient is the
Beneficiary; if no Beneficiary is living, the designated recipient is the
Owner's estate. A sole designated recipient who is the Contract Owner's spouse
may elect to become the Contract Owner (and 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 not continue the Contract, but may purchase a new Contract.
If you are a non-natural Owner of a Contract other than a Contract issued under
a Qualified Plan as defined in Section 401 or 403 of the Code, the Primary
Annuitant will be treated as the Owner of the Contract for purposes of these
Distribution Rules. If there is a change in the Primary Annuitant prior to the
Annuity Date, such change will be treated as the death of the Owner.
Death Benefit: Death of the Annuitant
The Death Benefit Amount as of any day (prior to the Annuity Date) is equal to
the greater of (a) your Contract Value as of that day, or (b) your aggregate
Purchase Payments, reduced by any applicable charges, fees and/or MVAs and
further reduced by an amount for each withdrawal that is calculated by
multiplying the aggregate Purchase Payments received prior to each withdrawal
by the ratio of the amount of each withdrawal, including applicable withdrawal
charges, to the Contract Value immediately prior to each withdrawal.
The Guaranteed Minimum Death Benefit Amount is determined as follows: We look
at the Contract as of the sixth Contract Anniversary and as of every subsequent
Contract Anniversary prior to the Annuity Date, that is, the 6th, 7th, 8th,
etc., until the earlier of (i) the date the Annuitant reaches his or her 76th
birthday, (ii) the date of the Annuitant's death, or (iii) the Annuity Date,
(each of these Anniversaries is a "Milestone Date"). For each Milestone Date,
we calculate the Death Benefit Amount and (a) add the aggregate amount of any
Purchase Payments received by us after that Milestone Date, (b) subtract an
amount for each withdrawal that is calculated by multiplying that Death Benefit
Amount by the ratio of the amount of each withdrawal that has occurred since
that Milestone Date, including applicable withdrawal charges, to the Contract
Value immediately prior to each withdrawal, and (c) subtract the aggregate
amount of any previous charges, fees, MVAs and/or taxes effected since that
Milestone Date.
The highest of these adjusted Death Benefit Amounts, as of the Notice Date, is
your Guaranteed Minimum Death Benefit Amount. CALCULATIONS OF ANY GUARANTEED
MINIMUM DEATH BENEFIT ARE ONLY MADE ONCE DEATH BENEFIT PROCEEDS BECOME PAYABLE
UNDER YOUR CONTRACT.
The Notice Date is the day on which we receive proof (in proper form) of death
and instructions regarding payment of death benefit proceeds.
If the Annuitant dies on or before the sixth Contract Anniversary, or if the
Annuitant had already reached his or her 76th birthday as of the sixth Contract
Anniversary, the death benefit will be equal to the "Death Benefit Amount" as
of the "Notice Date."
If the Annuitant dies prior to the Annuity Date but after the sixth Contract
Anniversary, and had not yet reached his or her 76th birthday as of the sixth
Contract Anniversary, the death benefit will be equal to the greater of (a) the
Death Benefit Amount as of the Notice Date; or (b) the "Guaranteed Minimum
Death Benefit Amount" as of the Notice Date.
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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. If there is no surviving Joint or Contingent
Annuitant, the death benefit is payable to your Beneficiary, if living. To
avoid the possibility of an adverse gift tax situation upon the death of a
sole Annuitant with no living Beneficiary, the death benefit will be paid to
the Owner or the Owner's estate.
Death Benefit: Death of a Contract Owner
If a Contract Owner who is not the Annuitant dies before the Annuity Date, the
amount of the death benefit will be equal to your Contract Value as of the
Notice Date and will be paid in accordance with the DEATH BENEFIT PROCEEDS
section above. See THE GENERAL ACCOUNT--WITHDRAWALS AND TRANSFERS.
If you are a non-natural Owner of a Contract other than a Contract issued
under a Qualified Plan as defined in Section 401 or 403 of the Code, and there
is a change in the Primary Annuitant prior to the Annuity Date, such change
will be treated as the death of the Owner. The amount of the death benefit
will be (a) the Contract Value if the non-natural owner elects to maintain the
Contract and reinvest the Contract Value into the Contract in the same amount
as immediately prior to the distribution, or (b) the Contract Value less any
Annual Fee, withdrawal fee, withdrawal charge, charge for premium taxes and/or
other taxes, and any MVA if the non-natural Owner elects a cash distribution.
The amount of the death benefit will be determined as of the Business Day we
receive, in proper form, the request to change the Primary Annuitant and
instructions regarding maintaining the Contract or cash distribution.
WITHDRAWALS
OPTIONAL WITHDRAWALS
You may, on or prior to your Annuity Date, withdraw all or a portion of the
amount available under your Contract. Except as provided below, beginning 30
days after your Contract Date, you may make withdrawals from your Investment
Options at any time. You may request to withdraw a specific dollar amount or a
specific percentage of an Account Value or your Net 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 of your
Investment Options proportionately. Each partial withdrawal must be for $500
or more, except pre-authorized withdrawals, which must be at least $250. 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 Net 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. Partial withdrawals from
the Fixed Option in any Contract Year are subject to restrictions. See GENERAL
ACCOUNT--WITHDRAWALS AND TRANSFERS.
Amount Available for Withdrawal
The amount available for withdrawal is your Net Contract Value at the end of
the Business Day on which your withdrawal request is effective, less any
applicable Annual Fee, any withdrawal charge, any withdrawal transaction fee,
and any charge for premium taxes and/or other taxes, and after application of
the MVA, if appropriate. 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 and THE GENERAL ACCOUNT--
WITHDRAWALS AND TRANSFERS.
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.
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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 pre-authorized partial
withdrawals) in excess of 15 in any Contract Year. Any such fee would be
charged against your Investment Options proportionately based on your Account
Value in each immediately after the withdrawal.
Pre-Authorized Withdrawals
If your Contract Value is at least $5,000, 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 $250. 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. The GIOs are
not available for pre-authorized withdrawals. See FEDERAL TAX STATUS and THE
GENERAL ACCOUNT--WITHDRAWALS AND TRANSFERS. Additional information and options
are set forth in the SAI and in the Pre-Authorized Withdrawal section of your
application.
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. The tax and ERISA rules relating to
Contract withdrawals are complex. We are not the administrator of any
Qualified Plan. You should consult your tax adviser and/or your plan
administrator before you withdraw a portion of your Contract Value.
Restrictions Under the Texas Optional Retirement Program
Title 8, Section 830.105 of the Texas Government Code restricts withdrawal of
contributions and earnings in a variable annuity contract in the Texas
Optional Retirement Program ("ORP") prior to 1) termination of employment in
all Texas public institutions of higher education, 2) retirement, 3) death, or
4) the participant's attainment of age 70 1/2. A participant in the Texas ORP
will not, therefore, be entitled to make full or partial withdrawals under a
Contract unless one of the foregoing conditions has been satisfied.
Appropriate certification may be required to withdraw the participant's
Contract Value. Restrictions on withdrawal do not apply to
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transfers of values from one annuity contract to another during participation
in the Texas ORP. Loans are not available in the Texas ORP. If you are a
participant in the Texas ORP, you should consult your tax adviser before you
withdraw a portion of your Contract Value.
Effective Date of Withdrawal Requests
Withdrawal requests are normally effective on the Business Day we receive them
in proper form. If you make Purchase Payments by check and submit a withdrawal
request immediately afterwards, payment of your withdrawal proceeds may be
delayed until your check clears.
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 GIOs; 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.
Some states' laws require us to refund your Purchase Payments allocated to the
Variable Investment Options instead of your Variable Account Value. If your
Contract is issued in one of these states (the "issue state"), the Purchase
Payments you have allocated to any Subaccount will usually be allocated to the
Money Market Subaccount during your free look period. In such cases, we will
transfer your Contract Value in the Money Market Subaccount 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
the issue state allows you to return your Contract to us pursuant to your
"free look" right.
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 1995, we had
over $44.2 billion of individual life insurance in force and total assets of
approximately $17.6 billion. Together with our subsidiaries and affiliated
enterprises, we have total assets and funds under management of over $116.6
billion. We have been ranked according to assets as the 24th largest life
insurance carrier in the nation for 1994. 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 Mutual Distributors, Inc.
("PMD"), formerly Pacific Equities Network, serves as the principal
underwriter for the Contracts. PMD is located at 700 Newport Center Drive,
Newport Beach, California 92660. PMD and Pacific Mutual enter into selling
agreements with broker-dealers, under which such broker-dealers act as agents
of Pacific Mutual and PMD in the sale of the Contracts.
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We may provide you with reports of our ratings both as an insurance company
and as to our claims-paying ability with respect to our General Account
assets. The SAI presents more details about these ratings.
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 (the "1940 Act"), as a type of investment company called a "unit
investment trust."
Obligations arising under your Contract are our general corporate obligations.
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 us that are
supported by the Separate Account may not be charged with liabilities arising
from any of our other business; 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 our 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) unless such an entity holds
the contract as nominee for a natural person. 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 Contract
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 if the Contract Owner is a natural person or a
nominee for a natural person, and that we (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.
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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. We believe 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 you may direct your 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 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 any
charges and 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) the value of
the Contract for a loan will be treated as a distribution. Moreover, all
annuity contracts issued to you in any given calendar year by us 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
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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.
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 or more 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. WE ARE NOT THE ADMINISTRATOR OF ANY
QUALIFIED PLAN. IF YOU ARE PURCHASING A QUALIFIED CONTRACT, YOU SHOULD CONSULT
WITH YOUR PLAN ADMINISTRATOR AND/OR A QUALIFIED TAX ADVISER.
Individual Retirement Annuities ("IRAs")
Contributions to an IRA are subject to limitations. 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 you 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 us. Similar limitations and tax penalties apply to
tax sheltered annuities, government plans, 401(k) plans, 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 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.
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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 or 403 of the Code and the
terms of your Qualified Plan permit, you may request a loan from us, using
your Contract Value as your only security. Loans are not available on
Contracts in the Texas Optional Retirement Program.
Tax and Legal Matters
The tax and ERISA rules relating to Contract loans are complex and in many
cases unclear. For these reasons, and because the rules vary depending on the
individual circumstances of each Contract, WE URGE YOU TO CONSULT WITH
QUALIFIED TAX ADVISORS PRIOR TO EFFECTING ANY LOAN TRANSACTION UNDER YOUR
CONTRACT.
Interest paid on your loan under a 401 plan or 403(b) tax-sheltered annuity
will be considered "personal interest" under Section 163(h) of the Code, to
the extent the loan comes from your pre-tax contributions, even if the
proceeds of your loan are used to acquire your principal residence.
We may change these loan provisions to reflect changes in the Code or
interpretations thereof.
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; however, before requesting a new loan, you must wait thirty days
after the last payment of a previous loan. If approved, your loan will usually
be effective as of the end of the Business Day on which we receive all
necessary documentation in proper form. We will normally forward proceeds of
your loan to you within seven calendar days after the effective date of your
loan. A loan administration fee of $100 will be deducted from your loan
proceeds, however we reserve the right to increase this fee up to a maximum of
$500.
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 Fixed and Variable Investment Options, based on your
Account Value in each. Your GIO Value is not available to secure your loan.
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 Fixed Option and Variable
Investment Options relative to your current allocation instructions.
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Loan Terms
You may have only one loan outstanding at any time. The minimum loan amount is
$1,000, subject to certain state limitations. Your Contract Debt at the
effective date of your loan may not exceed the lesser of:
. 50% of your Contract Value;
. 100% of your Contract Value excluding your GIO 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 most
recently available calendar month, 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; interest earnings on the
Loan Account Value accrue daily beginning on the following day, and those
earnings will be transferred once a year to your Fixed and Variable 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 the 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.
If you elect to annuitize (or withdraw) your Net Contract Value while you have
an outstanding loan, we will deduct any Contract Debt from your Contract Value
at the time of the annuitization (or withdrawal) to repay the Contract Debt.
You may prepay your entire loan at any time; if you do so, we will bill you
for any accrued interest. Your loan will be considered repaid only when the
interest due has been paid. Subject to any necessary approval of state
insurance authorities, 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 or include your loan stub with your
payment. To the extent allowed by law, any loan repayments in excess of the
amount then due will be refunded to you, unless such amount is sufficient to
pay the balance of your loan.
If we have not received your full payment by its due date, we will declare the
entire remaining loan balance in default. At that time, we will send written
notification of the amount needed to bring the loan back to a current status.
You will have sixty (60) days from the date on which the loan was declared in
default (the "grace period") to make the required payment.
If the required payment is not received by the end of the grace period, the
defaulted loan balance plus accrued interest will be withdrawn from your
Contract Value, if amounts under your Contract are eligible for
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distribution. If those amounts are not eligible for distribution, the
defaulted loan balance plus accrued interest will be considered a Deemed
Distribution and will be withdrawn when such Contract Values become eligible.
In either case, the Distribution or the Deemed Distribution will be considered
a currently taxable event, will be subject to the mandatory 20% federal
withholding, will be subject to the withdrawal charge and may be subject to
the early withdrawal tax penalty.
If there is a Deemed Distribution under your Contract and to the extent
allowed by law, any future withdrawals will first be applied as repayment of
the defaulted Contract Debt, including accrued interest, and withdrawal
charges and charges for applicable taxes. Any amounts withdrawn and applied as
repayment of Contract Debt will first be withdrawn from your Loan Account and
then from your Investment Options on a proportionate basis relative to the
Account Value in each account. If you have an outstanding loan that is in
default, the defaulted Contract Debt will be considered a withdrawal for the
purpose of calculating any Death Benefit Amount and/or Guaranteed Minimum
Death Benefit.
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%, unless otherwise specified
by the Code. 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 your Contract Value 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 us 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 Contract Value 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.
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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 our operations. No charge is made against the
Separate Account for our 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, we 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 us 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.
ADDITIONAL INFORMATION
VOTING RIGHTS
We are the legal owner of the shares of the Portfolios held by the
Subaccounts, and consequently have 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, and if any of our non-insurance subsidiaries
hold shares of a Portfolio, such shares will be voted 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 the Portfolio 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 number of shares that form the basis for your voting
interest, as described above, 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.
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Any newly-named Contract Owners, including Joint and/or Contingent Owners,
must be under the age of 86 at the time of change or addition. Joint ownership
is in the form of a joint tenancy. 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 RETIREMENT BENEFITS AND OTHER
PAYOUTS--SELECTING YOUR ANNUITANT. There may be limited exceptions for certain
Qualified Contracts.
Beneficiaries
Your Beneficiary is a person(s) who may receive death benefits under your
Contract. You may change or remove your Beneficiary or add Beneficiaries at
any time prior to the death of the Annuitant or Owner, as applicable. If you
have named your Beneficiary irrevocably, you will need to obtain that
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 of a different Beneficiary. If you leave no surviving Beneficiary, your
estate will receive any death benefit proceeds under your Contract.
CHANGES TO ALL CONTRACTS
If, in the judgment of our management, continued investment by Separate
Account A in one or more of the Portfolios becomes unsuitable or unavailable,
we may seek to alter the Variable Investment Options available under the
Contracts. We do 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. We
reserve 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 an 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 your
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 or in other investment vehicles; availability of any new
Subaccounts to existing Contract Owners will be determined at our discretion.
We will notify you, 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 of our separate
accounts or with any of our affiliates' separate accounts
. transfer Separate Account A assets attributable to the Contracts to
another of our separate accounts
. deregister the Separate Account under the 1940 Act
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. 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.
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.
Please send your forms and written requests or questions to:
Pacific Mutual Life Insurance Company
P.O. Box 7187
Pasadena, California 91109-7187
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
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 we "receive" the notice or instructions. We "receive"
this information only when it arrives, in proper 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, loan requests, transfer
requests, loan repayments and withdrawal requests we receive before the close
of the New York Stock Exchange (normally, 4:00 p.m. Eastern time) will
normally be effective on the same Business Day that we receive them in "proper
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 "proper form" unless the transaction or event is scheduled to occur on
another day. "Proper form" may require, among other things, a signature
guarantee or other verification of authenticity. We do not generally require a
signature guarantee unless it appears that your signature may have changed
over time or due to other circumstances. Requests regarding death benefits
must be accompanied by both proof of death and instructions regarding payment
satisfactory to us. You should call your registered representative or Pacific
Mutual if you have questions regarding the required form of a request.
TELEPHONE TRANSACTIONS
After your "free look" period, you may make transfer requests by telephone if
you have authorized telephone requests (a "telephone authorization"). We
cannot guarantee that you will always be able to reach us to complete
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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 (or other form acceptable to us).
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 upon our request. We may also record all or part of
any telephone conversation with respect to transaction instructions. We
reserve the right to deny any transaction request made by telephone. When you
make a proper 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, as long as we comply with our procedures, none
of Pacific Mutual, our 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. If a Contract
has Joint Owners, both Owners must sign the written request for a telephone
authorization, but each Owner individually may make transfer requests by
telephone.
TIMING OF PAYMENTS AND TRANSACTIONS
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, for
transfers from the Variable Investment Options, we will normally send the
proceeds within seven calendar days after your transfer (or exchange) request
is effective. We will normally effect periodic annuity payments on the day
that corresponds to the Annuity Date and will make payment on the following
day. 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 imposed by
the SEC, or an emergency declared by the SEC. For (i) withdrawals from the
Fixed Option or GIOs, (ii) death benefit payments attributable to Fixed Option
Value or GIO Value, or (iii) 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 loans and transfers from the Fixed
Option and the GIOs. See THE GENERAL ACCOUNT 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, GIO renewals, 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 each Fixed Option or GIO, fees
and charges applied to your Contract Value, transactions made and specific
Contract data that apply to your Contract. Confirmations of your transactions
under the pre-authorized checking plan, dollar cost 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. If you suspect
an error on a confirmation or quarterly statement, you must notify us in
writing within 30 days from the date of the first confirmation or statement on
which the transaction you believe to be erroneous appeared. When you write,
tell us your name, contract number and a description of the suspected error.
You will also be sent an annual and a semiannual 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.
35
<PAGE>
FINANCIAL STATEMENTS
Pacific Mutual's audited financial statements as of and for the years ended
December 31, 1995 and 1994, are contained in the SAI.
THE GENERAL ACCOUNT
GENERAL INFORMATION
All amounts allocated to the Fixed Option and GIOs 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 General
Account 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 1940 Act. Any interest you have in the Fixed Option or GIOs is not subject
to these Acts, and we have been advised that the SEC staff has not reviewed
disclosure in this Prospectus relating to the Fixed Option or GIOs. This
disclosure may, however, be subject to certain provisions of federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
You may choose among the following General Account options: the Fixed Option
and Guaranteed Interest Options with three available Guarantee Terms: three-
year, six-year and ten-year. Each is described below.
GUARANTEE TERMS
When you allocate any portion of your Purchase Payments or Contract Value to
our Fixed Option or one or more GIOs in the General Account, we guarantee you
an interest rate (a "Guaranteed Interest Rate") for a specified period of time
(a "Guarantee Term") of up to ten years. The Fixed Option and each GIO offers
a separate Guaranteed Interest Rate and Guarantee Term. Guarantee Terms will
be offered at our discretion. Presently, we offer Guarantee Terms of up to one
year for the Fixed Option, and three-, six- and ten-years for the GIOs. You
should specify the Fixed Option and/or GIO(s) into which you want us to
allocate your Purchase Payments or Contract Value, if any. EACH ALLOCATION TO
A GIO MUST BE AT LEAST $500.
Guaranteed Interest Rates for each Fixed Option and GIO may be changed
periodically for new allocations; your allocation will receive the Guaranteed
Interest Rate in effect for that Fixed Option or GIO on the effective date of
your allocation. All Guaranteed Interest Rates will be expressed as annual
effective rates; however, interest will accrue daily. The Guaranteed Interest
Rate on your Fixed Option and/or GIO will remain in effect for the Guarantee
Term and will never be less than an annual rate of 3%.
Fixed Option
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 AT THE END OF THAT CONTRACT YEAR OR, IF EARLIER, ON YOUR ANNUITY
DATE. At the end of that Contract 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) at the then current Guaranteed
Interest Rate, unless you instruct us otherwise.
Example: Your Contract Anniversary is February 1. 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%. Through January 31, year 1, your first allocation of $1,000 earns 5%
interest and your second allocation of $500 earns 6% interest. On February
1, year 2, a new interest rate may go into effect for your entire Fixed
Option Value.
36
<PAGE>
Guaranteed Interest Options
EACH ALLOCATION (OR ROLLOVER) YOU MAKE TO A GIO RECEIVES A GUARANTEE TERM THAT
BEGINS ON THE DAY THAT ALLOCATION OR ROLLOVER IS EFFECTIVE AND ENDS AT THE END
OF THE GUARANTEE TERM. For each GIO, at the end of its Guarantee Term, we will
roll over that portion of your Account Value on that day into a new GIO with a
Guarantee Term of the same length and at the then current Guaranteed Interest
Rate corresponding to that Guarantee Term, unless, within thirty days after
the end of the Guarantee Term you instruct us otherwise (SEE END OF GIO
GUARANTEE TERM). However, if the last day of this new Guarantee Term would
occur after the Annuity Date, we will roll over that portion of your Account
Value into the longest Guarantee Term, if any, that ends prior to the Annuity
Date, with the corresponding new Guaranteed Interest Rate then in effect. If
there is no Guarantee Term that ends before the Annuity Date, we will allocate
that portion of your Account Value to the Fixed Option at the corresponding
Guaranteed Interest Rate then in effect for new allocations.
Example: On January 1 of year 1, you allocate $1,000 to a GIO with a
Guarantee Term of three years and a Guaranteed Interest Rate of 7%. On
August 1, you allocate another $500 to another GIO with a Guarantee Term of
three years and a Guaranteed Interest Rate of 7.5%. On November 1, you
allocate $2,000 to a third GIO with a ten-year Guarantee Term at a
Guaranteed Interest Rate of 9%. Through December 31, year 3, your first
allocation of $1,000 earns 7% interest, and on January 1, year 4, a new
interest rate will go into effect for this portion of your GIO Value.
Through July 31, year 4, your second allocation of $500 earns 7.5%
interest, and on August 1, year 4, a new interest rate will go into effect
for this portion of your GIO Value. Finally, through October 31, year 11,
your third allocation of $2,000 earns 9% interest, and on November 1, year
11, a new interest rate will go into effect on this portion of your GIO
Value.
End of GIO Guarantee Term
You have thirty days after the last day of the Guarantee Term of a GIO to
inform us whether you want to (i) renew that particular Account Value in a
different Guarantee Term at its corresponding Guaranteed Interest Rate in
effect for new allocations, (ii) transfer all or part of that Account Value to
another Investment Option, and/or (iii) withdraw all or part of that Account
Value. Any subsequent change to such instructions will be subject to the
provisions of the CHARGES, FEES AND DEDUCTIONS section.
If you instruct us to allocate that portion of you Account Value that was
rolled over in the new GIO to a GIO with a different Guarantee Term, we will
consider that allocation to be made as of the end of the previous Guarantee
Term and will credit interest accordingly. If you instruct us to transfer to a
Variable Investment Option or the Fixed Option or to withdraw that portion of
your Account Value in the new GIO, we will effect such transfer or withdrawal
as of the day we receive your request; interest will be credited at the
Guaranteed Interest Rate for the time the Account Value was allocated to that
GIO. Any amounts that you transfer or withdraw before the last day of the
Guarantee Term or after this thirty-day period will be subject to the MVA, and
any transfer fee. All withdrawals made before, during or after this thirty-day
period will be subject to any applicable withdrawal charge, withdrawal fee and
any charges for premium taxes and/or other taxes.
WITHDRAWALS AND TRANSFERS
Prior to the Annuity Date, you may withdraw amounts from your Fixed Option
and/or one or more GIOs, or transfer amounts from your Fixed Option and/or
GIOs to one or more of the other Investment Options. The withdrawal or
transfer will access each GIO Term Value proportionately (or you may specify a
particular GIO Term Value). Amounts from the oldest GIO within a GIO Term
Value will be withdrawn or transferred first. Transfer requests to a GIO will
be applied as an allocation to a new GIO. If your Contract was issued in a
state that requires refund of Purchase Payments under the Free Look Right,
transfers may only be made after your Free Look Transfer Date. In addition, no
partial withdrawal or transfer may be made from your Fixed Option or GIOs
within 30 days of the Contract Date. If your withdrawal leaves you with a Net
Contract Value of less than $1,000, we have the right, at our option, to
terminate your Contract and send you the withdrawal proceeds.
37
<PAGE>
Payments or transfers from the Fixed Option or a GIO may be delayed, as
described under ADDITIONAL INFORMATION--TIMING OF PAYMENTS AND TRANSACTIONS;
any amount delayed will, as long as it is held under the Fixed Option or that
GIO, continue to earn interest at the Guaranteed Interest Rate then in effect
until that Guarantee Term has ended, and the minimum guaranteed interest rate
of 3% thereafter, unless state law requires a greater rate be paid.
Fixed Option
After the first Contract Anniversary, you may make one transfer or withdrawal
from your Fixed Option during any Contract Year, except as provided under the
dollar cost averaging, earnings sweep and pre-authorized withdrawal programs.
You may make one transfer or one withdrawal within the 30 days after the end
of each Contract Year. Normally, you may transfer or withdraw up to one-third
(33 1/3%) of your Fixed Option Value in any given Contract Year. However, in
consecutive Contract Years you may transfer or withdraw up to one-third (33
1/3%) of your Fixed Option Value in one year; you may transfer or withdraw up
to one-half (50%) of your remaining Fixed Option Value in the next year; and
you may transfer or withdraw up to the entire amount (100%) of any remaining
Fixed Option Value in the third year. In addition, if, as a result of a
partial withdrawal or transfer, the Fixed Option Value is less than $500, we
have the right, at our option, to transfer the entire remaining amount to your
other Investment Options on a proportionate basis relative to your most recent
allocation instructions.
GIOs
You may make unlimited transfers or withdrawals from your GIOs during any
Contract Year, however we reserve the right to impose a transaction fee of up
to $15 per transfer for transfers in excess of 15 in any Contract Year, as
described under HOW YOUR PAYMENTS ARE INVESTED--TRANSFERS.
You may not request an allocation or transfer into or renewal of a GIO that
has a Guarantee Term that ends after the Annuity Date. If you do not specify a
particular GIO Term Value(s), the amount of any transfer or withdrawal will be
deducted proportionately from your GIO Term Values, beginning with the oldest
GIO within each GIO Term Value. In addition, if as the result of a partial
withdrawal or transfer, your Account Value in that GIO is less than $500, we
have the right, at our option, to transfer the remaining amount to your other
Investment Options on a proportionate basis relative to your most recent
allocation instructions. A GIO cannot participate in any systematic transfer
program. In addition, your GIO Value cannot be transferred to the Loan Account
to secure any loan made under the Contract.
An MVA is applied to the Account Value of a GIO in order to determine the net
amount of the transfer or withdrawal prior to the deduction of any applicable
charges or fees. Unless you request a net amount, the amount actually
transferred or sent to you equals the amount requested, less any MVA, less any
applicable withdrawal charge (based upon the amount requested before the
application of the MVA), and less any charges for Annual Fees, transactions,
premium taxes and/or other taxes, including any taxes required for
withholding.
The MVA is not applied to (i) amounts used to pay charges for the Annual Fee,
transfer fees, and/or premium taxes and/or other taxes, (ii) the amount of
death benefit proceeds, and (iii) subject to medical evidence satisfactory to
us, full or partial withdrawals, after the first Contract Anniversary if the
Annuitant has been diagnosed with a medically determinable condition that
results in a life expectancy of twelve (12) months or less.
The formula for calculating the MVA is set forth in Appendix B to this
Prospectus, which also contains illustrations of the application of the MVA.
38
<PAGE>
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PERFORMANCE................................................................ 1
Total Returns............................................................ 1
Yields................................................................... 2
Performance Comparisons and Benchmarks................................... 2
Insurance Company Rating Information..................................... 3
Separate Account Performance............................................. 4
DISTRIBUTION OF THE CONTRACTS.............................................. 6
Pacific Mutual Distributors, Inc......................................... 6
THE CONTRACTS AND THE SEPARATE ACCOUNT..................................... 7
Calculating Subaccount Unit Values....................................... 7
Variable Annuity Payment Amounts......................................... 7
Corresponding Dates...................................................... 9
Age and Sex of Annuitant................................................. 10
Systematic Transfer Programs............................................. 10
Pre-Authorized Withdrawals............................................... 12
Death Benefit............................................................ 12
Joint Annuitants on Qualified Contracts.................................. 13
1035 Exchanges........................................................... 13
Safekeeping of Assets.................................................... 13
Dividends................................................................ 13
FINANCIAL STATEMENTS....................................................... 14
</TABLE>
39
<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
Optional Retirement Program.
SHORT-TERM CANCELLATION RIGHT ("FREE-LOOK")
VARIATIONS TO THE LENGTH OF THE FREE-LOOK PERIOD. In most states, the Free-Look
period is a 10-day period beginning on the day you receive your Contract. If
your Contract was issued in one of the following states, the Free-Look period
is as specified below:
Colorado (15 days)
Idaho (20 days)
North Dakota (20 days)
In addition, if you reside in California and are age 60 or older on your
Contract Date, the Free-Look period is 30 days.
STATES THAT REQUIRE US TO REFUND YOUR PURCHASE PAYMENTS ALLOCATED TO THE
VARIABLE INVESTMENT OPTIONS INSTEAD OF YOUR VARIABLE ACCOUNT VALUE. If your
Contract was issued in one of the following states and you exercise your Free
Look right and return your Contract to us within 10 days of your receipt of
your Contract (unless specified otherwise below), we will refund your Purchase
Payments under your Contract that we received:
Georgia Oklahoma
Idaho (20 days) South Carolina
Michigan Utah
Nebraska Washington
North Carolina West Virginia
40
<PAGE>
APPENDIX B: MARKET VALUE ADJUSTMENT
The MVA for amounts annuitized, transferred or withdrawn from a GIO prior to
the end of its Guarantee Term are based on the following formula:
MVA = W x [(J - I) x (N/12)] where:
(W) is the amount to be annuitized, withdrawn or transferred from the GIO.
(J) is the Guaranteed Interest Rate that would apply, as of the date of
transfer, annuitization or withdrawal, to a newly-issued GIO with a
Guarantee Term equal to the number of "years remaining" in the
Guarantee Term of the GIO from which the annuitization, withdrawal or
transfer is to be made, plus 0.25%. (For this purpose, the "years
remaining" will be rounded up to the next higher number of whole
years. If a Guaranteed Interest Rate is required for a Guarantee Term
not currently offered, the Guaranteed Interest Rate will be based on
linear interpolation, between the Guaranteed Interest Rates for
currently offered Guarantee Terms, if possible. Otherwise, we will
determine a substitute Guaranteed Interest Rate that will be no less
favorable to you than the then most recent U.S. Treasury Yield for a
maturity closest to the "years remaining", plus 1.0%);
(I) is the Guaranteed Interest Rate applicable to the GIO; and
(N) is the number of complete months remaining in the Guarantee Term.
The MVA will never exceed, in the positive or negative direction, the excess
interest earned on the GIO from which the annuitization, withdrawal or
transfer is to be made. For this purpose, excess interest is defined as the
dollar amount of interest earned during the current Guarantee Term in excess
of 3%, per annum.
Generally, if the Guaranteed Interest Rate currently in effect for the
Guarantee Term (I) is lower than (J) as defined above, the MVA will result in
a lower amount payable to you. Similarly, if (I) is higher than (J), the MVA
will result in a higher amount payable to you. In no event will the MVA reduce
interest earned to less than 3% per annum.
MVA EXAMPLES
These assumptions are made in the following examples:
1. An allocation of $10,000 was made to a Guaranteed Interest Option (GIO)
with a 6-year Guarantee Term, and with a Guaranteed Interest Rate of
5.5%.
2. A full withdrawal is requested 2 1/2 years (30 months) from the
expiration of the Guarantee Term (i.e., N = 30).
3. The Account Value for the GIO at the time of the request is $12,061.01.
It is assumed that no Contract charges or fees have been applied to this
GIO.
4. If the GIO Account Value had been credited with 3% interest instead of
the 5.5%, the Account Value would have been $11,089.97. The excess
interest for this GIO is then $971.04, (i.e. $12,061.01 - $11,089.97).
5. No transfers or withdrawals have been previously made from this GIO.
41
<PAGE>
EXAMPLES OF MVAS THAT REDUCE THE WITHDRAWAL AMOUNT:
Example A (MVA not limited to excess interest)
Assume that on the date of withdrawal the Guaranteed Interest Rate for a new
Guarantee Term of 3 years (2 1/2 years rounded up to the next higher whole
year) is 7.5%. "J" is then 7.75% (i.e. 7.50% + 0.25%). Then:
MVA = ($12,061.01) x [( 7.75% - 5.5%) x (30/12)]
= $678.43 (representing a positive amount to be subtracted from the GIO
Account Value)
Since the amount of the MVA is less than the excess interest earned on the
GIO, the withdrawal amount will include the GIO Account Value less $678.43.
That amount, $11,382.58, would be further reduced by the withdrawal charge and
any other Contract charges or fees that apply. The withdrawal charge is
calculated based on the GIO Account Value before the MVA.
Example B (MVA is limited to excess interest)
This time, assume that on the date of withdrawal the Guaranteed Interest Rate
for a new Guarantee Term of 3 years (2 1/2 years rounded up to the next higher
whole year) is 9.0%. "J" is then 9.25% (i.e. 9.00% + 0.25%). Then:
MVA = ($12,061.01) x [(9.25% - 5.5%) x (30/12)]
= $1,130.72 (representing a positive amount to be subtracted from the GIO
Account Value)
Since the amount of the MVA exceeds the excess interest earned on the GIO, the
MVA must be reduced to equal the excess interest and the withdrawal amount
will include the GIO Account Value less $971.04. That amount, $11,089.97,
would be further reduced by the withdrawal charge and any other Contract
charges or fees that apply. The withdrawal charge is calculated based on the
GIO Account Value before the MVA.
EXAMPLES OF MVAS THAT INCREASE THE WITHDRAWAL AMOUNT:
Example C (MVA not limited to excess interest)
Assume that on the date of withdrawal the Guaranteed Interest Rate for a new
Guarantee Term of 3 years (2 1/2 years rounded up to the next higher whole
year) is 3.25%. "J" is then 3.50% (i.e. 3.25% + 0.25%). Then:
MVA = ($12,061.01) x [(3.50% - 5.5%) x (30/12)]
= - $603.05 (representing a negative amount to be subtracted from the GIO
Account Value)
Since the absolute amount of the MVA is less than the excess interest earned
on the GIO, the withdrawal amount will include the GIO Account Value plus
$603.05. That amount, $12,664.06, would then be reduced by the withdrawal
charge and any other Contract charges or fees that apply. The withdrawal
charge is calculated based on the GIO Account Value before the MVA.
Example D (MVA is limited to excess interest)
To more readily show this example, and to demonstrate a Guaranteed Interest
Rate ("J") based on interpolation, the assumptions for this example have been
modified and are as follows:
1. An allocation of $10,000 was made to a Guaranteed Interest Option (GIO)
with a 6-year Guarantee Term, and with a Guaranteed Interest Rate of
5.5%.
2. A full withdrawal is requested 3 1/2 years (42 months) from the
expiration of the Guarantee Term(i.e., N = 42).
3. The Account Value for the GIO at the time of the request is $11,432.24.
It is assumed that no Contract charges or fees have been applied to this
GIO.
4. If the GIO Account Value had been credited with 3% interest instead of
the 5.5%, the Account Value would have been $10,766.96. The excess
interest for this GIO is then $665.28.
5. No transfers or withdrawals have been previously made from this GIO.
42
<PAGE>
This time, assume that on the date of withdrawal the Guaranteed Interest Rate
for a new Guarantee Term of 3 years is 3.25%, and also assume that the
Guaranteed Interest Rate for a new Guarantee Term of 6 years is 4.0%. Then the
Guaranteed Interest Rate for a Guarantee Term of 4 years (3 1/2 rounded to the
next higher whole year) is 3.5%. (That result is determined by interpolation
as follows: 3.25% plus (4.0% - 3.25%) x (4 years - 3 years)/(6 years - 3
years))
Then "J" is 3.75% (i.e. 3.50% + 0.25%), and:
MVA = ($11,432.24) x [(3.75% - 5.5%) x (42/12)]
= - $700.22 (representing a negative amount to be subtracted from the GIO
Account Value)
Since the absolute amount of the MVA exceeds the excess interest earned on the
GIO, the MVA must be reduced to equal the excess interest and the withdrawal
amount will include the GIO Account Value plus $665.28. That amount,
$12,097.52, would be reduced by the withdrawal charge and any other Contract
charges or fees that apply. The withdrawal charge is calculated based on the
GIO Account Value before the MVA.
43
<PAGE>
To receive a current copy of the Pacific Portfolios SAI 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 _________
[CRC Form #] [CRC Bar Code]
<PAGE>
[PASTE-UP LOGO]
Issued By: Principal Underwriter:
Pacific Mutual Life Insurance Company Pacific Mutual Distributors, Inc.
Mailing Address: Member: NASD/SIPC
Variable Annuity Department 700 Newport Center Drive
P.O. Box 7187 P.O. Box 9000
Pasadena, California 91109-7187 Newport Beach, California 92660
Home Office:
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
Prospectus dated , 1996
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
, 1996
PACIFIC PORTFOLIOS
SEPARATE ACCOUNT A
----------------
Pacific Portfolios (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 , 1996, which is
available without charge upon written or telephone request to Pacific Mutual.
Terms used in this Statement of Additional Information ("SAI") have the same
meanings as in the Prospectus, and some additional terms are defined
particularly for this SAI.
----------------
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 NO.
--------
<S> <C>
PERFORMANCE............................................................ 1
Total Returns........................................................ 1
Yields............................................................... 2
Performance Comparisons and Benchmarks............................... 2
Insurance Company Rating Information................................. 3
Separate Account Performance......................................... 4
DISTRIBUTION OF THE CONTRACTS.......................................... 6
Pacific Mutual Distributors, Inc. ................................... 6
THE CONTRACTS AND THE SEPARATE ACCOUNT................................. 7
Calculating Subaccount Unit Values................................... 7
Variable Annuity Payment Amounts..................................... 7
Corresponding Dates.................................................. 9
Age and Sex of Annuitant............................................. 10
Systematic Transfer Programs......................................... 10
Pre-Authorized Withdrawals........................................... 12
Death Benefit........................................................ 12
Joint Annuitants on Qualified Contracts.............................. 13
1035 Exchanges....................................................... 13
Safekeeping of Assets................................................ 13
Dividends............................................................ 13
FINANCIAL STATEMENTS................................................... 14
</TABLE>
<PAGE>
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 GUARANTEE OF FUTURE INVESTMENT PERFORMANCE, AND DO
NOT REPRESENT THE ACTUAL EXPERIENCE OF AMOUNTS INVESTED BY ANY PARTICULAR
CONTRACT OWNER.
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 ("Cash Surrender 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 Risk Charge, the asset-based
Administrative Fee and the deduction of the applicable withdrawal charge, but
does not reflect any charges for applicable premium taxes and/or other taxes.
The Annual Fee is also taken into account, assuming an average Contract Value
of $40,000. The redeemable value is then 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)(To the power of 1/N)]-1
<TABLE>
<C> <C> <C> <S>
where T = average annual total return
ERV = ending redeemable value
P = hypothetical initial payment of $1,000
N = number of years
</TABLE>
Average annual total return figures will be given for recent one-, three-,
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 withdrawal charge or the Annual Fee.
1
<PAGE>
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) (To the power of
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 and/or other taxes, but
do reflect a deduction for the Annual Fee, the Risk Charge and the asset-based
Administrative Fee and assume an average Contract Value of $40,000.
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 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 semiannual compounding:
YIELD = 2[(a-b + 1)(To the power of 6) - 1]
---
cd
<TABLE>
<C> <C> <C> <S>
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.
</TABLE>
The yield of each Subaccount reflects the deduction of all recurring fees and
charges applicable to the Subaccount, such as the Risk Charge, the asset-based
Administrative Fee and the Annual Fee (assuming an average Contract Value of
$40,000), but does not reflect any withdrawal charge or 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
2
<PAGE>
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 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 indices
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
We may also advertise or report to you our 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. As of the date of this SAI, A.M. Best reported our rating of A+ for
financial position and operating performance.
In addition, our claims-paying ability 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. As of the date of this SAI, Standard &
Poor's rates our claims-paying ability as AA+.
We may additionally advertise our 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. As of the date of this
SAI, Duff & Phelps rates our claims-paying ability as AA+.
We may advertise our insurance financial strength rating from Moody's
Investors Service, Inc. Moody's ratings range from Aaa to C. As of the date of
this SAI, Moody's gave us a rating of Aa3.
3
<PAGE>
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 had not yet commenced operations as of December 31, 1995.
Therefore, no historical performance data exist for the Subaccounts. The
following table represents 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 or for the indicated time period. Nine of the Portfolios of
the Fund available under the Contract, 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 that began its first
full year of operations on January 1, 1984, and was acquired by the Fund on
December 31, 1994. The Aggressive Equity and Emerging Markets Portfolios had
not commenced operations as of December 31, 1995. Because the Subaccounts had
not commenced operations as of December 31, 1995, however, and because the
Contracts were not available during this period, THESE ARE NOT ACTUAL
PERFORMANCE NUMBERS FOR THE SUBACCOUNTS OR FOR THE CONTRACT.
THESE ARE HYPOTHETICAL TOTAL RETURN NUMBERS based on Account Value ("AV") and
Full Withdrawal Value ("FWV") that represent the actual performance of the
Portfolios, adjusted for the fees and charges applicable to the Contract; the
FWV also includes applicable withdrawal charges. 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 $40,000.
THE RESULTS SHOWN IN THIS SECTION ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE
INVESTMENT PERFORMANCE.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1995
ALL NUMBERS ARE EXPRESSED AS A PERCENTAGE
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS** 5 YEARS** 10 YEARS** INCEPTION**
----------- ----------- ----------- ----------- -----------
AV FWV AV FWV AV FWV AV FWV AV FWV
VARIABLE ACCOUNT ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market 7/24/90*... 3.95 -2.35 2.40 0.65 2.61 2.11 3.89 3.89
High Yield Bond
8/16/90*............... 17.06 10.76 10.45 8.96 14.18 13.86 9.75 9.75
Managed Bond 9/5/90*.... 17.22 10.92 6.70 5.09 8.50 8.11 8.53 8.53
Government Securities
8/22/90*............... 17.00 10.70 6.09 4.46 7.81 7.41 7.97 7.97
Growth LT 1/4/90*....... 34.73 28.43 22.82 20.20
Equity Income 8/16/90*.. 29.63 23.33 10.78 9.29 12.89 12.56 10.79 10.79
Multi-Strategy 9/25/90*. 23.33 17.03 8.83 7.29 11.20 10.85 9.83 9.83
Equity 1/4/95*.......... 21.97 15.67 10.12 8.62 12.41 12.07 10.85 10.85 11.99 11.99
Bond and Income 1/4/95*. 31.74 25.44 11.87 10.41 12.86 12.53 10.04 10.04 11.55 11.55
Equity Index 2/11/91*... 34.90 28.60 13.10 11.68 13.75 13.41
International 8/16/90*.. 8.89 2.59 12.38 10.93 6.60 6.18 6.20 6.20
Donoghue MF............. 5.49 4.12 4.55
EAFE.................... 11.21 16.69 9.37 13.62
First Boston............ 17.38 11.39 18.30
LBG/Bond................ 18.33 8.16 9.36 9.38
LBG/C Bond.............. 19.24 8.51 9.80 9.65
Russell 2500............ 31.70 14.94 20.95 13.17
S&P 500................. 37.58 15.34 16.59 14.88
</TABLE>
- --------
* Date Variable Account commenced operations.
** The performance of the Equity Income, Multi-Strategy and International
Variable Accounts for a portion of this period occurred at a time when
other Portfolio Managers managed the corresponding Portfolio in which each
Variable Account invests. Effective January 1, 1994, J. P. Morgan
Investment Management, Inc. became the Portfolio Manager of the Equity
Income and Multi-Strategy Portfolios and Templeton Investment Counsel, Inc.
became the Portfolio Manager of the International Portfolio; prior to
1/1/94, some of the investment policies of the Equity Income Portfolio and
the investment objective of the Multi-Strategy Portfolio differed.
4
<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 Purchase Payment of $10,000, assuming hypothetical annual returns of
0%, 4% and 8%, compounded annually, and a tax rate of 36%. 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 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. If these expenses and fees
were taken into account, they would reduce the investment return shown for
both the taxable investment and the hypothetical variable annuity contract. In
addition, these values assume that you do 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 36% rate on the amount in excess of the Purchase
Payment.
The rates of return illustrated are hypothetical and are not an estimate or
guarantee 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%.
5
<PAGE>
POWER OF TAX DEFERRAL
$10,000 investment at annual rates of return of 0%, 4% and 8%, taxed @ 36%
<TABLE>
<CAPTION>
Taxable Tax-Deferred
Investment Investment
---------- ------------
<S> <C> <C>
10 Years
0% $10,000.00 $10,000.00
4% $12,875.97 $13,073.56
8% $16,476.07 $17,417.12
20 Years
0% $10,000.00 $10,000.00
4% $16,579.07 $17,623.19
8% $27,146.07 $33,430.13
30 Years
0% $10,000.00 $10,000.00
4% $21,347.17 $24,357.74
8% $44,726.05 $68,001.00
</TABLE>
DISTRIBUTION OF THE CONTRACTS
PACIFIC MUTUAL DISTRIBUTORS, INC.
Pacific Mutual Distributors, Inc. ("PMD"), an indirect wholly-owned subsidiary
of Pacific Mutual, acts as the principal underwriter of the Contracts and
offers the Contracts on a continuous basis. Pacific Mutual and PMD enter into
selling agreements with broker-dealers whose registered representatives are
authorized by state insurance departments to sell the Contracts.
6
<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 was $10 on the Business Day the Subaccount began operations. At the
end of each Business Day, the Unit Value for a Subaccount is equal to:
Y x 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 / B) - 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
where (a) = the net asset value per share of the corresponding Portfolio
shares held by that Subaccount as of the end of that valuation
period;
(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 taxes 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 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) = the net asset value per share of the corresponding Portfolio shares
held by the Subaccount as of the end of the preceding 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 an
annual factor expressed as a decimal (where 1.00 is equal to 100%)
of 0.0125 and the Administrative Charge at a rate that is equal on
an annual basis to an annual factor of 0.0015 (see CHARGES, FEES
AND DEDUCTIONS in the Prospectus).
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 Net Contract Value into 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, in the Fixed Option, and in
each GIO 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 available Contract
Value may be used to provide fixed annuity
7
<PAGE>
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 Net
Contract Value, less any applicable Annual Fees, withdrawal charge, and any
charges for premium taxes and/or other taxes without converting this amount
into annuity payments.
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 $5.79 for every $1,000 of his Contract Value (reduced by
applicable charges) that he will be using to provide variable payments.
Therefore, if his Contract Value after deducting applicable fees and
charges is $100,000 on his Annuity Date and he applies this entire amount
toward his variable annuity, his first monthly payment will be $579.00.
Third: Subaccount Annuity Units
For each Subaccount, we use the amount of the first variable annuity payment
under your Contract attributable 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 Risk Charge at
a rate equal on an annual basis to the annual factor expressed as a decimal
(where 1.00 is equal to 100%) of 0.0125 and the Administrative Fee at a rate
equal on an annual basis to the annual factor 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 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, you 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.
8
<PAGE>
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 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; thus 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 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 return 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 Risk Charge at the
annual rate of 1.25% and minus the Administrative Fee at the annual rate of
0.15% 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 - 1 = 0; 0 X 100% = 0%.
----
1.05
If the investment performance of a Subaccount's 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 Risk Charge at the
annual rate of 1.25% and minus the Administrative Fee at the annual rate of
0.15% 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 = 0.9771; 0.9771 - 1 = - 0.0229; - 0.0229 X 100% = - 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 Business Day. 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).
9
<PAGE>
AGE AND SEX OF ANNUITANT
As mentioned in the Prospectus, the Contracts generally provide for sex-
distinct annuity income factors 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 income factors, and
Contracts issued in those states will use unisex factors. In addition,
Contracts issued in connection with Qualified Plans are required to use unisex
factors.
We may require proof of your Annuitant's age and sex before or after
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
The GIOs are not available for any 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 proper 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; semiannual 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 $5,000 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, semiannual or
annual transfers. The amount of your transfers may be specified as a dollar
amount or a percentage of your source Account Value; however, each 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 Fixed or Variable 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 the earlier of (i)
your request to stop dollar cost averaging is effective, or (ii) your source
Account Value is zero, or (iii) you annuitize. If, as a result of a dollar
cost
10
<PAGE>
averaging 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 these Subaccount
Value allocations. If you elect the portfolio rebalancing feature, we will
automatically transfer your Subaccount Value back to the percentages you
specify.
You may choose to have rebalances made quarterly, semiannually 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 prior to your Annuity Date and it will be effective
when we receive it in proper 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 $5,000 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, semiannually
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 semiannual 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.
To determine the earnings, we take the change in the sweep option's Account
Value during the sweep period, add any withdrawals or transfers out of the
sweep option Account that occurred during the sweep period, and subtract any
allocations to the sweep option Account during the sweep period. The result of
this calculation represents the "total earnings" for the sweep period.
If, during the sweep period, you withdraw or transfer amounts from the sweep
option Account, we assume that earnings are withdrawn or transferred before
any other Account Value. Therefore, your "total earnings" for the sweep period
will be reduced by any amounts withdrawn or transferred during the sweep
option period. The remaining earnings are eligible for the sweep transfer.
11
<PAGE>
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 proper 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 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 selected the Fixed Option as your sweep option. You may not use
the earnings sweep and dollar cost averaging at the same time. If, as a result
of an earnings sweep 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. 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
Fixed or Variable Investment Options; if you do not give us these specific
directions, amounts will be deducted proportionately from your Account Value
in each Fixed or Variable 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 proper 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 the 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 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.
Pre-authorized withdrawals are subject to the same withdrawal charges as are
other withdrawals, and each 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 proper 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 proper form. 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.
If both the Contract Owner(s) and the Annuitant(s) are non-natural persons, no
death benefit will be payable, and any distribution
12
<PAGE>
will be treated as a withdrawal and subject to any applicable charges for
Annual Fees, transaction fees, withdrawal fees, premium taxes and/or other
taxes, withdrawal charges, and MVAs.
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 will be
payable to the surviving Owner, if there is one; if not, any death benefit
will be payable to the Owner's estate.
Death of a Contract Owner
If any Contract Owner dies prior to the Annuity Date while the Annuitant is
still living, a death benefit may be payable. If that Contract Owner was the
sole Annuitant or a Joint Annuitant under the Contract, any death benefit will
be payable to the surviving Beneficiary, or to your estate if no Beneficiary
survives. If that Contract Owner was not an Annuitant under the Contract, any
death benefit will be payable to the surviving Joint Owner of the Contract, if
there is one; if not, the death benefit will be payable to the surviving
Contingent Owner, if there is one; if not, any death benefit will be payable
to the surviving designated Beneficiary, or to the Owner's estate if no
designated 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"), you
may be permitted to add a Joint Annuitant on your Annuity Date. You may call
us 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 your representative, or by calling us at 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 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 record-keeping, 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
We are responsible for the safekeeping of the assets of the Separate Account.
These assets are held separate and apart from the assets of our General
Account and our other separate accounts.
DIVIDENDS
The current dividend scale is zero and we do not anticipate that dividends
will be paid. If any dividend is paid, you may elect to receive the dividend
in cash or to add the dividend to your Contract Value. If you make no
election, the dividend will be added to your Contract Value. We will allocate
any dividend to Contract Value in accordance with your most recent allocation
instructions, unless instructed otherwise. You should consult with your tax
adviser before making an election.
13
<PAGE>
FINANCIAL STATEMENTS
Separate Account A had not yet commenced operations as of December 31, 1995
and therefore no financial statements are included. Pacific Mutual's audited
financial statements as of and for the years ended December 31, 1995 and 1994
are set forth beginning on the next page. These financial statements should be
considered only as bearing on our ability to meet our 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, 1995 and 1994 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Pacific Mutual Life Insurance Company:
We have audited the accompanying statements of financial position of
Pacific Mutual Life Insurance Company as of December 31, 1995 and 1994,
and the related statements of operations and surplus, and of cash flow
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of Pacific Mutual Life
Insurance Company as of December 31, 1995 and 1994, and the results of
its operations and its cash flow for the years then ended, in conformity
with accounting practices prescribed or permitted by the Insurance
Department of the State of California and with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 23, 1996
15
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1995 1994
- ------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ASSETS
Bonds $ 6,699,489 $ 6,669,853
Preferred stocks 156,097 132,604
Common stocks 54,504 57,874
Unconsolidated subsidiaries 182,040 196,401
Mortgage loans 1,388,743 1,421,182
Real estate 145,178 157,507
Home office properties 48,446 51,419
Policy loans 2,700,544 2,312,455
Cash and short-term investments 262,527 97,745
Investment income due and accrued 135,607 125,534
Premiums due and uncollected, and other assets 295,159 245,243
Separate account assets 5,520,478 3,260,374
- ------------------------------------------------------------------------
TOTAL ASSETS $17,588,812 $14,728,191
- ------------------------------------------------------------------------
LIABILITIES AND SURPLUS
Liabilities
Policy reserves $ 7,204,362 $ 6,476,634
Deposit funds 3,262,340 3,298,915
Other liabilities 686,989 885,638
Asset valuation reserve 191,392 179,006
Separate account liabilities 5,520,478 3,260,374
- ------------------------------------------------------------------------
Total Liabilities 16,865,561 14,100,567
Surplus 723,251 627,624
- ------------------------------------------------------------------------
TOTAL LIABILITIES AND SURPLUS $17,588,812 $14,728,191
- ------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
16
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF OPERATIONS AND SURPLUS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums, annuity considerations and deposit funds $2,919,920 $2,180,409
Net investment income 945,546 879,116
Other income 5,685 5,073
- ------------------------------------------------------------------------------
TOTAL REVENUES 3,871,151 3,064,598
- ------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 3,371,448 2,659,601
Operating expenses 309,588 249,018
Premium and other taxes (excluding tax on capital
gains) 35,168 28,705
Dividends to policyowners 16,639 17,162
- ------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 3,732,843 2,954,486
- ------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 138,308 110,112
Federal income taxes 59,470 41,510
- ------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 78,838 68,602
NET REALIZED CAPITAL GAINS 6,311 12,424
- ------------------------------------------------------------------------------
NET INCOME $ 85,149 $ 81,026
- ------------------------------------------------------------------------------
SURPLUS
Net income $ 85,149 $ 81,026
Other surplus transactions, net 10,478 (36,178)
- ------------------------------------------------------------------------------
Increase in surplus 95,627 44,848
Surplus, beginning of year 627,624 582,776
- ------------------------------------------------------------------------------
SURPLUS, END OF YEAR $ 723,251 $ 627,624
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Receipts
Premiums, annuity considerations and deposit
funds $ 2,687,698 $ 1,687,583
Net investment income 927,918 809,791
Allowances and reserve adjustments on reinsurance
ceded 187,380 491,363
Other 13,885 23,862
Payments
Policy benefit payments (1,677,788) (1,408,650)
Net policy loans (388,320) (352,358)
Operating expenses (278,138) (247,437)
Net transfer to separate accounts (1,178,622) (594,284)
Premium and other taxes (41,116) (34,795)
Dividends to policyowners (16,715) (17,319)
Federal income taxes (35,779) (23,995)
- -------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES 200,403 333,761
- -------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds
Bonds 2,496,486 2,937,210
Stocks 208,235 139,785
Mortgage loans 261,514 390,642
Real estate 21,419 20,163
Other investments 49,089 47,132
Payments for the purchase of
Bonds (2,431,687) (3,673,859)
Stocks (222,678) (126,823)
Mortgage loans (239,355) (230,859)
Real estate (4,716) (17,466)
Other investments (124,164) (114,106)
- -------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY (USED IN)
INVESTING ACTIVITIES 14,143 (628,181)
- -------------------------------------------------------------------------------
</TABLE>
(Continued)
See Notes to Financial Statements
18
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended December 31,
(Continued) 1995 1994
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Issuance (repayment) of short-term borrowings $ (49,764) $ 49,764
- ------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY (USED IN) FINANCING
ACTIVITIES (49,764) 49,764
- ------------------------------------------------------------------------------
Increase (decrease) in cash and short-term
investments 164,782 (244,656)
Cash and short-term investments, beginning of year 97,745 342,401
- ------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 262,527 $ 97,745
- ------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 18,376 $ 22,120
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Pacific Mutual Life Insurance Company ("Pacific Mutual") was established
in 1868 and is organized under the laws of the State of California as a
mutual life insurance company. Pacific Mutual conducts business in every
state except New York.
Pacific Mutual, including its subsidiaries and affiliates, has primary
business segments which consist of life insurance, annuities, pension
products, group employee benefits and investment management and advisory
services. These primary business segments provide products for
individuals and corporations and offer a range of investment products to
institutions and pension plans.
BASIS OF PRESENTATION
Pacific Mutual's financial statements are prepared in accordance with
accounting practices prescribed or permitted by the Insurance Department
of the State of California, which are currently considered generally
accepted accounting principles ("GAAP") for mutual life insurance
companies. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations, and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The financial statements of Pacific Mutual
are not consolidated with those of its subsidiaries.
The Financial Accounting Standards Board ("FASB") has issued certain
pronouncements effective for 1996 financial statements and thereafter
that will no longer allow statutory financial statements of mutual life
insurance companies to be described as being prepared in conformity with
GAAP.
Upon the effective date of these pronouncements, in order for their
financial statements to be described as being prepared in accordance with
GAAP, mutual life insurance companies and their insurance subsidiaries
will be required to adopt all applicable authoritative GAAP
pronouncements in any general purpose financial statements that they may
issue. Pacific Mutual intends to issue 1996 general purpose financial
statements reflecting the adoption of all applicable GAAP pronouncements.
INVESTMENTS
Bonds qualifying for amortization are carried at amortized cost; all
other bonds are carried at prescribed values. Preferred stocks are
principally stated at amortized cost. Unaffiliated common stocks are
carried at market value. Investments in unconsolidated subsidiaries are
reported on the equity method of accounting, except for Pacific
Corinthian Life Insurance Company ("PCL") (Note 2) which is carried at
cost.
Mortgage loans and policy loans are stated at unpaid principal balances.
Real estate is valued at the lower of depreciated cost or market, less
related mortgage debt. Real estate is depreciated using the straight-line
method over 30 years.
Short-term investments generally mature within a year and are carried at
amortized cost which approximates estimated fair value.
The Asset Valuation Reserve ("AVR") is computed in accordance with a
prescribed formula and is designed to stabilize surplus against valuation
and credit-related losses for certain invested assets. Changes to the AVR
are reported as direct additions or deductions from surplus. The Interest
Maintenance Reserve ("IMR"), included in other liabilities on the
accompanying statements of financial position, results in the deferral of
after-tax realized capital gains and losses attributable to interest rate
fluctuations on fixed income investments. These capital gains and losses
are amortized into investment income over the remaining life of the
investment sold. The IMR was $25.3 million and $13.1 million as of
December 31, 1995 and 1994, respectively.
20
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net realized capital gains and losses are determined on the specific
identification method and are presented net of federal capital gains tax
of $18.5 million and $(2.3) million and transfers to the IMR of $22.6
million and $(.4) million for the years ended December 31, 1995 and 1994,
respectively.
Derivatives which qualify for hedge accounting are valued consistently
with the hedged items. Realized hedged gains and losses on fixed income
contracts are deferred and amortized over the average life of the related
hedged assets or insurance liabilities. Realized gains and losses on
equity securities, which are marked to market, are recognized
immediately. Derivatives which do not qualify for hedge accounting are
valued at market value through surplus while still held and when realized
through income.
On November 15, 1994, Pacific Financial Asset Management Corporation
("PFAMCo"), a wholly-owned, subsidiary of Pacific Mutual, and five of its
subsidiaries (Pacific Investment Management Company and subsidiaries,
Parametric Portfolio Associates, Inc., Cadence Capital Management
Corporation, NFJ Investment Group, Inc. and Blairlogie Capital Management
Limited) entered into an agreement and plan of consolidation with Thomson
Advisory Group L.P., a Delaware limited partnership with publicly traded
units, to merge into a newly capitalized partnership named PIMCO Advisors
L.P. Collectively, PFAMCo and various of its subsidiaries beneficially
own approximately 42% of the outstanding general and limited partner
units of PIMCO Advisors L.P. as of December 31, 1995 and 1994. Net cash
distributions received on these units are recorded as income as permitted
by the Insurance Department of the State of California.
On December 21, 1995, Pacific Mutual completed a subsidiary
reorganization in which PFAMCo became a direct, wholly-owned subsidiary
of Pacific Mutual. Prior to that PFAMCo was a wholly-owned second-tier
subsidiary of Pacific Mutual. The intermediate company, Pacific Financial
Holding Company ("PFHC") and certain of its assets and liabilities were
merged into PFAMCo in connection with this reorganization. The remaining
assets were merged into Pacific Mutual which consisted of investments in
subsidiaries as follows: Pacific Equities Network, PM Group Life
Insurance Company and PFAMCo.
POLICY RESERVES AND DEPOSIT FUNDS
Life insurance reserves are valued using the net level premium method,
the Commissioners' Reserve Valuation Method, or other modified reserve
methods.
Reserves for individual annuities are maintained principally on the
Commissioners' Annuity Reserve Valuation Method. Group annuity contract
reserves are valued using the net single premium method.
The liability for deposit funds, including guaranteed interest contracts,
is based primarily upon and is not less than the policyowners' equity in
their deposit accounts, including credited interest.
REVENUES AND EXPENSES
Premiums are recognized as income over the premium paying period.
Deposits made in connection with annuity contracts are recognized as
revenue when received. Investment income is recorded as earned.
Expenses, including policy acquisition costs, such as commissions, and
Federal income taxes are charged to operations as incurred.
DIVIDENDS
Dividends are provided based on dividend formulas approved by the Board
of Directors and reviewed for reasonableness and equitable treatment of
policyowners by an independent consulting actuary.
21
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
Pacific Mutual is taxed as a life insurance company for Federal income
tax purposes. Pacific Mutual's income tax return is consolidated with all
its includable domestic subsidiaries except PCL. The amount of Federal
income tax expense includes an equity tax calculated by a prescribed
formula that incorporates a differential earnings rate between stock and
mutual life insurance companies. Under prescribed statutory accounting
practices, deferred tax assets and liabilities are not recorded. The
difference between the effective tax rate and the statutory tax rate of
35% for 1995 and 1994 is primarily due to certain policy acquisition
costs being deferred and amortized over a ten-year period for tax
purposes, reserve differences, non-taxable investment income and the
equity tax.
OTHER SURPLUS TRANSACTIONS
Other surplus transactions consist primarily of unrealized capital gains
and losses, changes in nonadmitted assets, and changes in the AVR.
SEPARATE ACCOUNTS
Separate account assets are recorded at market value and the related
liabilities represent segregated contract owner funds maintained in
accounts with individual investment objectives. The investment results of
separate account assets generally pass through to separate account policy
owners and contract owners.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments disclosed in Notes 3
and 4 have been determined using available market information and
appropriate valuation methodologies. However, considerable judgment is
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented may not be indicative of the amounts
Pacific Mutual could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies could have a
significant effect on the estimated fair value amounts.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
practices prescribed or permitted by regulatory authorities and generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1995
financial statement presentation.
2. REHABILITATION OF FIRST CAPITAL LIFE INSURANCE COMPANY
Pursuant to a five-year rehabilitation agreement approved by a California
Superior Court and the Insurance Department of the State of California in
July 1992, Pacific Mutual, through its wholly-owned subsidiary, PCL, will
facilitate the rehabilitation of First Capital Life Insurance Company
("FCL"). In accordance with the rehabilitation agreement, insurance
policies of FCL were restructured and assumed by PCL on December 31,
1992.
The rehabilitation agreement provides for the holders of restructured
policies to share in a substantial percentage of the unallocated surplus
of PCL at the end of the rehabilitation period. Policyholders have the
option to surrender their restructured policies with reduced benefits
during this five-year period. During the rehabilitation
22
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
2. REHABILITATION OF FIRST CAPITAL LIFE INSURANCE COMPANY (CONTINUED)
plan period, PCL is prohibited from issuing new insurance policies. At
the end of the rehabilitation period, PCL will merge into Pacific Mutual,
with Pacific Mutual as the surviving entity. Substantially all of the
assets and certain of the liabilities of FCL were assumed by PCL on
December 31, 1992, pursuant to an assumption reinsurance agreement and
asset purchase agreement.
In accordance with the rehabilitation agreement, PCL was capitalized by a
cash contribution of $8.3 million from Pacific Mutual and a $45 million
certificate of contribution provided by a wholly-owned subsidiary of
Pacific Mutual for a total of $53.3 million initial capitalization.
In the event PCL is unable to pay contract benefits, Pacific Mutual is
obligated to contribute funds to pay those benefits in accordance with
the rehabilitation agreement.
3. INVESTMENTS IN DEBT SECURITIES
The statement value, gross unrealized gains and losses and estimated fair
value of bonds and redeemable preferred stocks ("debt securities"),
including short-term investments, are shown below. The estimated fair
value of publicly traded securities was based on quoted market prices.
For securities not actively traded, estimated fair values were provided
by independent pricing services specializing in "matrix pricing" and
modeling techniques. Pacific Mutual also estimates certain fair values
based on interest rates, credit quality and average maturity or from
securities with comparable trading characteristics.
<TABLE>
<CAPTION>
Gross Unrealized Estimated
Statement ----------------- Fair
Value Gains Losses Value
---------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
December 31, 1995:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 147,436 $ 28,214 $ 175,650
Obligations of states, political
subdivisions and foreign
governments 452,273 66,960 $ 3,064 516,169
Corporate securities 3,901,979 442,497 46,539 4,297,937
Mortgage-backed securities 2,438,052 116,650 10,106 2,544,596
Redeemable preferred stock 89,191 2,840 2,472 89,559
---------------------------------------
Total $7,028,931 $657,161 $ 62,181 $7,623,911
---------------------------------------
December 31, 1994:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 216,201 $ 1,064 $ 37,113 $ 180,152
Obligations of states, political
subdivisions and foreign
governments 321,798 5,371 16,309 310,860
Corporate securities 3,771,271 104,311 160,712 3,714,870
Mortgage-backed securities 2,475,472 28,472 81,111 2,422,833
Redeemable preferred stock 81,026 343 5,031 76,338
---------------------------------------
Total $6,865,768 $139,561 $300,276 $6,705,053
---------------------------------------
</TABLE>
23
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS IN DEBT SECURITIES (CONTINUED)
The statement value and estimated fair value of debt securities as of
December 31, 1995 by contractual repayment date of principal are shown
below. Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Statement Fair
Value Value
-----------------------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 445,645 $ 449,283
Due after one year through five years 1,319,487 1,426,373
Due after five years through ten years 1,409,209 1,542,228
Due after ten years 1,416,538 1,661,431
-----------------------
4,590,879 5,079,315
Mortgage-backed securities 2,438,052 2,544,596
-----------------------
Total $ 7,028,931 $ 7,623,911
-----------------------
</TABLE>
Proceeds from sales of investments in debt securities were $1.4 billion
and $1.5 billion for the years ended December 31, 1995 and 1994,
respectively. In 1995 and 1994, gross gains of $36 million and $30
million and gross losses of $14 million and $43 million, respectively,
were realized on those sales.
4. FINANCIAL INSTRUMENTS
The estimated fair values of Pacific Mutual's financial instruments,
including debt securities, are as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
Statement Estimated Statement Estimated
Value Fair Value Value Fair Value
-----------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
Assets:
Debt securities
(Note 3) $ 7,028,931 $ 7,623,911 $ 6,865,768 $ 6,705,053
Preferred and common
stocks 121,420 139,613 109,458 116,993
Mortgage loans 1,388,743 1,500,000 1,421,182 1,452,596
Policy loans 2,700,544 2,700,544 2,312,455 2,312,455
Derivative financial
instruments:
Interest rate swaps 1,068 3,379 121 (24,809)
Other 18,008 30,649 2,672 (2,822)
Liabilities:
Guaranteed interest
contracts 2,375,898 2,459,323 2,635,356 2,614,961
Deposit liabilities 876,276 899,393 897,743 859,469
Annuity liabilities 308,742 311,441 220,026 223,423
Other derivative fi-
nancial instruments 2,373 1,490 2,270 2,128
Surplus:
Contribution certifi-
cates 149,596 157,688 149,593 124,313
</TABLE>
24
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
The following methods and assumptions were used to estimate the fair
values of these financial instruments as of December 31, 1995 and 1994:
PREFERRED AND COMMON STOCKS
The estimated fair values are based on quoted market prices or dealer
quotes.
MORTGAGE LOANS
The estimated fair value of the mortgage loan portfolio is determined by
discounting the estimated future cash flows, using a year-end market rate
which is applicable to the yield, credit quality and average maturity of
the composite portfolio.
POLICY LOANS
The statement value of policy loans is a reasonable estimate of their
fair value.
GUARANTEED INTEREST CONTRACTS AND DEPOSIT LIABILITIES
The estimated fair values of fixed-maturity guaranteed interest contracts
are estimated using the rates currently offered for deposits of similar
remaining maturities. The estimated fair values of deposit liabilities
with no defined maturities are the amounts payable on demand.
Pacific Mutual has issued PRO GIC and Diversifier GIC contracts to plan
sponsors totaling $914 million as of December 31, 1995, pursuant to the
terms of which the plan sponsor retains direct ownership and control of
the assets related to these contracts. Pacific Mutual agrees to provide
benefit responsiveness in the event that plan benefit requests exceed
plan cash flows. In return for this guarantee, Pacific Mutual receives a
fee which varies by contract. Pacific Mutual sets the investment
guidelines to provide for appropriate credit quality and cash flow
matching.
ANNUITY LIABILITIES
The fair value of annuity liabilities approximates statement value and
primarily includes policyholder deposits and accumulated credited
interest.
DERIVATIVE FINANCIAL INSTRUMENTS
Pacific Mutual utilizes certain derivative financial instruments to
diversify its business risk and to minimize its exposure to fluctuations
in market prices, interest rates, or basis risk. Pacific Mutual has also
set aside a corporate total return portfolio utilizing derivative
financial instruments. These instruments include interest rate and
currency swaps, asset swaps, credit derivatives, forwards, options held,
options written, and futures contracts, and involve elements of credit
risk and market risk in excess of amounts recognized in the accompanying
financial statements. The notional amounts of those instruments reflect
the extent of involvement in those various types of financial
instruments. The estimated fair values of these instruments are based on
market or dealer quotes. Pacific Mutual determines, on an individual
counterparty basis, the need for collateral or other security to support
financial instruments with off-balance sheet credit risks.
25
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
Options and Floors
------------------
Pacific Mutual uses options and floors to hedge against fluctuations in
interest rates and in its corporate total return portfolio. Cash
requirements on options held are limited to the premium paid by Pacific
Mutual at acquisition. Pacific Mutual uses written options on a limited
basis consisting primarily of covered calls. Gains and losses on covered
calls are offset by gains and losses on the underlying position. Options
and floors held are reported as assets and options written are reported
as liabilities. As of December 31, 1995, the notional amount of options
held and options written approximated $1.3 billion and $30 million,
respectively. As of December 31, 1994, the notional amount of options
held and options written approximated $1.5 billion and $42 million,
respectively. Option contracts mature during 1996 through 2007.
Interest Rate Swap Contracts
----------------------------
Pacific Mutual has entered into interest rate swap contracts to reduce
the impact of changes in interest rates on its variable short-term and
long-term investments. These contracts effectively change the interest
rate exposure on variable rate notes to fixed rates which range from 1.9%
to 8.9% as of December 31, 1995, and from 1.9% to 8.6% as of December 31,
1994. Interest rate swap contracts mature during 1996 through 2013. As of
December 31, 1995 and 1994, interest rate swap contracts outstanding with
financial institutions had a total notional amount of $656 million and
$411 million, respectively.
Asset Swap Contracts
--------------------
Pacific Mutual has entered into an asset swap contract to reduce interest
rate risk by shortening both the duration and maturity of one of its
fixed rate investments. The asset swap contract matures during 1998. As
of December 31, 1995, the asset swap contract had a notional amount of
$10 million.
Credit Derivatives
------------------
Pacific Mutual uses credit derivatives to take advantage of market
opportunities. As of December 31, 1995 and 1994, the notional amount of
credit derivatives outstanding approximated $90 million and $66 million,
respectively. Credit derivatives mature during 1996 through 2000.
Foreign Currency Exchange Contracts
-----------------------------------
Pacific Mutual enters into foreign currency exchange contracts that are
used to hedge against fluctuations in foreign currency-denominated assets
and related income. Gains and losses on such agreements offset currency
gains and losses on the related assets. As of December 31, 1995 and 1994,
the notional amount of foreign currency exchange contracts approximated
$15 million and $35 million, respectively. Foreign currency exchange
contracts expire during 1998 and 1999.
Future Contracts
----------------
Pacific Mutual uses exchange-traded futures contracts for asset and
liability management of fixed maturity securities and insurance
liabilities and for hedging market fluctuations on equity securities.
Price changes on futures are settled daily through the daily margin cash
flows. As of December 31, 1995 and 1994, the notional amounts of futures
contracts were $340 million and $163 million, respectively. The notional
amounts of the contracts do not represent future cash requirements, as
Pacific Mutual intends to close out open positions prior to expiration.
26
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
CONTRIBUTION CERTIFICATES
The estimated fair value of contribution certificates is based on market
quotes.
5. CONCENTRATION OF CREDIT RISK
Pacific Mutual manages its investments to limit credit risk by
diversifying its portfolio among various security types and industry
sectors. The credit risk of financial instruments is controlled through
credit approvals, limits and monitoring procedures. Real estate and
mortgage loan investments are diversified by geographic location and
property type. Management believes that significant concentrations of
credit risk do not exist.
Pacific Mutual is exposed to credit loss in the event of nonperformance
by the other parties to the interest rate swaps contracts and other
derivative securities. However, Pacific Mutual does not anticipate
nonperformance by the counterparties.
6. UNCONSOLIDATED SUBSIDIARIES
Pacific Mutual's subsidiary operations primarily include other life and
health insurance and investment management and advisory services. As of
December 31, 1995 and 1994, subsidiary assets were $4.5 billion and
liabilities were $4.3 billion as of December 31, 1995 and $4.2 billion as
of December 31, 1994.
Revenue and net income, including PCL, were $908 million and $63 million
for the year ended December 31, 1995, and $1.1 billion and $75 million
for the year ended December 31, 1994. Dividends from subsidiaries totaled
$64.7 million and $2 million for the years ended December 31, 1995 and
1994, respectively. Earnings of subsidiaries, excluding PCL, and
excluding capital gains, are included in net investment income.
7. BORROWINGS
Pacific Mutual borrows for short-term needs by issuing commercial paper.
Approximately $50 million was outstanding as of December 31, 1994,
bearing an interest rate of 5.86%, and was repaid in January, 1995. There
were no borrowings outstanding as of December 31, 1995.
In addition, Pacific Mutual had available a revolving credit facility
totaling approximately $250 million as of December 31, 1995 and 1994.
There were no borrowings outstanding as of December 31, 1995 and 1994.
8. CONTRIBUTION CERTIFICATES
Pacific Mutual has $150 million of Contribution Certificates (the
"Certificates"), also referred to as Surplus Notes, outstanding at an
interest rate of 7.9% maturing on December 30, 2023. Interest is payable
semiannually on June 30 and December 30. The Certificates may not be
redeemed at the option of Pacific Mutual or any holder of the
Certificates. The Certificates are unsecured and subordinated to all
present and future senior indebtedness and policy claims of Pacific
Mutual. Each payment of interest on and the payment of principal of the
Certificates may be made only out of Pacific Mutual's surplus and with
the prior approval of the Insurance Commissioner of the State of
California. In accordance with accounting practices prescribed or
permitted by the Insurance Department of the State of California, the
Certificates are not part of the liabilities of Pacific Mutual and are
included in surplus.
27
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
9. REINSURANCE
Pacific Mutual has reinsurance agreements with other insurance companies
for the purpose of diversifying risk and limiting exposure on larger
risks. For the years ended December 31, 1995 and 1994, individual life
and annuity premiums assumed were $16 million and $20 million and
premiums ceded were $339 million and $363 million, respectively. Amounts
recoverable from reinsurers for individual life and annuities include
reinsured and paid claims of $8 million and $13 million as of December
31, 1995 and 1994, respectively. Policy benefits payable are net of
reinsurance recoveries of $8 million and $4 million at December 31, 1995
and 1994, respectively.
Pacific Mutual also reinsures substantially all of its group life and
health business with a subsidiary insurance company. Premiums of $72
million and $90 million, and benefits of $53 million and $70 million were
ceded during the years ended December 31, 1995 and 1994, respectively.
Amounts payable to the subsidiary under this agreement were $6 million
and $8 million as of December 31, 1995 and 1994, respectively.
To the extent that the assuming companies become unable to meet their
obligations under these treaties, Pacific Mutual remains contingently
liable. However, Pacific Mutual does not anticipate nonperformance by
these assuming companies.
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
PENSION PLAN
Pacific Mutual maintains a defined benefit pension plan covering eligible
employees and agents. In 1995, Pacific Mutual accrued $2.5 million in
pension expense that will be funded in 1996 based on the latest actuarial
valuation report. No expense or contributions were made during 1994
because of the funded status of the plans and related income tax
considerations. Accumulated benefits and net assets available for
benefits as of the latest valuation dates (January 1, 1995 and April 1,
1994) are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------
(In Thousands)
<S> <C> <C>
Actuarial present value of accumulated
benefits:
Vested $ 92,966 $ 88,122
Nonvested 392 1,115
-------------------
Total $ 93,358 $ 89,237
-------------------
Net assets available for benefits $ 107,530 $ 111,089
-------------------
</TABLE>
The above present values were determined using an assumed discount rate
of 8.5% in 1995 and 1994.
POSTRETIREMENT HEALTHCARE AND LIFE INSURANCE PLANS
Pacific Mutual sponsors a defined benefit health care plan and a defined
benefit life insurance plan ("The Plans") that provide postretirement
benefits for all eligible retirees and their dependents. Generally,
qualified employees may become eligible for these benefits if they reach
normal retirement age, have been covered under Pacific Mutual's policy as
an active employee for a minimum continuous period prior to the date
retired, and have an employment date before January 1, 1990. The Plans
contain cost-sharing features such as deductibles and coinsurance and
require retirees to make contributions which can be adjusted annually.
Pacific Mutual's
28
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
commitment to qualified employees who retire after April 1, 1994 is
limited to specific dollar amounts. Pacific Mutual reserves the right to
modify or terminate The Plans at any time. As in the past, the general
policy is to fund these benefits on a pay-as-you-go basis. The amount of
benefits paid under The Plans for the years ended December 31, 1995 and
1994 was approximately $1.7 million for both years.
Pacific Mutual utilizes the accrual method of accounting for the costs of
The Plans as prescribed by the Insurance Department of the State of
California and amortizes its transition obligation of $26.7 million over
twenty years.
Components of net periodic postretirement benefit cost are as follows (In
Thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
---------------------------
<S> <C> <C>
Service cost $ 177 $ 186
Interest cost 1,921 1,790
Amortization (260) (260)
---------------------------
1,838 1,716
Recognized transition obligation-net 1,336 1,337
---------------------------
Net periodic postretirement benefit cost $ 3,174 $ 3,053
---------------------------
</TABLE>
The following table presents The Plans' funded status reconciled with
amounts recorded in other liabilities on Pacific Mutual's statement of
financial position (In Thousands):
<TABLE>
<CAPTION>
1995 1994
------------------
<S> <C> <C>
Accumulated postretirement obligation:
Retirees $ 20,936 $ 20,580
Fully eligible active plan participants 1,695 1,346
Other active plan participants 2,290 2,455
------------------
24,921 24,381
Fair value of plan assets 0 0
------------------
Unfunded accumulated postretirement obligation 24,921 24,381
Unrecognized net gain 878 942
Prior service cost 1,589 1,849
Unrecognized transition obligation - net (22,720) (24,056)
------------------
Accrued postretirement benefit liability $ 4,668 $ 3,116
------------------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
benefit obligation was 10% for 1995 and 11% for 1994, and is assumed to
decrease gradually to 5% in 2003 and remain at that level thereafter. The
amount reported is materially affected by the health care cost trend rate
assumptions. If the health care cost trend
29
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
rate assumptions were increased by 1%, the accumulated postretirement
benefit obligation as of December 31, 1995 and 1994 would be increased by
10.9% and 11.2%, respectively. The effect of this change would increase
the aggregate of the service, interest and amortization cost components
of the net periodic benefit cost by 11.4% and 13.6%, respectively.
The discount rate used in determining the accumulated postretirement
benefit obligation is 7% and 8% for 1995 and 1994, respectively.
11. INVESTMENT COMMITMENTS
Pacific Mutual has outstanding commitments to make investments in bonds
and other invested assets as follows (In Thousands):
<TABLE>
<CAPTION>
Year ended December 31:
-----------------------
<S> <C>
1996 $ 179,551
1997-2000 88,698
2001 and thereafter 32,091
---------
Total $ 300,340
---------
</TABLE>
12. LITIGATION
Pacific Mutual and its subsidiaries are respondents in a number of legal
proceedings, some of which involve extra-contractual damages. In the
opinion of management, the outcome of these proceedings is not likely to
have a material adverse effect on the financial position of Pacific
Mutual.
--------------------------------------------------------------------------
30
<PAGE>
[FORM #T/K]
<PAGE>
PART II
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
Audited financial statements dated as of December 31, 1995
and 1994, respectively, included in Part B include the
following for Pacific Mutual
Statements of Financial Position
Statements of Operations and Surplus
Statements of Cash Flows
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.
(b) Memorandum Establishing Two New Variable
Accounts--Aggressive Equity and Emerging Markets
Portfolios.
II-1
<PAGE>
2. Not applicable
3. (a) Distribution Agreement between Pacific Mutual and
Pacific Mutual Distributors,Inc. ("PMD") (formerly
Pacific Equities Network)
(b) Form of Selling Agreement between Pacific Mutual,
PMD 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. Fund Participation Agreement
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, independent
auditor
(b) Powers of Attorney
11. Not applicable
12. Not applicable
13. Performance Calculations
14. Not applicable
15. Not applicable
16. Not applicable
17. Financial Data Schedules
Item 25. Directors and Officers of Pacific Mutual
Positions and Offices
Name and Address with Pacific Mutual
Thomas C. Sutton Director, Chairman of the Board, and
Chief Executive Officer
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
Jacqueline C. Morby Director
J. Fernando Niebla Director
Susan Westerberg Prager Director
Richard M. Rosenberg Director
James R. Ukropina Director
II-3
<PAGE>
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
Lynn C. Miller Executive Vice President
Marilee Roller Senior Vice President
Khan T. Tran Vice President and Treasurer
______________________________
The address for each of the persons listed above is as follows:
700 Newport Center Drive
Newport Beach, California 92660
Item 26. Persons Controlled by or Under Common Control with Pacific Mutual or
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, a 50% ownership of Pacific Mezzanine
Associates, L.L.C., and is the parent company of Pacific Financial Asset
Management Corporation, Pacific Mutual Realty Finance, Inc., PM Group Life
Insurance Company (an Arizona corporation), Pacific Mutual Distributors,
Inc. and Pacific Corinthian Life Insurance Company. Subsidiaries of Pacific
Financial Asset Management Corporation include: PMRealty Advisors Inc. and
PIMCO Advisors L.P. (a Delaware Limited Partnership which is 42% owned).
Subsidiaries of Pacific Mutual Distributors, Inc. include: Mutual Service
Corporation (a Michigan corporation), along with its subsidiary Advisors'
Mutual Service Center, Inc. (a Michigan corporation); and United Planners'
Group, Inc. (an Arizona corporation which is 95.2% owned consisting of 100%
of Class A and 79.3% of Class B of the corporation's common stock), along
with its subsidiary United Planners' Financial Services of America (an
Arizona Limited Partnership). Subsidiaries of Pacific Corinthian Life
Insurance include: World-Wide Holdings Limited (a United Kingdom
corporation which is 72.4% owned), including its subsidiaries World-Wide
Reassurance Company Limited (a United Kingdom corporation) and World-Wide
Reassurance Company (BVI) Limited (a British Virgin Islands corporation).
All corporations are 100% owned unless otherwise indicated. All entities
are California corporations unless otherwise indicated.
II-4
<PAGE>
Item 27. Number of Contractholders
None
Item 28. Indemnification
(a) The Distribution Agreement between Pacific Mutual and PMD
(formerly PEN) provides substantially as follows:
Pacific Mutual hereby agrees to indemnify and hold harmless PMD
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 PMD.
PMD 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 PMD or Broker;
(4) any willful misfeasance, bad faith, negligence, misconduct or
wrongful act. PMD 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, PMD
(formerly PEN) and Various Broker-Dealers provides substantially
as follows:
Pacific Mutual and PMD 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 PMD 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 PMD, 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 PMD 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
PMD or any director, officer, agent or employee of either entity
for any legal or other expenses reasonably incurred by Pacific
Mutual, PMD, 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) PMD (formerly 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 PMD, reference is made to Form B-D, SEC
File No. 8-15264, which is herein incorporated by reference.
(c) PMD 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 certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness and 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 April, 1996.
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
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:
Signature Title Date
Thomas C. Sutton* Director, Chairman of the Board ___________, 1996
and Chief Executive Officer
Glenn S. Schafer* Director and President ___________, 1996
Harry G. Bubb* Director and Chairman Emeritus ___________, 1996
Richard M. Ferry* Director ___________, 1996
<PAGE>
Donald E. Guinn* Director ___________, 1996
Ignacio E. Lozano, Jr.* Director ___________, 1996
Charles A. Lynch* Director ___________, 1996
Dr. Allen W. Mathies, Jr.* Director ___________, 1996
Charles D. Miller* Director ___________, 1996
Donn B. Miller* Director ___________, 1996
Jacqueline C. Morby Director ___________, 1996
J. Fernando Niebla* Director ___________, 1996
Susan Westerberg Prager* Director ___________, 1996
Richard M. Rosenberg Director ___________, 1996
James R. Ukropina* Director ___________, 1996
Raymond L. Watson* Director ___________, 1996
Edward Byrd* Vice President and Controller ___________, 1996
*By: /s/ DAVID R. CARMICHAEL
David R. Carmichael April 19, 1996
as attorney-in-fact
(Powers Of Attorney are contained in this Pre-Effective Amendment No. 1 to
the Registration Statement for the Separate Account A Separate Account, File No.
33-88460 as Exhibit 10(b).)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 94,486
<INVESTMENTS-AT-VALUE> 94,486
<RECEIVABLES> 1,533
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,019
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70
<TOTAL-LIABILITIES> 70
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95,975
<SHARES-COMMON-STOCK> 9,579
<SHARES-COMMON-PRIOR> 9,390
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (26)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 95,949
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,737
<OTHER-INCOME> 0
<EXPENSES-NET> 512
<NET-INVESTMENT-INCOME> 5,225
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,225
<EQUALIZATION> (34)
<DISTRIBUTIONS-OF-INCOME> (5,251)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,344
<NUMBER-OF-SHARES-REDEEMED> 25,679
<SHARES-REINVESTED> 524
<NET-CHANGE-IN-ASSETS> 1,799
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 386
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 512
<AVERAGE-NET-ASSETS> 96,579
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.55
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.02
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 2
<NAME> HIGH YIELD BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 80,122
<INVESTMENTS-AT-VALUE> 82,571
<RECEIVABLES> 1,896
<ASSETS-OTHER> 10
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,477
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52
<TOTAL-LIABILITIES> 52
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 80,958
<SHARES-COMMON-STOCK> 8,622
<SHARES-COMMON-PRIOR> 2,843
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 989
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,449
<NET-ASSETS> 84,425
<DIVIDEND-INCOME> 82
<INTEREST-INCOME> 4,868
<OTHER-INCOME> 0
<EXPENSES-NET> 413
<NET-INVESTMENT-INCOME> 4,537
<REALIZED-GAINS-CURRENT> 990
<APPREC-INCREASE-CURRENT> 3,249
<NET-CHANGE-FROM-OPS> 8,776
<EQUALIZATION> 795
<DISTRIBUTIONS-OF-INCOME> (4,508)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,807
<NUMBER-OF-SHARES-REDEEMED> 2,500
<SHARES-REINVESTED> 472
<NET-CHANGE-IN-ASSETS> 59,087
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 319
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 413
<AVERAGE-NET-ASSETS> 53,315
<PER-SHARE-NAV-BEGIN> 8.91
<PER-SHARE-NII> 0.76
<PER-SHARE-GAIN-APPREC> 0.88
<PER-SHARE-DIVIDEND> 0.76
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.79
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 3
<NAME> GOVERNMENT SECURITIES PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 65,905
<INVESTMENTS-AT-VALUE> 66,685
<RECEIVABLES> 4,523
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,208
<PAYABLE-FOR-SECURITIES> 11,369
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72
<TOTAL-LIABILITIES> 11,441
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,506
<SHARES-COMMON-STOCK> 5,511
<SHARES-COMMON-PRIOR> 2,229
<ACCUMULATED-NII-CURRENT> 56
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,107
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,098
<NET-ASSETS> 59,767
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,422
<OTHER-INCOME> 1
<EXPENSES-NET> 309
<NET-INVESTMENT-INCOME> 2,114
<REALIZED-GAINS-CURRENT> 2,863
<APPREC-INCREASE-CURRENT> 1,330
<NET-CHANGE-FROM-OPS> 6,307
<EQUALIZATION> 300
<DISTRIBUTIONS-OF-INCOME> (2,184)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,681
<NUMBER-OF-SHARES-REDEEMED> 608
<SHARES-REINVESTED> 209
<NET-CHANGE-IN-ASSETS> 38,278
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,630)
<GROSS-ADVISORY-FEES> 227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 309
<AVERAGE-NET-ASSETS> 37,860
<PER-SHARE-NAV-BEGIN> 9.64
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 4
<NAME> MANAGED BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 124,306
<INVESTMENTS-AT-VALUE> 126,608
<RECEIVABLES> 3,557
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130,179
<PAYABLE-FOR-SECURITIES> 3,021
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 166
<TOTAL-LIABILITIES> 3,187
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121,763
<SHARES-COMMON-STOCK> 11,440
<SHARES-COMMON-PRIOR> 5,376
<ACCUMULATED-NII-CURRENT> 127
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,377
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,725
<NET-ASSETS> 126,992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,892
<OTHER-INCOME> 4
<EXPENSES-NET> 655
<NET-INVESTMENT-INCOME> 5,241
<REALIZED-GAINS-CURRENT> 5,734
<APPREC-INCREASE-CURRENT> 3,716
<NET-CHANGE-FROM-OPS> 14,691
<EQUALIZATION> 1,230
<DISTRIBUTIONS-OF-INCOME> (5,400)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,715
<NUMBER-OF-SHARES-REDEEMED> 1,157
<SHARES-REINVESTED> 506
<NET-CHANGE-IN-ASSETS> 73,773
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,071)
<GROSS-ADVISORY-FEES> 519
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 655
<AVERAGE-NET-ASSETS> 86,713
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0.64
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.10
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 5
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 120,022
<INVESTMENTS-AT-VALUE> 129,567
<RECEIVABLES> 1,048
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130,616
<PAYABLE-FOR-SECURITIES> 494
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381
<TOTAL-LIABILITIES> 875
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,305
<SHARES-COMMON-STOCK> 6,988
<SHARES-COMMON-PRIOR> 5,468
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (20)
<ACCUMULATED-NET-GAINS> 8,911
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,545
<NET-ASSETS> 129,741
<DIVIDEND-INCOME> 1,309
<INTEREST-INCOME> 509
<OTHER-INCOME> 0
<EXPENSES-NET> 862
<NET-INVESTMENT-INCOME> 956
<REALIZED-GAINS-CURRENT> 8,911
<APPREC-INCREASE-CURRENT> 14,638
<NET-CHANGE-FROM-OPS> 24,505
<EQUALIZATION> 76
<DISTRIBUTIONS-OF-INCOME> (976)
<DISTRIBUTIONS-OF-GAINS> (13)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,533
<NUMBER-OF-SHARES-REDEEMED> 2,071
<SHARES-REINVESTED> 58
<NET-CHANGE-IN-ASSETS> 48,290
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 709
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 862
<AVERAGE-NET-ASSETS> 109,161
<PER-SHARE-NAV-BEGIN> 14.90
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 3.67
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.57
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 6
<NAME> EQUITY INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 187,217
<INVESTMENTS-AT-VALUE> 204,936
<RECEIVABLES> 1,636
<ASSETS-OTHER> 214
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 206,786
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 133
<TOTAL-LIABILITIES> 133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 177,898
<SHARES-COMMON-STOCK> 11,351
<SHARES-COMMON-PRIOR> 5,343
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (18)
<ACCUMULATED-NET-GAINS> 11,054
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,719
<NET-ASSETS> 206,653
<DIVIDEND-INCOME> 2,852
<INTEREST-INCOME> 281
<OTHER-INCOME> 0
<EXPENSES-NET> 1,070
<NET-INVESTMENT-INCOME> 2,063
<REALIZED-GAINS-CURRENT> 12,389
<APPREC-INCREASE-CURRENT> 19,133
<NET-CHANGE-FROM-OPS> 33,585
<EQUALIZATION> 430
<DISTRIBUTIONS-OF-INCOME> (2,080)
<DISTRIBUTIONS-OF-GAINS> (55)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,041
<NUMBER-OF-SHARES-REDEEMED> 1,161
<SHARES-REINVESTED> 128
<NET-CHANGE-IN-ASSETS> 131,570
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,280)
<GROSS-ADVISORY-FEES> 841
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,070
<AVERAGE-NET-ASSETS> 129,701
<PER-SHARE-NAV-BEGIN> 14.05
<PER-SHARE-NII> 0.26
<PER-SHARE-GAIN-APPREC> 4.16
<PER-SHARE-DIVIDEND> 0.26
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.21
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 7
<NAME> MULTI-STRATEGY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 128,088
<INVESTMENTS-AT-VALUE> 137,459
<RECEIVABLES> 1,790
<ASSETS-OTHER> 74
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 139,323
<PAYABLE-FOR-SECURITIES> 4,722
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 4,822
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 118,536
<SHARES-COMMON-STOCK> 9,471
<SHARES-COMMON-PRIOR> 6,747
<ACCUMULATED-NII-CURRENT> 30
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,564
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,371
<NET-ASSETS> 134,501
<DIVIDEND-INCOME> 1,237
<INTEREST-INCOME> 3,096
<OTHER-INCOME> 1
<EXPENSES-NET> 839
<NET-INVESTMENT-INCOME> 3,495
<REALIZED-GAINS-CURRENT> 7,345
<APPREC-INCREASE-CURRENT> 11,136
<NET-CHANGE-FROM-OPS> 21,976
<EQUALIZATION> 272
<DISTRIBUTIONS-OF-INCOME> (3,457)
<DISTRIBUTIONS-OF-GAINS> (12)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,300
<NUMBER-OF-SHARES-REDEEMED> 838
<SHARES-REINVESTED> 262
<NET-CHANGE-IN-ASSETS> 55,354
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (776)
<GROSS-ADVISORY-FEES> 650
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 839
<AVERAGE-NET-ASSETS> 100,215
<PER-SHARE-NAV-BEGIN> 11.73
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 2.47
<PER-SHARE-DIVIDEND> 0.45
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 8
<NAME> INTERNATIONAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 175,732
<INVESTMENTS-AT-VALUE> 184,405
<RECEIVABLES> 1,345
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185,750
<PAYABLE-FOR-SECURITIES> 3,343
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208
<TOTAL-LIABILITIES> 3,551
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,521
<SHARES-COMMON-STOCK> 14,090
<SHARES-COMMON-PRIOR> 6,360
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,286)
<ACCUMULATED-NET-GAINS> 3,299
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,665
<NET-ASSETS> 182,199
<DIVIDEND-INCOME> 2,889
<INTEREST-INCOME> 735
<OTHER-INCOME> 0
<EXPENSES-NET> 1,354
<NET-INVESTMENT-INCOME> 2,270
<REALIZED-GAINS-CURRENT> 3,100
<APPREC-INCREASE-CURRENT> 6,427
<NET-CHANGE-FROM-OPS> 11,797
<EQUALIZATION> 1,864
<DISTRIBUTIONS-OF-INCOME> (3,358)
<DISTRIBUTIONS-OF-GAINS> (58)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,290
<NUMBER-OF-SHARES-REDEEMED> 1,823
<SHARES-REINVESTED> 263
<NET-CHANGE-IN-ASSETS> 106,228
<ACCUMULATED-NII-PRIOR> 51
<ACCUMULATED-GAINS-PRIOR> 8
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,031
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,354
<AVERAGE-NET-ASSETS> 121,321
<PER-SHARE-NAV-BEGIN> 11.94
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 0.91
<PER-SHARE-DIVIDEND> 0.25
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.93
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 9
<NAME> EQUITY INDEX PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 115,791
<INVESTMENTS-AT-VALUE> 137,077
<RECEIVABLES> 648
<ASSETS-OTHER> 28
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,754
<PAYABLE-FOR-SECURITIES> 203
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32
<TOTAL-LIABILITIES> 235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,798
<SHARES-COMMON-STOCK> 7,880
<SHARES-COMMON-PRIOR> 3,119
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (9)
<ACCUMULATED-NET-GAINS> 4,558
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,172
<NET-ASSETS> 137,519
<DIVIDEND-INCOME> 1,861
<INTEREST-INCOME> 254
<OTHER-INCOME> 6
<EXPENSES-NET> 330
<NET-INVESTMENT-INCOME> 1,791
<REALIZED-GAINS-CURRENT> 4,554
<APPREC-INCREASE-CURRENT> 16,956
<NET-CHANGE-FROM-OPS> 23,301
<EQUALIZATION> 288
<DISTRIBUTIONS-OF-INCOME> (1,800)
<DISTRIBUTIONS-OF-GAINS> (6)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,687
<NUMBER-OF-SHARES-REDEEMED> 1,039
<SHARES-REINVESTED> 113
<NET-CHANGE-IN-ASSETS> 96,907
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 10
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 195
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 330
<AVERAGE-NET-ASSETS> 79,109
<PER-SHARE-NAV-BEGIN> 13.02
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 4.43
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.45
<EXPENSE-RATIO> 0.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 10
<NAME> GROWTH LT PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 177,754
<INVESTMENTS-AT-VALUE> 198,622
<RECEIVABLES> 3,005
<ASSETS-OTHER> 16
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 201,643
<PAYABLE-FOR-SECURITIES> 543
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 315
<TOTAL-LIABILITIES> 858
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 180,342
<SHARES-COMMON-STOCK> 14,221
<SHARES-COMMON-PRIOR> 4,443
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (427)
<ACCUMULATED-NET-GAINS> 164
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,706
<NET-ASSETS> 200,785
<DIVIDEND-INCOME> 634
<INTEREST-INCOME> 1,438
<OTHER-INCOME> 0
<EXPENSES-NET> 1,058
<NET-INVESTMENT-INCOME> 1,014
<REALIZED-GAINS-CURRENT> 12,228
<APPREC-INCREASE-CURRENT> 18,562
<NET-CHANGE-FROM-OPS> 31,804
<EQUALIZATION> 181
<DISTRIBUTIONS-OF-INCOME> (815)
<DISTRIBUTIONS-OF-GAINS> (12,566)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,137
<NUMBER-OF-SHARES-REDEEMED> 3,322
<SHARES-REINVESTED> 963
<NET-CHANGE-IN-ASSETS> 151,411
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (125)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 845
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,058
<AVERAGE-NET-ASSETS> 113,131
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 3.96
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 0.95
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.12
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 11
<NAME> EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 96,129
<INVESTMENTS-AT-VALUE> 107,853
<RECEIVABLES> 372
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 108,226
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90
<TOTAL-LIABILITIES> 90
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,141
<SHARES-COMMON-STOCK> 6,174
<SHARES-COMMON-PRIOR> 5,149
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (62)
<ACCUMULATED-NET-GAINS> 8,332
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,725
<NET-ASSETS> 108,136
<DIVIDEND-INCOME> 606
<INTEREST-INCOME> 326
<OTHER-INCOME> 0
<EXPENSES-NET> 697
<NET-INVESTMENT-INCOME> 235
<REALIZED-GAINS-CURRENT> 9,658
<APPREC-INCREASE-CURRENT> 7,633
<NET-CHANGE-FROM-OPS> 17,526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (296)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,728
<NUMBER-OF-SHARES-REDEEMED> 723
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> 35,011
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,326)
<GROSS-ADVISORY-FEES> 565
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 697
<AVERAGE-NET-ASSETS> 87,146
<PER-SHARE-NAV-BEGIN> 14.20
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 3.33
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.52
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC PORTFOLIOS
<SERIES>
<NUMBER> 12
<NAME> BOND AND INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 49,701
<INVESTMENTS-AT-VALUE> 55,907
<RECEIVABLES> 993
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,901
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48
<TOTAL-LIABILITIES> 48
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,130
<SHARES-COMMON-STOCK> 4,368
<SHARES-COMMON-PRIOR> 3,269
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (484)
<ACCUM-APPREC-OR-DEPREC> 6,207
<NET-ASSETS> 56,853
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,297
<OTHER-INCOME> 0
<EXPENSES-NET> 339
<NET-INVESTMENT-INCOME> 2,958
<REALIZED-GAINS-CURRENT> 294
<APPREC-INCREASE-CURRENT> 8,971
<NET-CHANGE-FROM-OPS> 12,223
<EQUALIZATION> 35
<DISTRIBUTIONS-OF-INCOME> (2,958)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,501
<NUMBER-OF-SHARES-REDEEMED> 650
<SHARES-REINVESTED> 248
<NET-CHANGE-IN-ASSETS> 22,775
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (778)
<GROSS-ADVISORY-FEES> 255
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 339
<AVERAGE-NET-ASSETS> 42,695
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> 0.82
<PER-SHARE-GAIN-APPREC> 2.59
<PER-SHARE-DIVIDEND> 0.81
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.02
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99.1(a)
Resolution of the Board of Directors of Pacific Mutual
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.
/s/ AUDREY L. MILFS
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:
/s/ THOMAS C. SUTTON
Thomas C. Sutton
Chairman & Chief Executive Officer
<PAGE>
EXHIBIT 99.1(b)
Memorandum Establishing Two New Variable Accounts -
Aggressive Equity and Emerging Markets Portfolios
<PAGE>
OFFICE MEMORANDUM [Logo of Pacific Mutual]
DATE February 8, 1996
TO Mr. Glenn S. Schafer
FROM Ms. Diane N. Ledger
SUBJECT Authorization of the Establishment of the Variable Accounts that will
each invest in corresponding underlying Emerging Markets and Aggressive
Equity Portfolios of Pacific Select Fund
The addition of the Emerging Markets Portfolio and Aggressive Equity Portfolio
to Pacific Select Fund was approved by the Board of Trustees of the Fund on
November 17, 1995. The objective of the Emerging Markets Portfolio is to seek
long-term growth of capital. The objective of the Aggressive Equity Portfolio
is to seek capital appreciation.
The Board of Trustees of Pacific Select Fund also approved the appointment of
Blairlogie Capital Management to serve as the Portfolio Manager of the Emerging
Markets Portfolio and Columbus Circle Investors to serve as the Portfolio
Manager of the Aggressive Equity Portfolio.
On behalf of Pacific Mutual Life Insurance Company, the following is hereby
authorized:
The establishment of two additional Variable accounts within each of the
Pacific Select, Pacific Select Exec, Pacific COLI, Pacific Select Variable
Annuity and Separate Account A Separate Accounts. Each of the Variable
Accounts is to invest exclusively in shares of its corresponding underlying
portfolio of the Pacific Select Fund.
Authorized by: /s/ GLENN S. SCHAFER Date: February 8, 1996
Glenn S. Schafer
President and Director
<PAGE>
EXHIBIT 99.3(a)
Distribution Agreement between Pacific Mutual
and Pacific Mutual Distributors, Inc. ("PMD")
(formerly Pacific Equities Network)
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 2nd day of January, 1996, 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: /s/ T. C. SUTTON
____________________________________
Chairman and Chief Executive Officer
ATTEST:
/s/ AUDREY L. MILFS
__________________________________________
<PAGE>
Secretary
PACIFIC EQUITIES NETWORK
By: /s/ GERALD W. ROBINSON
____________________________________
President
WITNESS:
/s/ AUDREY L. MILFS
__________________________________________
<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.
2
<PAGE>
III.
AUTHORITY AND DUTIES OF SELLING BROKER-DEALER
Selling Broker-Dealer agrees that it has full responsibility for the training
and supervision of all persons, including Sub-agents of General Agent,
associated with Selling Broker-Dealer who are engaged directly or indirectly in
the offer or sale of Securities Regulated Contracts. All such persons shall be
registered representatives of Selling Broker-Dealer and shall be subject to the
control of Selling Broker-Dealer with respect to their securities regulated
activities. Broker-Dealer shall: (i) train and supervise Sub-agents, in their
capacity as registered representatives, in the sale of Securities Regulated
Contracts; (ii) use its best efforts to cause such Sub-agents to qualify under
applicable federal and state laws to engage in the sale of Securities Regulated
Contracts; (iii) provide Pacific Mutual and PEN to their satisfaction with
evidence of Sub-agents' qualifications to sell Securities Regulated Contracts;
(iv) notify Pacific Mutual if any of such Sub-agents ceases to be a registered
representative of Selling Broker-Dealer; and (v) train and supervise Sub-agents
to ensure compliance with applicable federal and state securities laws, rules,
regulations, statements of policy thereunder and with NASD rules. Selling
Broker-Dealer shall train and supervise Sub-agents to ensure that purchase of a
Contract is not recommended to an applicant in the absence of reasonable grounds
to believe the purchase of the Contract is suitable for that applicant. While
not limited to the following, a determination of suitability shall be based on
information furnished to a Sub-agent after reasonable inquiry of such applicant
concerning the applicant's other security holdings, financial situation and
needs. Selling Broker-Dealer shall ensure that any offer of a Securities
Regulated Contract made by a Sub-agent will be made by means of a currently
effective prospectus.
Pacific Mutual and PEN shall not have any responsibility for the supervision
of any registered representative or any other employee or affiliate of Selling
Broker-Dealer. If the act or omission of a registered representative or any
other employee or affiliate of Selling Broker-Dealer is the proximate cause of
any claim, damage or liability (including reasonable attorney's fees) to Pacific
Mutual or PEN, Selling Broker-Dealer shall be responsible and liable therefor.
Selling Broker-Dealer at all times shall be duly registered as a broker-dealer
under the 1934 Act, a member in good standing of the NASD and duly licensed in
all states and jurisdictions where required to perform pursuant to this
agreement. Selling Broker-Dealer shall fully comply with the requirements of
the 1934 Act and all other applicable federal or state laws and with the rules
of the NASD. Selling Broker-Dealer shall establish such rules and procedures as
may be necessary to cause diligent supervision of the securities activities of
the Sub-agents including ensuring compliance with the prospectus delivery
requirements of the 1933 Act.
IV.
AUTHORITY AND DUTIES OF
GENERAL AGENT AND SELLING BROKER-DEALER
A. CONTRACTS
The securities and insurance regulated Contracts issued by Pacific Mutual to
which this Agreement applies are listed in Schedule B, which may be amended from
time to time by Pacific Mutual. Pacific Mutual, in its sole discretion, with
prior or concurrent written notice to Selling Broker-Dealer and General Agent,
may suspend distribution of any Contract. Pacific Mutual also has the right to
amend any Contract at any time.
B. SECURING APPLICATIONS
Each application for a Contract shall be made on an application form provided
by Pacific Mutual, and all payments collected by Selling Broker-Dealer, General
Agent or any registered representative and Sub-agent shall be remitted promptly
in full, together with such application form and any other required
documentation, directly to Pacific Mutual at the address indicated on such
application or to such other address as may be designated by Pacific Mutual.
All such payments and documents shall be the property of Pacific Mutual.
Selling Broker-Dealer and
3
<PAGE>
General Agent shall review all such applications for completeness and for
compliance with the conditions herein, including the suitability and prospectus
delivery requirements set forth above under Sections II.C and III. Check or
money order in payment of such Contracts should be made payable to the order of
"Pacific Mutual". All applications are subject to acceptance or rejection by
Pacific Mutual in its sole discretion.
C. RECEIPT OF MONEY
All money payable in connection with any of the Contracts, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any contract
owner or anyone else having an interest in the Contracts, is the property of
Pacific Mutual and shall be transmitted immediately in accordance with the
administrative procedures of Pacific Mutual without any deduction or offset for
any reason including, but not limited to, any deduction or offset for
compensation claimed by Selling Broker-Dealer or General Agent, unless there has
been a prior arrangement for net wire transmissions between Pacific Mutual and
Selling Broker-Dealer or General Agent.
D. NOTICE OF SUB-AGENT'S NONCOMPLIANCE
Selling Broker-Dealer shall immediately notify PEN and General Agent in the
event a Sub-agent fails or refuses to submit to the supervision of Selling
Broker-Dealer or General Agent in accordance with this Agreement, the agreement
between Selling Broker-Dealer, General Agent and Sub-agent referred to in
Section IV.H, below, or otherwise fails to meet the rules and standards imposed
by Selling Broker-Dealer or its registered representatives or General Agent or
its Sub-agents. Selling Broker-Dealer or General Agent shall also immediately
notify such Sub-agent that he or she is no longer authorized to sell the
Contracts, and both Selling Broker-Dealer and General Agent shall take whatever
additional action may be necessary to terminate the sale activities of such Sub-
agent relating to the Contracts.
E. SALES PROMOTION, ADVERTISING AND PROSPECTUSES
No sales promotion materials, circulars, documents or any advertising relating
to any of the Contracts shall be used by Selling Broker-Dealer, General Agent or
any Sub-agents unless the specific item has been approved in writing by PEN and
Pacific Mutual prior to use. Selling Broker-Dealer shall be provided, without
any expense to Selling Broker-Dealer, with prospectuses relating to Securities
Regulated Contracts. Selling Broker-Dealer and General Agent shall be provided
with such other material as PEN determines necessary or desirable for use in
connection with sales of the Contracts. Nothing in these provisions shall
prohibit Selling Broker-Dealer or General Agent from advertising life insurance
and annuities on a generic basis.
Selling Broker-Dealer, General Agent and Sub-agents shall make no material
representations relating to the Securities Regulated Contracts, other than those
contained in the relevant registration statement, as may be amended, or in sales
promotion or other materials approved by Pacific Mutual and PEN as provided in
this section.
F. CONFIDENTIALITY
Selling Broker-Dealer and General Agent shall keep confidential all
information obtained pursuant to this Agreement, including, without limitation,
names of the purchasers of the Policies, and shall disclose such information,
only if Pacific Mutual or PEN have authorized such disclosure in writing, or if
such disclosure is expressly required by applicable federal or state regulatory
authorities.
G. RECORDS
Selling Broker-Dealer and General Agent shall have the responsibility for
maintaining the records of its Sub-agents and representatives licensed,
registered and otherwise qualified to sell the Contracts. Selling Broker-Dealer
and General Agent shall maintain such other records as are required of them by
applicable laws and regulations. The books, accounts and records of Selling
Broker-Dealer and General Agent relating to the sale of the Contracts shall be
maintained so as to clearly and accurately disclose the nature and details of
the transactions. Selling Broker-Dealer and General Agent each agree to make
the books and records relating to the sale of the Contracts available to Pacific
Mutual or PEN upon their written request.
4
<PAGE>
H. SUB-AGENT AGREEMENTS
Before a Sub-agent is permitted to sell the Contracts, General Agent, Selling
Broker-Dealer and Sub-agent shall have entered into a written agreement pursuant
to which: (i) Sub-agent is appointed a Sub-agent of General Agent and a
registered representative of Selling Broker-Dealer; (ii) Sub-agent agrees that
his or her selling activities relating to Securities Regulated Contracts shall
be under the supervision and control of Selling Broker-Dealer; and (iii) that
Sub-agent's right to continue to sell such Contracts is subject to his or her
continued compliance with such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer or General Agent.
V.
COMPENSATION
A. COMMISSIONS AND FEES
Commissions and fees payable to General Agent or any Sub-agent in connection
with the Contracts shall be paid by Pacific Mutual through PEN to General Agent,
or as otherwise permitted by law or regulation. General Agent shall pay Sub-
agents. PEN will provide Selling Broker-Dealer and General Agent with a copy of
its current Compensation Schedule(s), attached hereto as Schedule B. Unless
otherwise provided in Schedule B, compensation will be paid as a percentage of
premiums or purchase payments (collectively, "Payments") received in cash or
other legal tender and accepted by Pacific Mutual on applications obtained by
the various Sub-agents appointed by General Agent hereunder. Upon termination
of this Agreement, all compensation to General Agent hereunder shall cease.
However, General Agent shall be entitled to receive compensation for all new and
additional premium payments which are in process at the time of termination, and
shall continue to be liable for any charge-backs pursuant to the provisions of
said Schedule B, or for any other amount advanced by or otherwise due Pacific
Mutual or PEN hereunder. Pacific Mutual reserves the right not to pay
compensation on a policy or contract for which the premium is paid in whole or
in part by the loan or surrender value of any other life insurance policy or
annuity contract issued by Pacific Mutual.
PEN shall deduct any chargebacks from compensation otherwise due General Agent
or Selling Broker-Dealer. If any amount to be deducted exceeds compensation
otherwise due, General Agent and/or Selling Broker-Dealer shall promptly pay
back the amount of the excess following a written demand by PEN or Pacific
Mutual. General Agent and Selling Broker-Dealer are jointly and severally
liable for such chargebacks.
Pacific Mutual reserves the right to reduce first year commissions and renewal
commissions, if necessary, on any life policies sold to residents of the State
of Kentucky and paid for after May 1, 1991. Such reduction shall be in an
amount sufficient to cover any premium tax levied by cities and counties within
the State of Kentucky which is over and above the premium tax paid by Pacific
Mutual to the State of Kentucky.
Pacific Mutual recognizes the Contract owners' right on issued Contracts to
terminate Selling Broker-Dealer and/or change a Selling Broker-Dealer, provided
that the Contract owner notifies PEN in writing. When a Contract owner
terminates Selling Broker-Dealer, no further compensation on any payments due or
received, or on any increases in face amount in the existing policy after
termination, shall be payable to that Selling Broker-Dealer in accordance with
Schedule B after the notice of termination is received and accepted by PEN.
However, when a Contract owner designates a Selling Broker-Dealer other than the
Selling Broker-Dealer of record, compensation on any payments due or received,
or on any increases in face amount in the existing Contract after the change,
shall be payable to the new Selling Broker-Dealer in accordance with Schedule B
in effect at the time of issuance of the Contract.
5
<PAGE>
A change of Selling Broker-Dealer request shall be honored only if there
exists a valid Selling Agreement between Pacific Mutual, PEN and the new
Selling Broker-Dealer and (1) the Contract owner(s) requests in writing that the
Sub-agent remains as representative of record, or (2) both the former and future
Selling Broker-Dealers direct Pacific Mutual and PEN in a joint writing to
transfer all policies and future compensation to the new Selling Broker-Dealer,
or (3) the NASD approves and effects a bulk transfer of all representatives to a
new Selling Broker-Dealer.
B. TIME OF PAYMENT
PEN will pay any commissions due General Agent at least twice monthly in
accordance with Schedule B of this Agreement, as it may be amended from time to
time.
C. AMENDMENT OF SCHEDULES
PEN may amend Schedule B upon at least ten (10) days' prior written notice to
Selling Broker-Dealer and General Agent. The submission of an application for
the Contracts by Selling Broker-Dealer or General Agent after the effective date
of any such amendment shall constitute agreement to such amendment. Any such
amendment shall apply to compensation due on applications received by Pacific
Mutual after the effective date of such notice.
D. Prohibition Against Rebates
Pacific Mutual or PEN may terminate this Agreement if Selling Broker-Dealer,
General Agent or any Sub-agent rebates, offers to rebate or withholds any part
of any Payment on the Contracts. If Selling Broker-Dealer, General Agent or any
Sub-agent of General Agent shall at any time induce or endeavor to induce any
owner of any Contract issued hereunder to discontinue payments or to relinquish
any such Contract, except under circumstances where there is reasonable grounds
for believing the Contract is not suitable for such person, any and all
compensation due General Agent hereunder shall cease and terminate.
E. INDEBTEDNESS AND RIGHT OF SET OFF
Nothing contained in this Agreement shall be construed as giving Selling
Broker-Dealer or General Agent the right to incur any indebtedness on behalf of
Pacific Mutual or PEN. Selling Broker-Dealer and General Agent hereby authorize
PEN and Pacific Mutual to set off liabilities of Selling Broker-Dealer and
General Agent to Pacific Mutual and PEN against any and all amounts otherwise
payable to Selling Broker-Dealer or General Agent.
VI.
GENERAL PROVISIONS
A. Waiver
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed to be, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver.
6
<PAGE>
B. LIMITATIONS
The Selling Broker-Dealer and General Agent are independent contractors with
respect to Pacific Mutual and PEN. No party other than Pacific Mutual and or
PEN, as the case may be, shall have the authority to: (i) make, alter or
discharge any Contract issued by Pacific Mutual; (ii) waive any forfeiture or
extend the time of making any payments; (iii) enter into any proceeding in a
court of law or before a regulatory agency in the name of or on behalf of
Pacific Mutual or PEN; (iv) contract for the expenditure of funds of Pacific
Mutual or PEN; (v) alter the forms which PEN prescribes, or substitute other
forms in place of those prescribed by PEN.
C. FIDELITY BOND AND OTHER LIABILITY COVERAGE
Selling Broker-Dealer and General Agent each represent that all directors,
officers, agents, employees and Sub-agents who are licensed pursuant to this
Agreement as Pacific Mutual agents for state insurance law purposes or who have
access to funds of Pacific Mutual, including but not limited to, funds submitted
with applications for the Contracts are and shall be covered by a blanket
fidelity bond, including coverage for larceny and embezzlement, issued by a
reputable bonding company. This bond shall be maintained by Selling Broker-
Dealer or General Agent at their expense. Such bond shall be, at a minimum, of
the form, type, and amount required under NASD Rules, endorsed to extend
coverage to transactions relating to the Contracts. Pacific Mutual may require
evidence, satisfactory to it, that such coverage is in force and Selling Broker-
Dealer or General Agent, as the case may be, shall give prompt written notice to
Pacific Mutual of any notice of cancellation of the bond or change of coverage.
Selling Broker-Dealer and General Agent hereby assign any proceeds received
from a fidelity bonding company, error and omissions or other liability
coverage, to Pacific Mutual or PEN as their interest may appear, to the extent
of their loss due to activities covered by the bond, policy or other liability
coverage. If there is any deficiency amount, whether due to a deductible or
otherwise, Selling Broker-Dealer or General Agent shall promptly pay such
amounts on demand. Selling Broker-Dealer and General Agent hereby indemnify and
hold harmless Pacific Mutual and PEN from any such deficiency and from the costs
of collection thereof (including reasonable attorneys' fees).
D. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that neither
Selling Broker-Dealer nor General Agent may assign this Agreement or any rights
or obligations hereunder without the prior written consent of Pacific Mutual.
E. REGULATIONS
All parties agree to observe and comply with the existing laws and rules or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
F. INDEMNIFICATION
Pacific Mutual and PEN agree to indemnify and hold harmless Selling Broker-
Dealer and General Agent, their officers, directors, agents and employees,
against any and all losses, claims, damages or liabilities to which they may
become subject under the 1933 Act, the 1934 Act, or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in the
registration statement for the Contracts or for the shares of Pacific Select
Fund (the "Fund") filed pursuant to the 1933 Act, or any prospectus included as
a part thereof, as from time to time amended and supplemented, or in any
advertisement or sales literature approved in writing by Pacific Mutual and PEN
pursuant to Section IV.E. of this Agreement
7
<PAGE>
Selling Broker-Dealer and General Agent agree to indemnify and hold harmless
Pacific Mutual, the Fund and PEN, their officers, directors, agents and
employees, against any and all losses, claims, damages or liabilities to which
they may become subject under the 1933 Act, the 1934 Act, or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon; (a) any oral or written misrepresentation by Selling
Broker-Dealer or General Agent or their officers, directors, employees or agents
unless such misrepresentation is contained in the registration statement for the
Contracts or Fund shares, any prospectus included as a part thereof, as from
time to time amended and supplemented, or any advertisement or sales literature
approved in writing by Pacific Mutual and PEN pursuant to Section IV.E. of this
Agreement, (b) the failure of Selling Broker-Dealer or General Agent or their
officers, directors, employees or agents to comply with any applicable
provisions of this Agreement or (c) claims by Sub-agents or employees of General
Agent or Selling Broker-Dealer for payments of compensation or remuneration of
any type. Selling Broker-Dealer and General Agent will reimburse Pacific Mutual
or PEN or any director, officer, agent or employee of either entity for any
legal or other expenses reasonably incurred by Pacific Mutual, PEN, or such
officer, director, agent or employee in connection with investigating or
defending any such loss, claims, damages, liability or action. This indemnity
agreement will be in addition to any liability which Broker-Dealer may otherwise
have.
G. NOTICES
All notices or communications shall be sent to the following address for
Pacific Mutual or PEN, or to such other address as Pacific Mutual or PEN may
request by giving written notice to the other parties:
Pacific Mutual Life Insurance Company Pacific Equities Network
700 Newport Center Drive 700 Newport Center Drive
Newport Beach, CA 92660 Newport Beach, CA 92660
All notices or communications to the Selling Broker-Dealer or General Agent
shall be sent to the last address known to Pacific Mutual or PEN for that party,
or to such other address as Selling Broker-Dealer or General Agent may request
by giving written notice to the other parties.
H. Governing Law
This Agreement shall be construed in accordance with and governed by the laws
of California.
I. AMENDMENT OF AGREEMENT
PEN may amend this Agreement upon at least ten (10) days' prior written notice
to Selling Broker-Dealer and General Agent. The submission of an application
for the Contracts by Selling Broker-Dealer or General Agent after the effective
date of any such amendment shall constitute agreement to such amendment.
Additional General Agents may be added as parties to this Agreement at any
time by a written amendment signed by Pacific Mutual, PEN, Selling Broker-Dealer
and such additional General Agents. All General Agents which are parties to
this Agreement at the time of such amendment hereby consent and agree in advance
to the addition of such additional General Agents.
J. GENERAL AGENT AS BROKER-DEALER
Selling Broker-Dealer and General Agent shall not have the other entity's
authority and shall not be responsible for the other entity's duties hereunder
unless Selling Broker-Dealer and General Agent are the same entity. If Selling
Broker-Dealer and General Agent are the same person or legal entity, such person
or legal entity shall have the rights and obligations hereunder of both Selling
Broker-Dealer and General Agent and this Agreement shall be binding and
enforceable by and against such person or legal entity in both capacities.
8
<PAGE>
K. COMPLAINTS AND INVESTIGATIONS
Pacific Mutual, PEN, Selling Broker-Dealer and General Agent agree to
cooperate fully in any insurance regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts distributed under
this Agreement. Pacific Mutual, PEN, Selling Broker-Dealer and General Agent
further agree to cooperate fully in any securities regulatory investigation or
proceeding with respect to Pacific Mutual, PEN, Selling Broker-Dealer and
General Agent, their affiliates and their agents or representatives to the
extent that such investigation or proceeding is in connection with the Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) Selling Broker-Dealer or General Agent will be notified promptly of any
customer complaint or notice of any regulatory investigation or proceeding or
judicial proceeding received by Pacific Mutual or PEN with respect to Selling
Broker-Dealer or General Agent or any Sub-agent or which may affect Pacific
Mutual's issuance of any contracts sold under this Agreement; and
(b) Selling Broker-Dealer and General Agent will promptly notify Pacific
Mutual and PEN of any customer complaint or notice of any regulatory
investigation or proceeding received by Selling Broker-Dealer, General Agent
or their affiliates with respect to Selling Broker-Dealer, General Agent or
any Sub-agent in connection with any Contracts distributed under this
Agreement or any activity in connection with any such policies.
In the case of a substantive customer complaint, Pacific Mutual, PEN, Selling
Broker-Dealer and General Agent will cooperate in investigating such complaint
and any response will be sent to the other party to this Agreement for approval
not less than five business days prior to its being sent to the customer or
regulatory authority, except that if a more prompt response is required, the
proposed response shall be communicated by telephone or telegraph.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days' prior written notice. This Agreement also may be terminated, for cause,
by any party immediately. This Agreement shall be terminated immediately if PEN
or Selling Broker-Dealer shall cease to be a registered Broker-Dealer under the
1934 Act or a member in good standing of the NASD, or if there occurs the
dissolution, bankruptcy or insolvency of Selling Broker-Dealer or General Agent.
Sections VI F and K shall survive termination of this Agreement.
Upon termination of this Agreement, Selling Broker-Dealer and General Agent
shall each use their best efforts to have all property of Pacific Mutual and PEN
in Selling Broker-Dealer, General Agent or Sub-agents' possession promptly
returned to Pacific Mutual or PEN, as the case may be. Such property includes
prospectuses, applications and other literature supplied by Pacific Mutual or
PEN.
THIS SPACE INTENTIONALLY LEFT BLANK
9
<PAGE>
M. EXCLUSIVITY
Selling Broker-Dealer and General Agent each agree that no territory is
assigned exclusively hereunder and that Pacific Mutual and PEN reserve the right
in their discretion to establish one or more agencies in any jurisdiction in
which Selling Broker-Dealer and General Agent transact business hereunder.
This Agreement shall be effective as of __________________________________.
PACIFIC EQUITIES NETWORK -------------------------------------
(SELLING BROKER-DEALER)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
PACIFIC MUTUAL LIFE INSURANCE COMPANY -------------------------------------
(GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
10
<PAGE>
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
11
<PAGE>
SCHEDULE A
----------
GENERAL LETTER OF RECOMMENDATION
General Agent hereby certifies to Pacific Mutual that all of the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as Sub-agents ("applicant")
submitted by General Agent. General Agent will, upon request, forward proof of
compliance with same to Pacific Mutual in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare that
each applicant is personally known to us, has been examined by us, is known to
be of good moral character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each individual is
trustworthy, competent, and qualified to act as an agent for Pacific Mutual, and
to hold himself out in good faith to the general public. We vouch for each
applicant.
2. We have on file a B-300, B-301 or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements for
the registration of each applicant as a registered representative through our
NASD member firm, and each applicant is presently registered as an NASD
registered representative.
The above information in our files indicates no fact or condition which would
disqualify the applicant from receiving a license, and all the findings of all
investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state in which each applicant is requesting a license, and that all such persons
have fulfilled the appropriate examination, education and training requirements.
4. If the applicant is required to submit his or her picture, signature, and
securities registration in the state in which he or she is applying for a
license, we certify that those items forwarded to Pacific Mutual are those of
the applicant and the securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a license with
Pacific Mutual in order to place insurance chiefly or solely on his or her life
or property, lives or property of his or her relatives, or property or liability
of his or her associates.
6. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will be
properly protected.
7. We will not permit any applicant to transact insurance as an agent until
duly licensed therefor. No applicants have been given a contract or furnished
supplies, nor have any applicants have permitted to write, solicit business or
act as an agent in any capacity, and they will not be so permitted until the
certificate of authority or license applied for is received.
8. We certify that General Agent, Selling Broker-Dealer and applicant shall
have entered into a written agreement pursuant to which: (i) applicant is
appointed a Sub-agent of General Agent and a registered representative of
Selling Broker-Dealer; (ii) applicant agrees that his or her selling activities
relating to securities regulated Contracts shall be under the supervision and
control of Selling Broker-Dealer and his or her selling activities relating to
all Contracts shall be under the supervision and control of General Agent; and
(iii) that applicant's right to continue to sell such Contracts is subject to
his or her continued compliance with such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer or General Agent.
12
<PAGE>
EXHIBIT 99.4(a)
Form of Individual Flexible Premium Deferred Variable
Annuity Contract (Draft)
<PAGE>
DRAFT
PACIFIC PORTFOLIOS
- -------------------------------------------------------------------------------
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED 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. THE DETAILS OF THE
VARIABLE PROVISIONS BEGIN ON PAGE 10.
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/or the Guaranteed
Interest Option(s); and
. any Variable Account Value as of the Business Day we receive the Contract;
plus
. any Contract fees and charge for premium taxes and or other taxes we deduct
from your Contract Value.
Signed at our Home Office, 700 Newport Center Drive, Newport Beach, California
92660.
/s/ Thomas C. Sutton /s/ Audrey L. Milfs
Chairman and Chief Executive Officer Secretary
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
CONTRACT SPECIFICATIONS............ 3
DEFINITIONS........................ 4
GENERAL PROVISIONS................. 6
PURCHASE PAYMENTS.................. 8
Purchase Payment Allocation........ 8
Minimum Investment Option Value.... 8
THE FIXED OPTION................... 8
GUARANTEED INTEREST OPTIONS........ 9
Market Value Adjustments........... 10
VARIABLE INVESTMENT OPTIONS........ 10
Separate Account................... 10
CONTRACT VALUE..................... 11
Fixed Option Value................. 11
GIO Value.......................... 12
Variable Account Value............. 12
Loan Account Value................. 13
CHARGES, FEES AND DEDUCTIONS....... 13
Administrative Fee................. 13
Annual Fee......................... 13
Mortality and Expense Risk Charge.. 13
Premium Taxes...................... 14
Transfer Fee....................... 14
Withdrawal Fee..................... 14
Withdrawal Charge.................. 14
TRANSFERS.......................... 15
WITHDRAWALS........................ 15
Amount Available for Withdrawal.... 15
Special Restrictions - Fixed Option 15
Special Restrictions - GIOs........ 15
CONTRACT LOANS..................... 16
DEATH BENEFIT...................... 16
Death of Annuitant................. 16
Death of Owner..................... 17
Death of Owner Distribution Rules.. 18
Interest on Death Benefit Proceeds. 18
BENEFICIARY........................ 18
Adding or Changing Your Beneficiary 19
ANNUITY BENEFITS................... 19
Choice of Annuity Date............. 19
Application of Contract Value...... 19
Your Selections.................... 19
Fixed and Variable Annuities....... 20
Annuity Options.................... 20
Default Annuity Date and Options... 20
Amount of Payments................. 21
Fixed Annuity Payments............. 21
Variable Annuity Payments.......... 21
Periodic Payments.................. 22
Misstatement of Age or Sex......... 22
ANNUITY OPTION TABLES.............. 22
</TABLE>
Form 95-00
<PAGE>
CONTRACT SPECIFICATIONS
<TABLE>
<S> <C> <C>
SERVICE CENTER: SEND FORMS AND WRITTEN REQUESTS TO: SEND PAYMENTS TO:
Pacific Mutual Life Insurance Company Pacific Mutual Life Insurance Company
P.O. Box 7187 P.O. Box 100060
Pasadena, California 91109-7187 Pasadena, California 91189-0060
</TABLE>
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
Investment Options:
Variable Investment Options:
Money Market Multi-Strategy
High Yield Bond Equity
Managed Bond Bond and Income
Government Securities Equity Index
Aggressive Equity International
Growth LT Emerging Markets
Equity Income [ ]
Fixed Option
Guaranteed Interest Options with the following Guarantee Terms:
Three-Year
Six-Year
Ten-Year
[ ]
Administrative Charge: 0.15%
Mortality and Expense Risk Charge: 1.25%
Annual Fee: $40 if Net Contract Value is less than $50,000
Withdrawal Charge: Age of Premium
in contract years Charge Percent
1 7%
2 7%
3 6%
4 5%
5 3%
6 1%
7 and over 0%
Contract Number: Contract Date:
Owner(s):
Annuitant(s): Age Sex
Initial Purchase Payment: Annuity Start Date:
Form 95-00
<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 any one of the
Investment Options.
AGE - The Owner's or Annuitant's age, as applicable, at his or her last
birthday.
ANNUITANT - The person you name 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. If you designate Joint
Annuitants or a Contingent Annuitant, unless otherwise stated, "Annuitant" means
the sole surviving Annuitant. If your Contract is a Non-Qualified Contract, you
cannot change the Annuitant or change or add a Joint Annuitant. 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; or if
earlier, the date that annuity payments actually begin.
ANNUITY OPTIONS - Income options available for 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 any 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 Owner'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 Owner's estate.
BUSINESS DAY - Any day on which the value of an amount invested in a Subaccount
is determined. If any transaction or event under this Contract is scheduled to
occur on a day 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 or, if
you add or change a Contingent Annuitant, as of the date of the addition or
change.
CONTINGENT OWNER - The person, if any, you select who may succeed to your rights
as Owner of this 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, as shown in the Contract
Specifications. Contract Years, Contract Semiannual 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.
CONTRACT VALUE - As of the end of any Business Day, your Variable Account Value,
plus your Fixed Option Value, your GIO Value, and any Loan Account Value.
Form 95-00
<PAGE>
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 an annual rate of 3%.
FIXED OPTION VALUE - The aggregate amount of your Contract Value allocated to
the Fixed Option.
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.
GUARANTEED INTEREST RATE - The interest rate guaranteed at the time of
allocation for the Guarantee Term on amounts allocated to the Fixed Option or a
Guaranteed Interest Option. All Guaranteed Interest Rates are expressed as
annual rates, and interest is accrued daily. This rate will not be less than an
annual rate of 3%.
GUARANTEED INTEREST OPTION ("GIO") - If you allocate all or part of your
Purchase Payments or Contract Value to one or more GIOs, such amounts are
subject to a particular Guaranteed Interest Rate for the Guarantee Term selected
for each GIO. GIO amounts are held in our General Account and are subject to a
Market Value Adjustment if converted to an annuity, withdrawn or transferred
prior to the end of the Guarantee Term. Each new allocation will receive the
Guaranteed Interest Rate then applicable to new allocations for the selected
Guarantee Term.
GUARANTEE TERM - The period during which the amount you allocate to the Fixed
Option or to a GIO earns a specified Guaranteed Interest Rate.
GIO VALUE - The aggregate amount of your Contract Value allocated to all GIOs.
GIO TERM VALUE - The aggregate amount under your Contract allocated to all GIOs
that have the same length Guarantee Term. The GIO Term Value is based on the
original Guarantee Term, not the time remaining in the Guarantee Term. We use
the GIO Term Value to determine the order in which GIOs will be accessed when
you make a withdrawal or transfer.
INVESTMENT OPTION - A Variable Account, Fixed Option, or GIO offered under the
Contract.
LOAN ACCOUNT VALUE - The amount, including any interest accrued, held in the
Loan Account to secure any Contract Debt.
MARKET VALUE ADJUSTMENT ("MVA") - The adjustment made to any amount you convert
to an annuity, withdraw or transfer from a GIO prior to the end of its Guarantee
Term. This adjustment reflects the impact of changes in applicable interest
rates between the time the Purchase Payment(s) and/or Contract Value is
allocated to a specific GIO and the time of that conversion, withdrawal or
transfer.
NET CONTRACT VALUE - Your Contract Value less any Contract Debt.
NON-QUALIFIED CONTRACT - A Contract other than a Qualified Contract.
OWNER - The person(s) who has (have) all rights under this Contract. If your
Contract names Joint Owners, Owner means both Joint Owners. Any named Owner must
not have attained age 86 as of your Contract Date. If your Contract allows you
to change or add Owners after the Contract is issued, any newly-named or added
Owners, including Joint and/or Contingent Owners, must be under the age of 86 at
the time of change or addition.
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 under a Qualified Plan that
qualifies for special tax treatment under the Code.
Form 95-00
<PAGE>
QUALIFIED PLAN - A retirement plan that receives favorable tax treatment under
section 401, 403, 408, or 457 of the Code.
SEC - Securities and Exchange Commission.
SEPARATE ACCOUNT/SEPARATE ACCOUNT A - A Separate Account of PM registered as a
unit investment trust under the Investment Company Act of 1940.
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.
UNIT VALUE - The value of a Subaccount Unit ("Subaccount Unit Value") or
Subaccount Annuity Unit ("Subaccount Annuity Unit Value"). The Unit Value of
any Subaccount is subject to change on any Business Day. The fluctuations in
value reflect the investment results, and also reflect the daily deductions for
the mortality and expense risk charge and administrative fee. Changes in
Subaccount Annuity Unit Values also reflect an additional adjustment factor that
corrects for an assumed investment return of 5%. The Unit Value of a Subaccount
Unit and of a Subaccount Annuity Unit on any Business Day is measured at or
about 4:00 p.m. Eastern Time on each Business Day.
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.
VARIABLE ACCOUNT VALUE - The aggregate amount of your Contract Value allocated
to the Variable Accounts.
GENERAL PROVISIONS
REPORTS TO OWNERS - We will send you those reports at least annually or as
otherwise required by applicable law.
PAYMENTS, INSTRUCTIONS AND REQUESTS - Unless this Contract provides otherwise,
all Purchase Payments, loan repayments, instructions and requests must be
received in proper form at our Service Center at its mailing address. (See
DEFINITIONS - SERVICE CENTER). Any subsequent Purchase Payments, loan repayments
and requests for transfer or withdrawal we receive in proper form 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.
Form 95-00
<PAGE>
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 waiver 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
issued.
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. 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 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 or any
GIO, loans, 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 or in any of the GIOs, continue to earn interest at the
Guaranteed Interest Rate(s) then in effect until the applicable Guaranteed Term
in effect has ended, and not less than 3% on an annual basis thereafter. If you
make any Purchase Payment by check, other than a cashier's 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 on whose life or death determines
whether, to whom, or how much we must pay any benefits under this Contract.
DIVIDENDS - The current dividend scale is zero and we do not expect dividends to
become payable. However, 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
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Contract Value. We will allocate any dividend added to your Contract Value in
accordance with your most recent allocation instructions, unless you instruct us
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.
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 $250 for Non-Qualified Contracts and $50 for
Qualified Contracts. 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 proceeds and any refund under your "Free Look" right may
be delayed until your check has cleared. On request a receipt for the Purchase
Payment signed by an officer of PM will be provided after payment.
PURCHASE PAYMENT ALLOCATION - Prior to your Annuity Date, you may allocate all
or part of your Purchase Payments to one or more of the Investment Options
available to you. The Investment Options available to you on the Contract Date
are shown on your Contract Specifications Page. We will allocate your Purchase
Payments that we receive during the Free Look Period as shown in your
application, or your 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 VALUE - 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 for those Investment Options.
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.
Account Values under 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.
We will credit your Contract with a Guaranteed Interest Rate for 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 will credit the
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Guaranteed Interest Rate in effect on the Business Day that the allocation
and/or transfer is effective for an initial Guarantee Term that ends at the end
of that Contract Year.
At the end of an initial Guarantee Term and each succeeding Guarantee Term, we
will roll over your Fixed Option Value attributed to that Guarantee Term to a
new Guarantee Term of up to one year, unless you instruct us otherwise. We will
credit the Guaranteed Interest Rate 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 will 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; withdrawal
charges; annual fee; and 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 OPTIONS
For each GIO you elect, we will credit interest at a specified Guaranteed
Interest Rate during each Guarantee Term on the amount of Purchase Payments
and/or Contract Value you allocate or transfer to, or roll over in, the GIO, as
described below. Each allocation to a GIO must be at least $500.
Account Values under the GIOs are held in our General Account. Subject to
applicable law, we have sole discretion over the investment of our General
Account assets.
Account Values in the GIOs are not available for transfer to the Loan Account as
collateral for Contract loans.
Each GIO has a different Guarantee Term. The Guarantee Terms available on the
Contract Date are shown on the Contract Specifications page. When you allocate
any portion of your Purchase Payment(s) and/or Contract Value to one or more of
these options, we will credit interest at the Guaranteed Interest Rate then in
effect on the Business Day that the allocation and/or transfer is effective.
That rate will apply for the Guarantee Term you choose, while the Annuitant is
living and this Contract is in force, and prior to the Annuity Date.
At the end of the Guarantee Term for each GIO, unless you instruct us otherwise,
we will roll over the Account Value of such GIO into a new GIO with the same
length Guarantee Term and at the then applicable Guaranteed Interest Rate.
However, if the last day of this new Guarantee Term would occur after your
Annuity Date, we will substitute the longest offered Guarantee Term that ends
prior to your Annuity Date. If there is no Guarantee Term that ends prior to
your Annuity Date, we will roll over the Account Value of that GIO into the
Fixed Option at its then current Guaranteed Interest Rate for new allocations.
During the first thirty (30) days of that new Guarantee Term, you may instruct
us to (a) allocate all or a portion of your Account Value that was rolled over,
to a new GIO with a different Guarantee Term, and/or (b) transfer to any
Variable Account or Fixed Option, or withdraw or convert to an Annuity Option
all or a portion of your Account Value in that new GIO. If you elect a new GIO
with a different Guarantee Term, we will effect such allocation as of the end of
the previous Guarantee Term and will credit interest accordingly. Otherwise, we
will effect such transaction as of the day we receive your request and interest
will be credited at the Guaranteed Interest Rate for the time the Account Value
was allocated to the GIO. On such transactions during this thirty (30) day
period, we will waive any MVAs and/or transfer fees. Any other applicable
charges and/or withdrawal fees will apply. Any subsequent change to such
instructions will be subject to the provisions of the WITHDRAWALS and TRANSFERS
sections of this Contract.
We will stop crediting interest on that portion of your GIO Value you withdraw,
transfer, or convert to an Annuity Option, including any: fees for withdrawals
and/or transfers, withdrawal charge, annual fee, MVA, and charge for premium
taxes and/or other taxes. We do so as of the end of the Business Day any such
transaction is effective.
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MARKET VALUE ADJUSTMENT (MVA) - Any amounts transferred or withdrawn from any
GIO, including any amounts withdrawn to convert to an Annuity Option, prior to
the completion of its Guarantee Term, except as cited above, will first be
adjusted by subtracting an MVA. The MVA is separately determined for each GIO
and may be positive or negative. Each MVA is equal to:
W x [(J - I) x (N/12)] where:
(W) is the amount to be converted, withdrawn, or transferred from the GIO;
(J) is the Guaranteed Interest Rate that would apply, as of the date of the
conversion, withdrawal or transfer, to a newly-issued GIO with a Guarantee
Term equal to the number of years remaining in the Guarantee Term of the
GIO from which the conversion, withdrawal or transfer is to be made, plus
0.25% (For this purpose, the "years remaining" will be rounded up to the
next higher number of whole years. If a Guaranteed Interest Rate is
required for a Guarantee Term not currently offered, the Guaranteed
Interest Rate will be based on linear interpolation between the Guaranteed
Interest Rates for the currently offered Guarantee Terms, if possible.
Otherwise, we will determine a substitute Guaranteed Interest Rate that
will be no less favorable to you than the then most recent U.S. Treasury
Yield for a maturity closest to the "years remaining", plus 1.0%);
(I) is the Guaranteed Interest Rate applicable to the GIO; and
(N) is the number of complete months remaining in the Guarantee Term.
Each MVA will never exceed, in the positive or negative direction, the excess
interest earned on the GIO from which the withdrawal, transfer or conversion to
any Annuity Option is to be made. For this purpose, excess interest is defined
as the dollar amount of interest earned during the current Guarantee Term in
excess of 3% per annum.
The MVA is applied prior to the deduction of any applicable fees for withdrawals
and/or transfers, withdrawal charge, fees, or charge for premium taxes and/or
other taxes.
We will not apply the MVA to amounts withdrawn to pay any:
. annual fees, transaction fees;
. death benefits; or
. withdrawals (full or partial) after the first Contract Anniversary, if the
Annuitant has been diagnosed with a medically determinable condition that
results in a life expectancy of twelve (12) months or less, subject to medical
evidence satisfactory to us.
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.
Form 95-00
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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 (the "1940 Act");
. operate any Variable Account as a managed investment company under the 1940
Act, or any other form permitted by law;
. 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;
. 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
following the filing and other procedures of the Insurance Commissioner in the
State of California nor without following the filing and other procedures
established by insurance regulators of the state of issue. Unless required by
law or regulation, an investment policy may not be changed without our consent.
From time to time we may make other Investment Options available to you. Any new
Investment Option may invest in portfolios of the designated investment company,
other designated investment companies or their portfolios, or in other
investment vehicles. New Investment Options 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 GIO Value on that day;
. plus your Variable Account Value on that day;
. plus your Loan Account Value 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 administrative 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 any additions to your Fixed
Option on that day as a result of any:
. interest;
. Purchase Payments received by us and allocated to the Fixed Option;
. transfers to the Fixed Option, including transfers from the Loan Account; and
Form 95-00
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decreased by any deductions from the Fixed Option on that day as a result of
any:
. transfers, including transfers to the Loan Account;
. withdrawals and withdrawal charges;
. amounts converted to an Annuity Option;
. charge for premium taxes and/or other taxes;
. fees for withdrawals and/or transfers; and
. annual fee.
GIO VALUE - Your GIO Value on any Business Day is your GIO Value as of the prior
Business Day, increased by any additions to your GIOs on that day as a result of
any:
. interest;
. Purchase Payments received by us and allocated to a new GIO; and
. transfers allocated to a new GIO;
and decreased by any deductions from your GIOs on that day as a result of any:
. transfers from your GIOs;
. withdrawals and withdrawal charges from your GIOs;
. amounts converted to an Annuity Option;
. MVAs;
. charge for premium taxes and/or other taxes;
. fees for withdrawals and/or transfers; and
. annual fee.
For more detailed information see GUARANTEED INTEREST OPTIONS.
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 a Subaccount on any Business Day is
the number of Subaccount Units in that 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 that
Subaccount; and any transfers of your Contract Value to that 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 any:
. withdrawals;
. transfers (including transfers to the Loan Account);
. amounts converted to an Annuity Option;
. fees for transfers and/or withdrawals;
. withdrawal charges;
. charge for premium taxes and/or other taxes; and
. annual fee.
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.
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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) times (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 corresponding 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) plus or minus any per share charge or credit for any income taxes,
other taxes, or 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 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 Subaccount's net assets held by
each Subaccount for the mortality and expense risk charge and the
administrative fee during that valuation period.
LOAN ACCOUNT VALUE - For those Qualified Contracts that permit loans, your Loan
Account Value as of the end of any Business Day is your Loan Account Value on
the prior Business Day, increased by any:
. interest; and
. Contract Value loaned on that day;
and decreased by any:
. loan principal repaid on that day; and
. earned interest transferred from the Loan Account on that day.
CHARGES, FEES AND DEDUCTIONS
ADMINISTRATIVE FEE - We charge an administrative fee against assets held in your
Variable Investment Option(s). 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 prior
to your Annuity Date against your Contract Value, and at the time you make a
full withdrawal, if your Net Contract Value is less than $50,000 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 when you annuitize or on payment of any death benefit
proceeds.
MORTALITY AND EXPENSE RISK CHARGE ("RISK CHARGE") - We impose a Risk Charge
against assets held in your Variable Investment Option(s). This charge is
assessed daily at the annual rate of 1.25%. The Risk
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Charge compensates 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 or withdrawals. Such taxes may
include, but are not 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 any withdrawal, at the
time any death benefit is paid, when the taxes are incurred, 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 that, in 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. For this
purpose, we will treat each transfer request as a single transfer, regardless of
the number of Investment Options from which or to which portions of Account
Values are 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. For this purpose, we will treat each
withdrawal request as a single withdrawal, regardless of the number of
Investment Options or Guarantee Terms from which portions of Account Values are
withdrawn.
CONTINGENT DEFERRED SALES CHARGE ("WITHDRAWAL CHARGE") - Purchase Payments are
subject to a withdrawal charge which is shown in the Contract Specifications.
This charge may apply to amounts you withdraw under your Contract prior to your
Annuity Date, depending on the length of time each Purchase Payment has been
allocated to your Contract and on the amount you withdraw. We will not apply
the withdrawal charge on:
. death benefit proceeds, except as provided under the DEATH OF OWNER
provisions for certain non-natural Owners;
. Contract Values converted to an Annuity Option;
. withdrawals by Contract Owners to meet the minimum distribution rules for
Qualified Contracts as they apply to amounts held under the Contract; or
. withdrawals (full or partial), after the first Contract Anniversary, if the
Annuitant has been diagnosed with a medically determinable condition that
results in a life expectancy of twelve (12) months or less, subject to
medical evidence satisfactory to us.
Amount of Withdrawal Charge - The amount of a withdrawal charge depends on how
long your Purchase Payments are held under this Contract. Each Purchase Payment
you make is considered to have a certain "age," depending on the length of time
since that Purchase Payment was effective. A Purchase Payment is "age one" from
the day it was effective until your next Contract Anniversary and increases in
"age" on that and each succeeding Contract Anniversary. When you withdraw an
amount, the "age" of any Purchase Payment(s) you withdraw determines the
level(s) of withdrawal charge as shown in the Contract Specifications. We
calculate your withdrawal charge by assuming that your Earnings are withdrawn
first, followed by amounts attributed to Purchase Payments with the "oldest"
Purchase Payment withdrawn first. The withdrawal charge will be deducted
proportionately from each Investment Option selected for withdrawal.
Form 95-00
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Free Withdrawals - We will not impose the withdrawal charge on withdrawals of
your Earnings or on withdrawals of Purchase Payments held under your Contract
more than six (6) years. In addition, in any Contract Year, we will not impose
the withdrawal charge on your withdrawal of up to 10% of your remaining Purchase
Payments otherwise subject to the charge. Our calculations of the withdrawal
charge deduct this "free 10%" from your "oldest" remaining Purchase Payment(s)
still otherwise subject to the charge.
Earnings - FOR THE PURPOSE OF CALCULATING THE WITHDRAWAL CHARGE, as of the end
of any Business Day, your Earnings equal your Contract Value less your aggregate
Purchase Payments which are reduced by withdrawals of prior Purchase Payments.
TRANSFERS
You may make transfers under this Contract subject to certain restrictions (see
TRANSFER AND WITHDRAWAL RESTRICTIONS) and any applicable fees (see CHARGES, FEES
AND DEDUCTIONS).
By providing a proper transfer request (see GENERAL PROVISIONS - PAYMENTS,
INSTRUCTIONS AND REQUESTS), you may request transfer of part or all of your
Contract Value, less Loan Account Value, in any Investment Option among other
Investment Options while your Annuitant is living and prior to the Annuity Date.
Transfers from the GIOs are subject to a Market Value Adjustment (see GUARANTEED
INTEREST OPTIONS). Transfer requests to a GIO will be applied as an allocation
to a new GIO, subject to any minimum allocation requirements.
If your transfer causes your remaining Account Value 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.
Transfers between Investment Options will normally be effective as of the end of
the Business Day on which we receive a proper transfer request.
WITHDRAWALS
You may, on or 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 proper 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 $500 or more.
Withdrawals from the Fixed Option and the GIOs are subject to certain additional
restrictions described below.
If your partial withdrawal causes your Net Contract Value to be less than $1,000
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
Net Contract Value as of the end of the Business Day on which your withdrawal
request is effective, less any:
. annual fee;
. withdrawal fee;
. withdrawal charge;
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. MVA; and
. charge for premium taxes and/or other taxes.
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.
TRANSFER AND WITHDRAWAL RESTRICTIONS
SPECIAL RESTRICTIONS ON WITHDRAWALS OR TRANSFERS FROM THE FIXED OPTION - After
the first Contract Anniversary, you may, within thirty (30) days from your
Contract Anniversary, withdraw or transfer up to one-third (33-1/3%) of your
Fixed Option Value. In consecutive Contract Years, however, you may withdraw or
transfer one-third of your Fixed Option Value at the beginning of the first
year, one-half (50%) of your remaining Fixed Option Value at the beginning of
the second year, and up to the entire amount (100%) of your remaining Fixed
Option Value at the beginning of the third year.
SPECIAL RESTRICTIONS ON WITHDRAWALS AND TRANSFERS FROM THE GIOS - You may make
unlimited transfers or withdrawals from your GIOs during any Contract Year,
except that we reserve the right to impose a transaction fee as described in
CHARGES, FEES AND DEDUCTIONS. However, each transfer and/or withdrawal from any
GIO is subject to a Market Value Adjustment if such transaction occurs prior to
the end of that GIOs respective Guarantee Term, unless such transfer or
withdrawal is made within the thirty (30) days following the end of the
Guarantee Term (see GUARANTEED INTEREST OPTIONS). You may specify a Guarantee
Term from which your withdrawal or transfer is to occur. We will deduct such
withdrawal or transfer first from the oldest GIO within that GIO Term Value and
then from the next oldest GIO in succeeding order, as needed. If you do not
specify a Guarantee Term, we will deduct the amount of the withdrawal or
transfer from your Contract Value in proportion to your GIO Term Values,
beginning with the oldest GIO within each GIO Term Value.
CONTRACT LOANS
If your Contract is issued under a Qualified Plan under Code Section 401 or 403
and your qualified Plan permits, you may request a loan of all or part of your
Contract Value after you first Contract Year and before your Annuity Date. 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 any
Owner before the Annuity Date, while this Contract is in force.
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, as an Annuity
Option under this Contract or towards the purchase of any annuity option we then
offer, or in accordance with IRS regulations (see DEATH OF OWNER DISTRIBUTION
RULES). Any such Annuity Option is subject to all restrictions and requirements
as are other annuities offered under this Contract.
DEATH OF ANNUITANT - The Death Benefit Amount as of any Business Day prior to
your Annuity Date is equal to the greater of: (a) your Contract Value as of that
day; or (b) your aggregate Purchase Payments reduced by (i) an amount for each
withdrawal that has occurred, which is calculated by multiplying the aggregate
Purchase Payments received prior to each withdrawal by the ratio of the amount
of the
Form 95-00
<PAGE>
withdrawal, including any withdrawal charge, to your Contract Value immediately
prior to the withdrawal; and (ii) any applicable charges, fees, and/or MVAs
deductions on or before that day.
The Guaranteed Minimum Death Benefit Amount will be calculated only when a death
benefit becomes payable, and is determined as follows: First, we calculate what
the Death Benefit Amount would have been as of your sixth Contract Anniversary
and each subsequent 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 by: (i) adding the aggregate amount of any
Purchase Payments received by us since that Milestone Date; (ii) subtracting an
amount for each withdrawal that has occurred since that Milestone date, which is
calculated by multiplying the Death Benefit Amount by the ratio of the amount of
each withdrawal that has occurred since that Milestone Date, including any
withdrawal charge, to the Contract Value immediately prior to the withdrawal;
and (iii) subtracting the aggregate amount of any previous charges, fees, MVAs,
and/or 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. The "Notice Date" is the day on
which we receive, in proper form, proof of death and instructions satisfactory
to us regarding payment of death benefit proceeds.
If the Annuitant dies on or before your sixth 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.
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. 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 Owner or the Owner'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 Annuitant. Death
benefit proceeds are payable only for 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; and, if your Contract is a Non-Qualified Contract, we will
distribute any death benefit proceeds under the Death of Owner Distribution
Rules.
DEATH OF OWNER - If you are not the Annuitant, and you die before the Annuitant,
the amount of the death benefit will be equal to your Contract Value as of the
Notice Date.
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 Owner'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, the Death Benefit
will be calculated under the DEATH OF ANNUITANT provision of this Contract and
payment will be made in accordance with the DEATH OF OWNER provisions of this
Contract.
If you are a non-natural Owner of a Contract other than a Contract issued under
a Qualified Plan as defined in Section 401 or 403 of the Code, the Primary
Annuitant will be treated as the Owner of the Contract for purposes of the DEATH
OF OWNER DISTRIBUTION RULES. If there is a change in the Primary Annuitant prior
to the Annuity Date, such change will be treated as the death of the Owner. The
amount of the death benefit will be (a) the Contract Value if the non-natural
Owner elects to maintain the Contract and reinvest the Contract Value into the
Contract in the same amount as immediately prior to the distribution, or (b) the
Contract Value less any annual fee, withdrawal fee, withdrawal charge, charge
for premium taxes and/or other taxes, and MVAs if the non-natural Owner elects a
cash distribution. The amount of the death benefit will be determined as of the
Business Day we receive, in proper form, the request to change the Primary
Annuitant and instructions regarding maintaining the Contract or cash
distribution.
Form 95-00
<PAGE>
If both you and the Annuitant(s) are non-natural persons, no death benefit will
be payable, and any distribution will be treated as a withdrawal and subject to
any applicable annual fee, withdrawal fee, withdrawal charge, charge for premium
taxes and/or other taxes, and MVAs.
DEATH OF OWNER DISTRIBUTION RULES - The following rules will determine whether a
distribution must be made under this Contract. The rules do not affect our
determination of the amount of benefit payable or distribution proceeds. If
there is more than one Owner, these rules apply on 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:
. within five years after the Owner's death; or
. over a period that does not exceed the life or life expectancy of the
designated recipient with payments that start within one year after the
Owner's death. The designated recipient is the individual selected by the
Owner to succeed the Owner's interest in the Contract after the death of an
Owner of this Contract, and may include a Joint or Contingent Owner, a
Beneficiary, or the Owner'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 as Owner rather than receive the death benefit proceeds.
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-natural 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-natural Owner means a corporation or other entity which is a non-natural
person, unless the entity demonstrates to our satisfaction, or we otherwise
determine in our sole discretion, 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 DEATH OF OWNER DISTRIBUTION RULES are
intended to satisfy the distributions-at-death timing requirements of Section
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
DEATH OF OWNER DISTRIBUTION RULES do not apply to Qualified Contracts issued
under Qualified Plans as defined in Section 401 or 403 of the Code.
INTEREST ON DEATH BENEFIT PROCEEDS - If payment of death benefit proceeds is
unduly delayed after the Notice Date, we will pay interest on the proceeds.
Interest will be paid at a rate of not less than 3% per 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,
your 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
Form 95-00
<PAGE>
payment of any death benefit proceeds, we receive proper notice that the trust
has been revoked or is not in effect, then any death benefit proceeds payable
will be paid to the Owner'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 death of the Annuitant or Owner, as
applicable, by sending us a request in proper form. 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.
Any change or addition will take effect only when we receive all necessary
documents and record the change or addition.
ANNUITY BENEFITS
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 providing proper notice to us at least ten
(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 the 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 before your 100th birthday; however, to meet IRS minimum distribution
requirements, your Annuity Date may need to occur on or before April 1 of the
calendar year following the year in which your Annuitant (who is the Qualified
Plan participant) reaches his or her 70-1/2 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.
If you change your Annuity Date and that date is before the end of the Guarantee
Term for an existing GIO, that GIO may be subject to an MVA on the new Annuity
Date (see GUARANTEED INTEREST OPTIONS - MARKET VALUE ADJUSTMENTS (MVAS)).
APPLICATION OF CONTRACT VALUE - Prior to the Annuity Date, you may elect to
convert all or part of your Net Contract Value, less any applicable MVA, and any
charge for premium taxes and/or other taxes, to any currently offered Annuity
Option. You may also elect a full withdrawal (subject to the terms of the
withdrawal provisions) 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 convert must
be at least $10,000; otherwise, we will pay a single amount equal to your
withdrawal proceeds (see AMOUNT AVAILABLE FOR 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 not to have the remainder of your
Contract Value distributed, but instead to continue your Contract with that
remaining Contract Value. This option may or may not be available, or may be
available only for certain types of Contracts. If this option is available and
you elect it, 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. You should call your tax adviser 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, semiannually, or
annually.
The first annuity payment on the Annuity Date will be sent on the day following
the Annuity Date and must be at least $250. We may reduce your payment frequency
if the first annuity payment is less than $250. If you elect annuity payments
for a Period Certain Only, we also reserve the right to reduce the Period
Form 95-00
<PAGE>
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
a combination of both. If you select a variable annuity, you may choose any
Subaccounts for your annuity. If you select a variable annuity, on your Annuity
Date, we will transfer that portion of your Net Contract Value that you indicate
to the Subaccount(s) you choose. 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 or GIOs).
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, you 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
proper form.
ANNUITY OPTIONS - The following forms of annuity payments are available under
this Contract. Additional options may become available in the future:
Option 1: Life Only. Periodic payments are made to the designated payee during
the Annuitant's lifetime. Payments stop when the Annuitant dies.
Option 2: Life with Period Certain. Periodic payments are made to the
designated payee during the Annuitant's 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 based on the life of the secondary
Annuitant named in the election if and so long as such secondary
Annuitant lives. Payments made based on the life of 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 based on the life of 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 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 to 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 attained age 70-1/2 when
the contract is issued, the Annuity Date is April 1 of the calendar year
following the first Contract Anniversary.
Form 95-00
<PAGE>
If you do not elect an Annuity Option, your Net Contract Value, less any
applicable MVA, and any charge for premium taxes and/or other taxes, when
converted, will, subject to our minimum requirements, be converted as follows:
. the net amount from your Fixed Option Value and your GIO Value will be
converted to a fixed annuity and held in our General Account, and
. 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 you are not
married, your Annuity Option will be Period Certain Only for five years. If this
is a Qualified Contract and you are married, your Annuity Option will be Joint
and Survivor Life, with survivor payments of 50%, and your spouse will
automatically be named as the secondary (Joint) 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 - 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, the amount will depend on the Age of the Annuitant(s), the Annuity Date,
and the sex of the Annuitant(s), unless unisex factors apply.
FIXED ANNUITY PAYMENTS - The minimum guaranteed income purchased per $1,000 of
the net amount applied to a fixed annuity is based on an annual interest rate of
3% and the 1983a Mortality Table with the ages set back ten (10) years. The
fixed annuity payments made will be based on the greater of:
. our current income factors in effect for this Contract on your Annuity Date;
or
. our guaranteed income factors.
The dollar amount of any payments after the first annuity payment is specified
during the annuity payment period according to the provisions of your elected
Annuity Option.
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 (or if the Joint and Survivor Annuity
option is elected and the Primary Annuitant dies first), 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 administrative offices are also open that day.
Form 95-00
<PAGE>
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 due to the death of the
Annuitant, the first payment will be made on the first day of the calendar
month, or earlier at our option, next following the day we receive due proof of
the Annuitant's death and instructions regarding payment, (called the "Payment
Start Date"), and such other documentation as we may require. Subsequent
payments will be determined on the day in each payment period that corresponds
to the Payment Start 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 starting 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 Net Contract Value, less any MVA and any charge 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 started, 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.
ANNUITY OPTION TABLES
For the fixed annuity option and the initial variable annuity benefit, the
Tables below illustrate the minimum guaranteed monthly income purchased per
$1,000 of the net amount applied. The actuarial basis for the fixed annuity
option Tables is the 1983a Annuity Mortality Table with the ages set back ten
(10) years with interest at an annual rate of 3%. The Tables also illustrate the
minimum rates for the first monthly variable annuity payment per $1,000 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% and the
1983a Annuity Mortality Table with the ages set back ten (10) years. 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 income factors for life
payment options. For some Qualified Plans and in some states, the use of sex-
distinct income factors are prohibited. For those Qualified Plans and in those
states, we use blended unisex income factors 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 or any annuity option, if
applicable, that we offer if they are not shown in the Tables that follow.
Form 95-00
<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 3.04 3.03 3.03 2.93 2.93 2.93 2.99 2.98 2.98
35 3.14 3.14 3.13 3.02 3.02 3.01 3.08 3.08 3.07
40 3.28 3.27 3.26 3.13 3.12 3.12 3.20 3.20 3.19
45 3.44 3.44 3.41 3.26 3.26 3.24 3.35 3.35 3.33
50 3.66 3.64 3.60 3.42 3.42 3.40 3.54 3.54 3.50
55 3.93 3.90 3.82 3.63 3.63 3.59 3.78 3.77 3.71
60 4.27 4.22 4.08 3.90 3.89 3.82 4.09 4.06 3.96
65 4.70 4.62 4.39 4.25 4.22 4.11 4.48 4.43 4.25
70 5.28 5.14 4.71 4.72 4.66 4.44 5.00 4.90 4.58
75 6.10 5.81 5.02 5.35 5.22 4.79 5.73 5.52 4.92
80 7.23 6.61 5.27 6.25 5.96 5.12 6.74 6.30 5.20
85 8.82 7.49 5.42 7.56 6.89 5.35 8.18 7.20 5.39
90 11.06 8.33 5.49 9.53 7.89 5.47 10.28 8.12 5.48
95 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%
------------------------------------------------------
10 20 10 20 10 20
AGE NONE YR. YR. NONE YR. YR. NONE YR. YR.
------------ ---- ---- ----- ---- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 4.38 4.37 4.36 4.29 4.29 4.29 4.34 4.33 4.33
35 4.46 4.46 4.44 4.36 4.35 4.35 4.41 4.41 4.40
40 4.57 4.56 4.54 4.44 4.44 4.42 4.51 4.50 4.49
45 4.71 4.70 4.67 4.55 4.54 4.52 4.63 4.62 4.60
50 4.91 4.89 4.82 4.69 4.68 4.65 4.80 4.78 4.74
55 5.16 5.12 5.02 4.87 4.86 4.81 5.02 4.99 4.92
60 5.48 5.41 5.24 5.12 5.09 5.01 5.30 5.26 5.13
65 5.89 5.79 5.51 5.44 5.40 5.26 5.67 5.60 5.39
70 6.46 6.28 5.80 5.89 5.80 5.55 6.18 6.05 5.68
75 7.27 6.91 6.08 6.51 6.34 5.87 6.89 6.64 5.98
80 8.41 7.68 6.29 7.39 7.05 6.16 7.90 7.38 6.23
85 10.02 8.52 6.43 8.72 7.93 6.37 9.36 8.24 6.40
90 12.29 9.30 6.49 10.71 8.88 6.47 11.49 9.10 6.48
95 15.42 9.90 6.51 13.70 9.68 6.50 14.55 9.80 6.51
</TABLE>
Form 95-00
<PAGE>
OPTION 3 - JOINT AND 50% SURVIVOR LIFE
PRIMARY ANNUITANT
MALE AGE
<TABLE>
<CAPTION>
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 3.91 5.12 4.13 5.34 4.39 5.60 4.69 5.92 5.02 6.30 5.38 6.73
FEMALE 65 3.99 5.19 4.25 5.43 4.54 5.73 4.88 6.09 5.26 6.51 5.67 6.98
AGE 70 4.06 5.25 4.36 5.53 4.70 5.87 5.10 6.27 5.55 6.75 6.03 7.29
75 4.12 5.31 4.46 5.62 4.85 6.00 5.32 6.47 5.86 7.03 6.45 7.66
80 4.17 5.36 4.54 5.70 4.98 6.13 5.54 6.67 6.18 7.33 6.91 8.08
85 4.21 5.40 4.60 5.77 5.09 6.24 5.72 6.86 6.49 7.63 7.40 8.54
</TABLE>
PRIMARY ANNUITANT
UNISEX AGE
<TABLE>
<CAPTION>
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 3.84 5.05 4.07 5.27 4.34 5.54 4.65 5.86 5.00 6.24 5.39 6.69
UNISEX 65 3.90 5.10 4.17 5.35 4.47 5.65 4.83 6.01 5.23 6.44 5.68 6.94
AGE 70 3.96 5.15 4.25 5.43 4.60 5.76 5.02 6.17 5.49 6.66 6.03 7.24
75 4.00 5.19 4.32 5.49 4.72 5.87 5.20 6.34 5.76 6.91 6.41 7.58
80 4.03 5.23 4.38 5.55 4.81 5.96 5.36 6.49 6.02 7.15 6.81 7.96
85 4.05 5.25 4.42 5.59 4.88 6.04 5.49 6.62 6.25 7.38 7.20 8.33
</TABLE>
OPTION 4 - PERIOD CERTAIN ONLY
<TABLE>
<CAPTION>
MONTHLY MONTHLY MONTHLY MONTHLY
INCOME INCOME INCOME INCOME
- ---------------------------------------------------------------------------------------------------------
3% 5% 3% 5% 3% 5% 3% 5%
YEARS FIXED VARIABLE YEARS FIXED VARIABLE YEARS FIXED VARIABLE YEARS FIXED VARIABLE
- --------- ----- -------- ----- ----- -------- ----- ----- -------- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
10 9.61 10.51 17 6.23 7.20 24 4.84 5.88
11 8.86 9.77 18 5.96 6.94 25 4.71 5.76
</TABLE>
Form 95-00
<PAGE>
- --------------------------------------------------------------------------
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED 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
Form 95-00
<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. All
terms of the base Contract which do not conflict with this Endorsement's terms
apply to this Endorsement. In the event of any conflict between the terms of
this Endorsement and the terms of the Contract, the terms of this Endorsement
shall prevail over the terms of the base policy.
AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST OPTIONS ARE NOT ELIGIBLE FOR
TRANSFER TO OR FROM THE LOAN ACCOUNT, NOR WILL THEY BE CONSIDERED WHEN
DETERMINING THE AMOUNT AVAILABLE FOR A CONTRACT LOAN.
Adverse tax consequences may result if you fail to meet the repayment
requirements for your loan. The tax and ERISA rules relating to Contract loans
are complex and in many cases unclear. For these reasons, and because the
rules vary depending on the individual circumstances of each Contract,
WE ADVISE THAT YOU CONSULT WITH A QUALIFIED TAX ADVISER before exercising
- -------------------------------------------------------
the loan provisions of your Contract.
CONTRACT LOANS
If your Contract is issued under a Qualified Plan under code Section 401
or 403 and your Qualified Plan permits, you may request a loan using your
Contract Value as the only security.
LOAN PROCEDURES - Your loan request must be submitted on our Loan Request Form.
You may submit a loan request at any time after your first Contract Anniversary
and before your Annuity Date however, before requesting a new loan, you must
wait thirty (30) days after the last payment of a previous loan. If approved,
your loan will usually be effective as of the end of the Business Day on which
we receive all necessary documentation in proper form. We will normally forward
proceeds of your loan to you within seven calendar days after the effective date
of your loan. A $100 loan administrative fee will be deducted from your loan
proceeds; however, we reserve the right to increase this fee up to a maximum
of $500.
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 on a prorata basis from
your Fixed and Variable 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 loan. Interest earned will accrue daily beginning on the
day following the effective day of the loan. The interest credited will be
transferred from the Loan Account to your Fixed and Variable Investment Options
once per year on a prorata basis relative to your most recent allocation
instructions. As your loan is repaid, the amount of the repayment will be
transferred from the Loan Account to your Fixed and Variable Investment Options
on a prorata basis relative to your most recent allocation instructions.
LOAN TERMS - You may have only one loan outstanding at any time. The minimum
loan amount is $1,000 and the maximum loan amount is the lesser of:
. 50% of your Contract Value;
. 100% of your Contract Value excluding your GIO Value; or
. $50,000 less your highest outstanding Contract Debt during
the 12-month period immediately preceding the effective date
of your loan.
1
<PAGE>
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 5% or
the Moody's Corporate Bond Yield Average-Monthly Corporates, as published by
Moody's Investors Service, Inc., or its successor, for the most recently
available calendar month. In the event that the Moody's Corporate Bond Yield
Average-Monthly Corporates is no longer available, we will use a substantially
similar average, subject to compliance with applicable state regulations.
Interest charged will accrue daily beginning on the day your loan is effective.
We will notify you of the loan interest rate when you make a Contract loan.
REPAYMENT TERMS - You must repay principal and interest of any loan within
five years after its effective date. If you have certified to us that your loan
proceeds will be used to acquire a principal residence for yourself, you may
request a loan for thirty years. In either case, you must repay your loan prior
to your Annuity Date.
Your loan, including principal and accrued interest, must be repaid in quarterly
installments. An installment will be due each quarter on the date corresponding
to your loan effective date, beginning with the first such date following the
effective date of your loan. You may prepay your loan at any time; if you do so,
we will bill you for any accrued interest. Your loan will be considered repaid
only when the interest due has also been paid. Subject to any necessary approval
of state insurance authorities, we will treat all payments you send us as
Purchase Payments unless you specifically indicate that your payment is a loan
repayment. To the extent allowed by law, any repayment in excess of the amount
then due will be refunded to you, unless such amount is sufficient to pay the
balance of your loan. Repayments received that are less than the amount then
due will be returned to you, unless otherwise required by law.
If a loan repayment is not made when due, we will declare the entire remaining
loan balance in default. At that time, we will send written notification of the
amount needed to bring the loan back to a current status. You will have sixty
(60) days from the date on which the loan was declared in default (the "grace
period") to make the required repayment.
If the required repayment is not received by the end of the grace period, the
defaulted loan balance plus accrued interest will be withdrawn from your
Contract Value, if amounts under your Contract are eligible for distribution.
If those amounts are not eligible for distribution, the defaulted loan balance
plus accrued interest will be considered a Deemed Distribution and that portion
of any Contract Value needed to repay the Contract Debt will be withdrawn when
such Contract Values become eligible for distribution.
In either case, the distribution or the Deemed Distribution will be considered
a currently taxable event, will be subject to the mandatory 20% federal
withholding, will be subject to the withdrawal charge and may be subject to
the early withdrawal tax penalty.
If there is a Deemed Distribution under your Contract and to the extent
allowed by law, any future withdrawals will first be applied as repayment
of the defaulted Contract Debt, including accrued interest and withdrawal
charges and charges for applicable taxes. Any amounts withdrawn and
2
<PAGE>
applied as repayment of Contract Debt will be withdrawn first from your Loan
Account and then from your Investment Options on a proportionate basis relative
to the Account Value in each Option. If you have an outstanding loan that is in
default, the defaulted Contract Debt will be considered a withdrawal for the
purpose of calculating any Death Benefit Amount and/or Guaranteed Minimum
Death Benefit amounts.
We reserve the right to amend the provisions of this rider in order to reflect
changes in the Code or interpretations thereof.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
[SIG OF THOMAS C. SUTTON] [SIG OF AUDREY L. MILFS]
Chairman and Chief Executive Officer Secretary
3
<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 the 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 "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 the minimum
as stated in the Purchase Payment 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
allowable 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 non annuity 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 (i) December 31 of the Calendar Year immediately following the Calendar
Year in which the Owner died and (ii) December 31 of the Calendar Year in which
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 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
R96-IRA
<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 becomes 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
<PAGE>
EXHIBIT 99.5(a)
Application Form for Individual Flexible Premium
Variable Accumulation Annuity Contract (Draft)
<PAGE>
[LOGO OF PACIFIC MUTUAL APPEARS HERE]
PACIFIC PORTFOLIOS APPLICATION
Pacific Mutual Life Insurance Company, PO Box 100060, Pasadena, CA 92289-0060
Express Mail Address: Pacific Mutual, C/O FCNPC, 1111 South Arroyo Parkway, 1st
Floor, Pasadena, CA 91105
1a ANNUITANT (See instructions for retirement 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
(Not applicable for qualified plans.)
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 ___. See instructions for
retirement 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 Requests section or enclose a signed letter of
instruction if you need to provide additional information.)
Beneficiary Name Primary Contingent
Beneficiary Name Primary Contingent
<PAGE>
Beneficiary Name Primary Contingent
4 TYPE OF PLAN
___ Non-qualified ___ Qualified (Indicate one type below.)
Type: ___ 401(k) ___ SEP-IRA ___ Pension/Profit Sharing
___ TSA/403(b) ___ 457 ___ Keogh/HR10
___ IRA (Qualified Payment type/s required below.)
Payment Type: (See instructions.)
___ Transfer (Attach transfer form/s.)
___ Rollover
___ Contribution $_______________ for tax year 199__
$_______________ for tax year 199__
5 ISSUE STATE
_______________
Enter the state where application was signed.
6 INITIAL PURCHASE PAYMENT
___ Amount with application
$______________________
___ 1035 exchange/estimated transfer
$______________________
7 TELEPHONE AUTHORIZATION (Owner/Owners must check and initial.)
___ ______________ ___________
By initialing, Pacific Mutual is authorized and directed to act on telephone
instructions from any person(s) who can furnish proper identification. Pacific
Mutual will use reasonable procedures to confirm that these instructions are
authorized and genuine. As long as these procedures are followed, Pacific
Mutual, our affiliates, directors, trustees, officers, employees,
representatives and/or agents, will be held harmless for any claim, liability,
loss or cost.
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 insurance company name and contract number in
Special Requests section and attach any required state replacement and/or
transfer forms.)
AP95-00 (Please complete the following pages) 280-6A 04/96
<PAGE>
9 TRANSFERS (Choose only one of the four options, then frequency, start date
and number of transfers below.)
Earnings Sweep:
1 ___ Sweep previous period's earnings of either the Fixed Option or the Money
Market account to the target account(s) indicated below. (Choose one source
account. If also rebalancing, only Fixed Option available.)
___ Fixed ___ Money Market
Dollar Cost Averaging:
2 ___ Deplete the source account in (indicate number) ______ transfers to the
target account(s) indicated below. (If the Fixed Option is source account, up
to 100% can be transferred over one year or more.)
3 ___ Transfer $________ from the source account to the target account(s)
indicated below.
4 ___ Transfer ______% annually from the source account to the target
account(s) indicated below.
Frequency: (Choose one.)
___ Monthly ___ Quarterly ___ Semi-Annually ___ Annually
Start Date: ___-___-___
Number of Transfers: (If option 1, 3 or 4 selected above, indicate number.)
______
Source: (If option 2, 3 or 4 selected above, choose one.)
___ Fixed
___ Money Market
___ High Yield Bond
___ Managed Bond
___ Govt. Securities
___ Aggressive Equity
___ Growth LT
___ Equity Income
___ Multi-Strategy
___ Equity
___ Bond and Income
___ Equity Index
___ International
___ Emerging Markets
___ [ ]
Target: (Must be different than source. Total must equal either 100% or total $
transfer amount.)
Money Market ________
High Yield Bond ________
Managed Bond ________
Govt. Securities ________
Aggressive Equity ________
Growth LT ________
Equity Income ________
Multi-Strategy ________
Equity ________
Bond and Income ________
Equity Index ________
International ________
Emerging Markets ________
Three-Year GIO ________
Six-Year GIO ________
Ten-Year GIO ________
[ ] ________
<PAGE>
10 PRE-AUTHORIZED WITHDRAWALS (Choose one option only, then frequency, start
date and number of transfers below.)
1 ___ Withdraw $______ from the source account(s) indicated below.
___Net of charges ___ Gross of charges
(Will be net if not selected.)
2 ___ Withdraw ______% annually from the source account(s) indicated below.
___Net of charges ___ Gross of charges
(Will be gross if not selected.)
Frequency: (Choose one.)
___ Monthly ___ Quarterly ___ Semi-Annually ___ Annually
Start Date: ___-___-___
Number of Transfers: (If option 1 or 2 selected above, indicate number.)
________
Federal Taxes:
___ Do Not Withhold
___ Withhold ______%
(If not specified, a minimum 10% federal tax on non-qualified plans, 20% on
qualified plans, will be withheld. State mandated income tax will be withheld
where required by law.)
Third Party Payee:
Indicate name and address of payee, if other than owner, below:
First Name Middle Last
Institution Account Number
Street Address
City State Zip
Source: (Choose one or more. Total must equal either 100% or total $ withdrawal
amount.)
Fixed ________
Money Market ________
High Yield Bond ________
Managed Bond ________
Govt. Securities ________
Aggressive Equity ________
Growth LT ________
Equity Income ________
Multi-Strategy ________
Equity ________
Bond and Income ________
Equity Index ________
International ________
Emerging Markets ________
11 PRE-AUTHORIZED CHECKING (Please attach a voided check. To begin the plan,
the first minimum installment must accompany this application.)
<PAGE>
Collect $______ monthly by initiating automatic withdrawals from my account as
indicated on the attached voided check. Payments will be applied according to
the allocations on this application or more current instructions, if any.
Start Date: ___-___-___
280-6X 04/96
<PAGE>
12 ANNUITY START DATE (Optional, annuity date cannot be prior to first contract
anniversary.)
- -
--------------
13 ALLOCATION OPTIONS (Indicate either whole percentages or dollars. Total
must equal either 100% or initial purchase payment.)
Pacific Mutual............. Fixed ________
Pacific Mutual............. Money Market ________
Pacific Mutual............. High Yield Bond ________
PIMCO...................... Managed Bond ________
PIMCO...................... Govt. Securities ________
Columbus Circle............ Aggressive Equity ________
Janus...................... Growth LT ________
J.P. Morgan Inv............ Equity Income ________
J.P. Morgan Inv............ Multi-Strategy ________
Greenwich.................. Equity ________
Greenwich.................. Bond and Income ________
Bankers Trust.............. Equity Index ________
Templeton.................. International ________
Blairlogie................. Emerging Markets ________
[Pacific Mutual............ Three-Year GIO] ________
[Pacific Mutual............ Six-Year GIO] ________
[Pacific Mutual............ Ten-Year GIO] ________
[ ] ________
14 REBALANCING ___ (Variable accounts will be rebalanced to the allocation
percentages on this application.)
Frequency: (Choose one.)
___ Quarterly ___ Semi-Annually ___ Annually
Start Date: ___-___-___
15 SPECIAL REQUESTS
16 STATEMENT OF APPLICANT
I believe this Contract will meet my financial objectives. I 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.
I have received prospectuses. I 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
<PAGE>
Contract issued by Pacific Mutual. I acknowledge that corrections to my
Contract may be made from the application. My 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 paragraph 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 or statement of claim 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 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).
My signature certifies, under penalty of perjury, that the taxpayer
identification number provided is correct. I am not subject to backup
withholding because: I am exempt; or I have not been notified that I am subject
to backup withholding resulting from failure to report all interest or
dividends; or I have been notified that I am no longer subject to backup
withholding. (Strike out the preceding sentence if subject to backup
withholding.) The IRS does not require my consent to any provision of this
document other than the certifications required to avoid backup withholding.
Owner Signature (if different from Annuitant)
Annuitant Signature Date
Joint/Contingent Owner Signature Joint/Contingent Annuitant Signature Date
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 in Special Requests section. 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
280-6Z 04/96
<PAGE>
[LOGO OF PACIFIC MUTUAL APPEARS HERE]
PACIFIC PORTFOLIOS APPLICATION INSTRUCTIONS
Send this completed application, with payment or 1035 Tax-Free Exchange or
Transfer of Assets form to:
Pacific Mutual Life Insurance Company, PO Box 100060, Pasadena, CA 91189-0060.
Our phone number is (800) 722-2333.
Our express mail address is: Pacific Mutual, C/O FCNPC, 1111 South Arroyo
Parkway, 1st Floor, Pasadena, CA 91105.
1 Annuitants: There are many combinations of owner and annuitant
registrations which may result in different
consequences. For example, the death of an
owner/annuitant may have different consequences
2 Owners: than the death of a non-owner annuitant. Joint or
contingent owners and/or joint annuitants cannot be
named on retirement plans. For IRAs, owner and
annuitant must be participant. For pension/profit
sharing, 401(k) and Keogh/HR 10 plans, name plan as
owner and annuitant. For 403(b) plans, name
participant as both owner and annuitant. Use the
Special Request section to clarify registrations.
Spousal signatures may be required for certain
actions in qualified plans. Consult a tax adviser
to properly structure qualified plans and effect
transfers.
3 Beneficiary: Beneficiaries will be joint if no boxes are
checked. Joint beneficiaries will share equally
with the rights of survivorship. Beneficiary
designations may be irrevocable. Please use the
Special Requests section to indicate this option.
4 Type of Plan: Transfer indicates a trustee to trustee or
custodian to custodian transfer only. Rollover
indicates a move from a qualified plan; includes
moving from a qualified plan with intent to move to
another qualified plan at a later date. If initial
payment represents both a rollover and a
contribution, indicate amounts for each in Special
Requests. Ensure the total matches the check.
5 Issue State: Indicate the state where the application is signed.
6 Initial Purchase: Indicate the initial purchase payment in U.S.
dollars. Initial non-qualified minimum $5,000, $250
subsequent; qualified minimum $2,000, $50
subsequent.
7 Telephone Authorization: If the Contract is jointly owned, both owners
must check and initial.
<PAGE>
8 Replacement of Annuity: For 1035 exchanges/transfers, a transfer of
assets form must also be completed and attached.
9 Transfers: Contract must be issued for at least 30 days.
Actual start date may occur after date elected.
Minimum source account value $1,000. Minimum
initial transfer amount $250. Select target
accounts that are different than the source
account. Target accounts must total either 100% for
options 1, 2 and 4 or transfer amount for option 3.
[No less than $500 may be transferred to a
guaranteed interest option (GIO). If instruction
results in less, transfer either will not occur or
amount will be divided proportionately over other
target accounts selected.] Deplete source account:
If Fixed Option is source account, up to 100% can
be transferred over one year or more. Earnings
sweep: If rebalancing, earnings sweep allowed only
from the Fixed Option. If not rebalancing, earnings
sweep allowed from either the Fixed Option or the
Money Market. Transfer dollars: Last transfer will
not occur if remaining balance is less than amount
selected. Transfer percentages: Annual percentage
will be divided by the frequency selected.
10 Pre-Authorized Contract must be issued for 30 days. Actual
Withdrawals: start date may occur after date elected. Minimum
withdrawal $250. Annual percentage will be divided
by the frequency selected. Payment will reflect
deduction of fees, charges and taxes, if
withholding selected, and will be prorated from all
investment options if none selected. Withdrawals
may be taken from qualified plans if allowed.
11 Pre-Authorized Checking: Initial minimum purchase may be met over maximum 12
months. The first installment must accompany this
application. Monthly non-qualified minimum $400,
qualified minimum $150.
12 Annuity Start Date: Annuity date cannot be prior to first Contract
anniversary. For non-qualified plans, if no date is
chosen, annuity date is the Annuitant's 100th
birthday. For qualified plans, if no date is
chosen, annuity date is April 1 of year the
Annuitant reaches 70-1/2.
13 Allocation Options: Allocations must total 100% or equal total purchase
payment.
<PAGE>
14 Rebalancing: Contract must be issued for at least 30 days.
Actual start date may occur after date elected. If
no date is chosen, rebalancing will occur on the
first business day of the frequency selected and
every period after. Variable account percentages
will be prorated, excluding Fixed Option [and GIO]
balances. The Fixed Option [and GIOs] may not be
rebalanced. If variable account rebalancing is
chosen, then earnings sweep may be made only from
the Fixed Option and not the Money Market.
Additional premium to accounts other than those
selected on this application will not be
rebalanced. To change allocations, complete a new
transfer form.
15 Special Requests: Use this section to indicate unique registrations
and other special instructions.
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.
<PAGE>
EXHIBIT 99.5(b)
Variable Annuity PAC APP
<PAGE>
[LOGO OF PACIFIC MUTUAL APPEARS HERE]
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
Primary Beneficiary Name -- Annuitant
Primary Beneficiary Name -- Owner (PSVA only)
5 TRADE INFORMATION Product: PSVA One Portfolios
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 ___ Growth LT ___ International
___ Money Market ___ Equity Income ___ Emerging Markets
___ High Yield Bond ___ Multi-Strategy ___ [Three-Year GIO]
___ Managed Bond ___ Equity ___ [Six-Year GIO]
___ Govt. Securities ___ Bond and Income ___ [Ten-Year GIO]
___ Agressive Equity ___ Equity Index
<PAGE>
8 DEALER INFORMATION
Will the purchase of this Annuity replace or change any other insurance or
annuity? ___ Yes ___ No
Registered Representative Name
SS#
9 REBALANCING (Optional) ___ Yes ___ No
The fixed account is not available for
rebalancing. ___ Quarterly ___ Semi-Annually
___ Annually
10 SPECIAL REMARKS
11 REPLACEMENT OF ANNUITY
Will the purchase of this Annuity replace or change any other insurance or
annuity? ___ Yes ___ No
255-5A-2 PACIFIC MUTUAL LIFE INSURANCE COMPANY -- P.O. BOX 10060, Pasadena,
CA 91189-0060
<PAGE>
EXHIBIT 99.5(c)
Application/Confirmation Form
<PAGE>
[LOGO OF PACIFIC MUTUAL]
Pacific Portfolios
PACIFIC MUTUAL APPLICATION/CONFIRMATION FORM
Pacific Mutual Life Insurance Company
[contract number] Initial premium [premium] Issue date [date] State Of Sale
[state of sale]
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 on the
reverse, 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.
ANNUITANT(S):
[name]
[address1]
[address2]
[city, state zip]
[SS#], [DOB], [sex]
Joint/Contingent
[address1]
[address2]
[city, state zip]
[SS# if given], [DOB if given], [sex if given]
OWNER(S):
[name]
[address1]
[address2]
[city, state zip]
[SS#], [DOB], [sex]
Joint/Contingent
[address1]
[address2]
[city, state zip]
[SS# if given], [DOB if given], [sex if given]
BENEFICIARY/BENEFICIARIES (P=Primary; C= Contingent):
[primary/contingent]
[name]
[address]
ALLOCATION OPTIONS
[initial premium]
___ Fixed Account ___ Bond and Income
___ Money Market ___ Equity Index
___ High Yield Bond ___ International TYPE OF PLAN
___ Managed Bond ___ Emerging Markets [non-qualified/qualified/type]
___ Govt. Securities ___ Three-Year GIO
___ Aggressive Equity ___ Six-Year GIO REBALANCING
___ Growth LT ___ Ten-Year GIO [yes/no], [frequency]
___ Equity Income ___
___ Multi-Strategy DEALER INFORMATION
___ Equity [rep name], [rep #]
- --------------------------------------------------------------------------------
1 TELEPHONE AUTHORIZATION Owner/Owners must check box and initial to
authorize telephone requests. ___
Please act on telephone instructions from any person purporting to have
authority to make transfers between accounts or 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.
<PAGE>
________________________________________________________________________________
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. Contract 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. 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-2
<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.
5
<PAGE>
Article III. - BOARD OF DIRECTORS
SECTION 1. Powers. - Subject to limitations of the articles of
incorporation and of the bylaws, and of any statutory provisions as to action to
be authorized or approved by the members, all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to-wit:
First. Corporate Business. - To conduct, manage and control all the
business and affairs of the corporation, and to make such rules and regulations
therefor not inconsistent with law, the articles of incorporation or the bylaws,
as they may deem best.
Second. Select and Remove Officers, Agents and Employees. - To select
and remove all officers of the corporation, as more fully provided for in
Article V hereof, and to select and remove all agents and employees of the
corporation, and to prescribe such duties and powers for its officers, agents
and employees as may not be inconsistent with law, the articles of incorporation
or the bylaws, fix or change their salaries, compensation and emoluments, and if
the board of directors deem it necessary, require of them security for faithful
service, including surety bonds, and from time to time thereafter require of
them other and different security for faithful service, including surety bonds
in different amounts and with different
6
<PAGE>
sureties. The board of directors may delegate to the executive committee or
other committee and/or to any officer or officers its power hereunder to select
or remove officers appointed under the provisions of Section 3 of Article V and
agents or employees, and to fix or change their respective salaries,
compensation or emoluments.
Third. Appoint Committees. - To appoint an executive committee and other
committees, and to delegate, by resolution or resolutions, to such committee any
of the powers and authority of the board of directors in the management of the
business and affairs of the corporation, except the power to declare dividends
on policies of insurance and adopt, amend or repeal bylaws; to fix and
prescribe, by resolution or resolutions, the powers and duties of committees
appointed by it; and to fix, by resolution or resolutions, the quorum for the
transaction of business of committees, other than the executive committee, which
may be less than a majority, but not less than one-third of the authorized
number of committee members.
Fourth. Incur Indebtedness. - To borrow money and incur indebtedness for
the purposes of the corporation and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, pledges, hypothecations, or other evidences of debt and securities
therefor.
Fifth. Participating and Non-Participating Insurance. - To determine
which agreements and policies of insurance made by the corporation shall be upon
the basis of full or partial participation in the profits or without any
participation therein.
7
<PAGE>
Sixth. Dividends. - To declare dividends or to provide other
participation in the profits in the case of policies of insurance entitled to
such dividends or participation at such times and in such amounts as in its
opinion the condition of the affairs of the corporation shall render it
advisable.
Seventh. Miscellaneous. - To designate any place within or without the
State of California for the holding of any members' meeting or meetings, other
than the annual meeting.
SEC. 2. Number of Directors.
(a) Authorized Number of Directors. - The authorized number of directors
of the corporation shall be not less than fifteen (15) nor more than eighteen
(18).
(b) Exact Number of Directors. - The exact number of directors is hereby
fixed at Sixteen (16).
SEC. 3. Term of Office and Election. - The directors shall be divided into
three classes, as nearly equal in number as possible, and the terms of office of
the respective classes shall expire at annual intervals and at the times fixed
for successive annual meetings of members. The directors in office at the time
this bylaw becomes effective shall be divided by lot into one
8
<PAGE>
class of six directors and two classes of five directors each, and the terms of
office of the class composed of six directors shall expire at the time fixed for
the first annual meeting of members to be held after the annual meeting of
members in 1990 and the terms of office of the classes composed of five
directors each shall expire at the time of the second and third annual meeting
of members to be held after the annual meeting of members in 1990. Each director
thereafter elected at annual or special meetings of members shall hold office
for a term expiring at the time fixed for the third annual meeting of members to
be held after the meeting of members at which he was elected provided that if
any election would put more than six directors in the class whose terms expire
at such annual meeting, then the excess shall be chosen serially by lot and
allocated serially to the class or classes next in order whose terms expire at
the second and first annual meetings respectively and whose membership shall be
less than six to bring the membership of such class or classes up to six.
At each annual meeting of members, directors in number equal to the
number of directors whose terms expire at the time fixed for such meeting, shall
be elected, but if any such annual meeting of members is not held, or if
directors are not elected thereat, directors may be elected at any special
meeting of members held for the purpose of electing directors.
All directors shall hold office for the term for which they are elected
and until their respective successors are elected and qualified, except that
each director who attains age 72 during the term for which elected shall hold
office only until the next annual meeting of members following attainment of age
72 at which time a person may be elected as director to
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complete the unexpired term of office, if any, for which the director attaining
age 72 had been elected.
SEC. 4. Resignation. - Any director may resign at any time by giving written
notice to the board of directors or to the chairman of the board or to the
secretary of the corporation. Any such resignation shall take effect at the
date of receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SEC 5. Vacancies. - Each director elected to fill a vacancy caused by the
death, resignation or removal of a director shall hold office for a term which
will complete the unexpired term of office of such deceased, resigned or removed
director. Each director elected to fill a vacancy created by an increase in the
authorized number of directors or by failure of the members to elect the full
authorized number of directors shall hold office for a term expiring at the time
fixed for the third annual meeting of members to be held after the election
which fills the vacancy provided that if any election would put more than six
directors in the class whose terms expire at such annual meeting, then the
excess shall be chosen serially by lot and allocated serially to the class or
classes next in order whose terms expire at the second and first meetings,
respectively, and whose membership shall be less than six to bring the
membership of such class or classes up to six.
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SEC 6. Place of Meetings. - Regular meetings of the board of directors shall be
held at any place within or without the State of California which has been
designated from time to time by resolution of the board of directors or by
written consent of all members of the board. In the absence of such
designation, regular meetings, other than the annual meeting, shall be held at
700 Newport Center Drive, Newport Beach, California, unless not less than ten
(10) days prior to said meeting, a written notice designating another location
is mailed to each director at the address as shown upon the records of the
corporation. Special meetings of the board may be held either at a place so
designated or at 700 Newport Center Drive, Newport Beach, California.
SEC. 7 Regular Annual Meetings. - Immediately following each annual meeting of
members, the board of directors shall hold a regular annual meeting for the
purpose of organization, election of officers, and the transaction of other
business. The regular annual meeting shall be held at 700 Newport Center Drive,
Newport Beach, California. Notice of such meeting is hereby dispensed with.
SEC 8. Other Regular Meetings. - Other regular meetings of the board of
directors shall be held without call, on the fourth Wednesday of February, May,
August, October and November. All meeting shall be held at the hour of 9:00
o'clock A.M., except in the month in which the regular annual meeting of the
board of directors is held. Should any meeting day for a meeting of the board
of directors fall upon a legal holiday, then said meeting shall be
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held at the same time on the next day thereafter ensuing which is not a legal
holiday. Notice of all such regular meetings of the board of directors is hereby
dispensed with.
SEC 9. Special Meetings. - Special meetings of the board of directors for any
purpose or purposes shall be called at any time by the chairman of the board, or
if he is absent or unable or refuses to act, by the president, or, if he is
absent or unable or refuses to act, by any three (3) directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director or sent to each director by mail or other
form of written communication, charges prepaid, addressed to him at his address
as it is shown upon the records of the corporation, or, if it is not so shown on
such records and is not readily ascertainable, at the place in which the
meetings of the directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail or delivered to the
telegraph company at least twenty-four (24) hours prior to the time of the
holding of the meeting. In case such notice is delivered as above provided, it
shall be so delivered at least twelve (12) hours prior to the time of the
holding of the meeting. Such mailing, telegraphing or delivery as above
provided shall be due, legal and personal notice to such director.
SEC. 10. Adjournment. - A quorum of the directors may adjourn any directors'
meeting to meet again at a stated day and hour; provided, however, that in the
absence of a quorum, a
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majority of the directors present at any directors' meeting, either regular or
special, may adjourn from time to time or until the time fixed for the next
regular meeting of the board.
SEC. 11. Notice of Adjournment. - Notice of the time and place of holding an
adjourned meeting need not be given to absent directors if the time and place be
fixed at the meeting adjourned.
SEC. 12. Entry of Notice. - Whenever any director has been absent from any
special meeting of the board of directors, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was given to such director as
required by law and the bylaws of the corporation.
SEC. 13. Waiver of Notice. - The transactions of any meeting of the board of
directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice if a quorum be
present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice of or consent to holding such meeting
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
SEC. 14. Quorum. - Eight directors shall be necessary to constitute a quorum
for the transaction of business, except to adjourn, as provided in Section 10 of
this article. Every act
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or decision done or made by a majority of the directors at a meeting duly held,
at which a quorum is present, shall be regarded as an act of the board of
directors, unless a greater number be required by law or by the articles of
incorporation.
SEC. 15. Fees and Compensation. - The directors shall, by resolution of the
board, determine from time to time the manner and amount of compensation payable
for their services as directors, with or without expenses of attendance at
meetings. Directors who are salaried officers of the corporation shall not
receive additional fees or compensation for their services as directors.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation therefor.
Article IV. - EXECUTIVE COMMITTEE
SECTION 1. Powers and Duties. - The executive committee shall have and
exercise, to the extent provided in a resolution or resolutions of the board of
directors, such powers and authority of the board of directors in the management
of the business and affairs of the corporation, except the power to declare
dividends on policies of insurance or adopt, amend or repeal bylaws, as the
board of directors may delegate to it.
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SEC. 2. Number of Members. - The authorized number of members of the
executive committee shall be seven (7), in addition to ex officio members, until
changed by a resolution of the board of directors.
SEC. 3. Qualifications. - Each member of the executive committee shall
be a member of the board of directors.
SEC 4. Appointment and Term of Office. - The members of the executive
committee shall be appointed at each annual meeting of the board of directors,
but if any such annual meeting is not held or the members are not appointed
thereat, the members may be appointed at any subsequent meeting of the board of
directors. All members of the executive committee shall hold office until their
respective successors are appointed.
SEC. 5. Resignation. - Any member of the executive committee may resign
at any time by giving written notice to the board of directors or to the
chairman of the board or to the secretary of the corporation. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time, specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SEC. 6. Vacancies. - Vacancies in the executive committee shall be
filled by appointment by the board of directors and each member so appointed
shall hold office until his successor is appointed.
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SEC. 7. Organization, etc. - The chairman of the executive committee
shall be as designated, the chairman of the board shall be vice chairman of the
executive committee, and the secretary of the corporation, or in his absence
such other officer or employee as the chairman of the executive committee may
designate, shall act as secretary. The executive committee shall keep a record
of its acts and proceedings and report the same from time to time to the board
of directors.
SEC. 8. Regular Meetings. - A regular meeting of the executive committee
shall be held without call or notice upon the day and at such hours and place as
the committee shall from time to time determine or at such other place as
designated by the chairman of the executive committee in a written notice to the
members thereof. Should the day so selected by the committee fall upon a legal
holiday, then the meeting shall be held at the same time on the next day which
is not a legal holiday.
SEC. 9. Special Meetings. - Special meetings of the executive committee
for any purpose or purposes shall be held at such place as shall be called by
the chairman of the executive committee, the chairman of the board, the
president, or secretary or any three (3) members of the executive committee.
Notice of each special meeting of the executive committee shall be sent by mail,
telegraph or telephone, or be delivered personally to each member of said
committee not later than twelve (12) hours before the day on which such meeting
is to be held.
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SEC. 10. Waiver of Notice. - The transactions at any meeting of the
executive committee, however called and noticed or whenever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum be present and if, either before or after the meeting, each of the
members not present sign a written waiver of notice of or consent to holding
such meeting or an approval of the minutes thereof. All such waivers, consents,
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
SEC. 11. Quorum. - Any three (3) members of the executive committee,
either regular or ex officio, shall constitute a quorum for the transaction of
business. Every act or decision done or made by a majority of the members at a
meeting duly held, at which a quorum is present, shall be regarded as an act of
the executive committee.
SEC 12. Adjournment. - A quorum of the members may adjourn any executive
committee meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum the majority of members present at any executive
committee meeting, either regular or special, may adjourn from time to time or
until the time fixed for the next regular meeting of the executive committee.
SEC. 13. Inspection of Records. - The record or records of the acts and
proceedings of the executive committee, including its minutes, shall at all
times be open to inspection by any
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member of the board of directors or any committee or any person appointed by the
board of directors for that purpose and such inspection shall include the right
to make extracts.
SEC. 14. Fees. - Each member of the executive committee, except those
members who are salaried officers of the corporation, shall receive such fee, if
any, as shall be fixed by the board of directors for their respective attendance
at each meeting. Members of the executive committee who are salaried officers
of this corporation shall not receive additional fees or compensation for their
respective attendance at executive committee meetings.
Article V. - OFFICERS
SECTION 1. Number and Qualifications. - The officers of the corporation
shall be a chairman of the board who shall be a member of the board of
directors; a president; one or more executive vice presidents, senior vice
presidents, vice presidents, and 2nd vice presidents as the board of directors
may from time to time determine; a secretary, treasurer, general counsel,
corporate actuary, controller, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold any two offices and perform the duties thereof except that of chairman and
secretary and except that of president and secretary.
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SEC. 2 Election, Term of Office. - Each officer, except such officers as
may be appointed in accordance with the provisions of Section 3 of this Article
V, shall be chosen annually by the board of directors and shall hold his office
until his successor shall have been duly chosen and shall have qualified, or
until his death, or until he shall resign, or until he shall have been removed
in the manner hereinafter provided.
SEC. 3. Other Officers, etc. - The Board of directors may appoint such
assistant vice presidents, assistant secretaries, assistant treasurers, and
other officers as the business of the corporation may require, each of whom
shall hold office for such period and have such authority and perform such
duties as are provided in these bylaws or as the board of directors may from
time to time determine. The board of directors may delegate to the executive
committee, or any officer or officers, the power to appoint any officer or
officers provided for in this Section 3 of Article V.
SEC. 4. Removal. - Any officer chosen under Section 2 of this Article V
may be removed, either with or without cause, by a two-thirds vote of the
directors present at any regular meeting of the board of directors. Any
officer, except an officer chosen by the board of directors pursuant to Section
2 of this Article V, may also be removed at any time, with or without cause, by
the executive committee or any officer or officers upon whom such powers of
removal may be conferred by the board of directors.
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SEC. 5. Resignation. - Any officer may resign at any time by giving
written notice to the board of directors or to the chairman of the board or to
the chief executive officer or to the secretary of the corporation. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SEC. 6. Vacancies. - A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the bylaws for regular election or appointment to such
office.
SEC. 7. Chairman of the Board. - The chairman of the board shall be the
chief executive officer of the corporation and shall have supervision, direction
and control of the business and affairs of the corporation and shall consult
with the president and the executive vice presidents as to policies laid down or
defined by the board of directors and major policy decisions relating to the
policies laid down or defined by the board of directors and major policy
decisions relating to the conduct of the affairs of the corporation. He shall
preside at all meetings of the members of the board of directors and in the
absence or disability of the chairman of the executive committee, he shall
exercise the powers and perform the duties of the chairman of the executive
committee. He shall be an ex officio member of all committees, and shall have
such other powers and duties as may be prescribed from time to time by the board
of directors or elsewhere in these bylaws.
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SEC. 8. Vice Chairman. - The vice chairman shall also be the chief
investment officer and shall have such powers and duties as may be prescribed
from time to time by the board of directors, the chairman of the board, or
elsewhere in these bylaws. He shall be an ex officio member of all committees.
In the absence or disability of the chairman of the board, he shall exercise the
powers and perform the duties of the chairman of the board. In the absence or
disability of both the chairman of the board and vice chairman, an officer
designated by the chairman of the board shall exercise the powers and perform
the duties of the vice chairman.
SEC. 9. Executive Vice Presidents. - The executive vice presidents shall
assist the chairman of the board and the president in the exercise of their
powers and duties and shall have such other powers and perform such other duties
as may be prescribed from time to time by the chairman of the board, the
president, the board of directors, or elsewhere in these bylaws.
SEC. 10. Senior Vice President, Vice Presidents and 2nd Vice Presidents.
- - The senior vice presidents, vice presidents and 2nd vice presidents shall
assist the chairman of the board, the president and the executive vice
presidents in the exercise of their powers and duties and shall have such other
powers and perform such other duties as may be prescribed from time to time by
the chairman of the board, the president, the executive vice presidents, the
board of directors or elsewhere in these bylaws.
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SEC. 11. Secretary. - The secretary shall keep, or cause to be kept, a
book of minutes at the principal office, or such other place as the board of
directors may order, of all meetings of the directors, executive committee and
members with the time and place of holding, whether regular or special, and if
special, how authorized, the notice thereof given, the names of those present at
directors' and executive committee meetings, the number of members present or
represented at members meetings and the proceedings thereof.
The secretary shall give, or cause to be given, notice of all meetings of
the members, the board of directors and the executive committee, required by the
bylaws or bylaw to be given; and he shall keep the seal of the corporation in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the chairman of the board, the president, the executive
vice presidents, the board of directors or elsewhere in these bylaws.
SEC. 12. Treasurer. - The treasurer shall have custody of all funds,
securities and other valuables of the corporation which may have or shall come
into his hands. He shall have such powers and perform such duties as may be
prescribed by the chairman of the board, the president, the executive vice
presidents, the board of directors or elsewhere in these bylaws, and in addition
thereto shall:
(a) Deposit or cause to be deposited all funds, securities and other
valuables in the name of and to the credit of the corporation in its own or with
such depositaries as shall be designated in accordance with the provision of
Section 4, Article VI of these bylaws.
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(b) Be responsible for the due and proper disbursement of the funds
of the corporation.
(c) When necessary or proper, endorse on behalf of this corporation
for collection, checks, notes and other obligations.
(d) Make a report each month to the board of directors of such cash
receipts and disbursements as shall have occurred during the period of the
report and, in addition, shall render to the board of directors, the chairman of
the board, or the president, whenever requested, an account of all his
transactions as treasurer.
(e) Record regularly, full and accurate accounts of all monies
received and paid by him on account of the corporation.
SEC. 13. General Counsel. - The general counsel shall have the general
powers and duties usually vested in such officer and shall have such other
powers and duties as may be prescribed by the chairman of the board, the
president, the executive vice presidents, the board of directors or elsewhere in
these bylaws.
SEC. 14. Corporate Actuary. - The corporate actuary's duties shall be to
coordinate the actuarial bases of the company's operations, to maintain
surveillance of the financial
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performance of the company and its subsidiaries, to maintain surveillance of tax
and regulatory compliance, to direct the auditing of the various accounts and
records, and to have such other duties and responsibilities as may from time to
time be assigned to him by the chairman of the board, the president, the
executive vice presidents, the board of directors or elsewhere in these bylaws.
SEC. 15. Controller. - The controller's duties shall be to direct the
maintenance of the various accounts and other accounting media of the
corporation, to supervise expenses and operating efficiencies of the company and
its subsidiaries, and to have such further duties and responsibilities as may
from time to time be assigned to him by the chairman of the board, the
president, the executive vice presidents, the board of directors or elsewhere in
these bylaws.
SEC. 16. Assistant Vice Presidents. - The assistant vice presidents
shall have such powers and perform such duties as may from time to time be fixed
and prescribed for them by the board of directors, the chairman of the board,
the president, the executive vice presidents or elsewhere in these bylaws.
SEC. 17. Assistant Secretaries and Assistant Treasurers. - The assistant
secretaries and the assistant treasurers shall have such powers and perform such
duties as are assigned to them by these bylaws and shall have such other powers
and perform such other duties not inconsistent with these bylaws as may from
time to time be assigned to them by the secretary or the treasurer,
respectively, or by the board of directors.
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Article VI. - INSURANCE POLICIES, CONTRACTS, CHECKS,
DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Insurance Policies, How Signed. - All policies issued by this
corporation shall be signed by the chairman or president and countersigned by
the secretary either personally or by facsimile.
SEC. 2. Checks, Drafts, etc. - All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, except as in these
bylaws otherwise provided, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as from
time to time shall be determined by resolution of the board of directors or by
resolution of the executive committee, if the board of directors delegate such
authority to it.
SEC. 3. Contracts, etc., How Executed. - The board of directors, or the
executive committee if such authority is delegated to it by the board of
directors, except as by law or in the bylaws otherwise provided, may authorize
any officer or officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to special instances; and unless so
authorized, no officer, agent or employee shall have any power or authority to
bind the corporation by any
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contract or engagement or to pledge its credit to render it liable for any
purpose or to any amount.
SEC. 4. Bank Accounts. - All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation,
and in its name, in such banks, trust companies, or other depositaries as the
board of directors may select or as may be selected by any committee, officer or
officers, agent or agents of the corporation to whom such powers may from time
to time be delegated by the board of directors; and for the purpose of such
deposits the chairman of the board, the president, any vice president, the
secretary, the treasurer, or any other officer or agent or employee of the
corporation to whom such power may be delegated by the board of directors or by
the executive committee, if such authority be delegated to it by the board of
directors, may endorse, assign and deliver checks, drafts and other orders for
the payments of monies which are payable to the order of the corporation.
SEC. 5. Departmentalization. - So long as the corporation maintains two
or more departments, the corporation may apportion among them their fair and
equitable share of expenses; may exchange assets between such departments on a
fair and equitable basis; and may, at customary reinsurance rates, reinsure
business between such departments.
Article VII. - INVESTMENTS
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SECTION 1. Investments in the Corporation's Name. - All investments of
the corporation shall be made in the name of Pacific Mutual Life Insurance
Company or its nominee.
SEC. 2. Investments by the Corporation. - The corporation shall invest
as much of its capital, surplus and accumulations as the board of directors or
the executive committee, if such authority is delegated to it by the board of
directors, may determine in the purchase of or loans upon any of the securities
specified by law, which investment or investments shall be approved by the
executive committee, if such authority is delegated to it by the board of
directors, and by a vote of two-thirds of all the directors of the corporation,
unless such latter approval is not required by law, and any such approval by the
board of directors shall be entered upon the records or minutes of the
corporation which must show the fact of making such investment or investments,
the amount thereof, the name of each director voting to approve the same, the
amount, character and value of the security purchased or taken as collateral
and, if the investment be a loan, the name of the borrower, the rate of interest
thereon, and the date when the loan will become due or payable.
Article VIII. - MEMBERS
SECTION 1. Members Defined. - The words "member" and "members" as used in these
bylaws are hereby defined to include only those policyholders of the
Participating and Non-
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Participating Life classes. In any case where a Participating or Non-
Participating Life policy names two or more persons as joint insureds, payees,
owners or holders thereof, the persons so named shall be deemed collectively to
be but one member for the purposes of these bylaws. In any case where such a
policy shall have been assigned by assignment absolute on its face to an
assignee other than the corporation, and such assignment shall have been filed
at the principal office of the corporation at least thirty days prior to the
date of any election or meeting referred to in these bylaws, then such assignee
shall be deemed to be the member entitled to vote at such election or meeting.
SEC. 2. One Class of Members. - There shall be but one class of members
of the corporation.
Article IX. - CORPORATE RECORDS, ANNUAL REPORT
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
SECTION 1. Inspection of Bylaws. - The corporation shall keep in its principal
office for the transaction of business the original or a copy of the bylaws as
amended or otherwise altered to date, certified by the secretary, which shall be
open to inspection by the members at all reasonable times during office hours.
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SEC. 2. Inspection of Corporate Records. - The books of account, and
minutes of proceedings of the members, of the board of directors and of the
executive committee shall be open to inspection upon the written demand of any
member at any reasonable time and for a purpose reasonably related to his
interests as a member and shall be exhibited at any time when required by the
demand of ten percent (10%) of the members entitled to vote at any members'
meeting shall be made in writing upon the chairman of the board, the president,
secretary or assistant secretary of the corporation.
SEC. 3. Representation of Shares of Other Corporations. - The chairman
of the board, the president or any vice president and the secretary or any
assistant secretary of this corporation are authorized to vote, represent and
exercise on behalf of this corporation all rights incident to any and all share
or other evidence of ownership of any other business entities such as
corporations, business trusts and partnerships standing in the name of this
corporation. The authority herein granted to said officers to vote or represent
on behalf of this corporation any and all such evidences of ownership held by
this corporation may be exercised either by such officers n person or by any
person authorized so to do by proxy or power of attorney duly executed by said
officers.
Article X. - AMENDMENTS
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SECTION 1. Powers of Members. - A bylaw or bylaws may be adopted,
amended, or repealed by the vote of members entitled to exercise a majority of
the voting power of the corporation or by the written assent of such members.
SEC. 2. Power of Directors. - Subject to the rights of the members, as
provided in Section I of this Article, to adopt, amend or repeal a bylaw or
bylaws, other than a bylaw or amendment thereof changing the authorized number
of directors, may be adopted, amended, or repealed by the board of directors.
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EXHIBIT 99.8
Fund Participation Agreement
<PAGE>
FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 6th day of November, 1992, by and between Pacific
Mutual Life Insurance Company (the "Company"), a life insurance company
domiciled in California, on its behalf and on behalf of the segregated asset
accounts of the Company listed on Exhibit A to this Agreement (the "Separate
Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts business trust;
and Pacific Equities Network ("Distributor"), a California corporation.
WITNESSETH
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act") and the Fund is authorized to issue
separate classes of shares of beneficial interests ("shares"), each representing
an interest in a separate portfolio of assets known as a "series" and each
series has its own investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is currently
comprised of nine separate series, and other series may be established in the
future; and
WHEREAS, the Fund has obtained an order from the SEC granting Participating
Insurance Companies, separate accounts funding Variable Contracts of
Participating Insurance Companies, and the Fund exemptions from the provisions
of sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and paragraph (b)(15)
of Rule 6e-3(T) under the 1940 Act, to the extent necessary to permit such
persons to rely on the exemptive relief provided under paragraph (b)(15) of Rule
6e-3(T), even though shares of the Fund may be offered to and held by separate
accounts funding variable annuity contracts or scheduled or flexible premium
variable life insurance contracts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company wishes to purchase shares of one or more of the Fund's series on
behalf of its Separate Accounts to serve as an investment medium for Variable
Contracts funded by the Separate Accounts, and the Distributor is authorized to
sell shares of the Fund's series;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I. Sale of Fund Shares
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1.1. The Distributor agrees to sell to the Company those shares of the series
offered and made available by the Fund and identified on Exhibit B ("Series")
that the Company orders on behalf of its Separate Accounts, and agrees to
execute such orders on each day on which the Fund calculates its net asset value
pursuant to rules of the SEC ("business day") at the net asset value next
computed after receipt and acceptance by the Fund or its agent of the order for
the shares of the Fund.
1.2. The Fund agrees to make available on each business day shares of the
Series for purchase at the applicable net asset value per share by the Company
on behalf of its Separate Accounts' provided, however, that the Board of
Trustees of the Fund may refuse to sell shares of any Series to any person, or
suspend or terminate the offering of shares of any Series, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Trustees, acting in good faith and in light of the
Trustees' fiduciary duties under applicable law, necessary in the best interests
of the shareholders of any Series.
1.3. The Fund and the Distributor agree that shares of the Series of the Fund
will be sold only to Participating Insurance Companies, their separate accounts,
and other persons consistent with each Series being adequately diversified
pursuant to Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code") and the regulations thereunder. No shares of any Series will be sold
directly to the general public.
1.4. The Fund and the Distributor will not sell shares of the Series to any
insurance company or separate account unless an agreement containing provisions
substantially the same as this Agreement is in effect to govern such sales.
1.5. Upon receipt of a request for redemption in proper form from the Company,
the Fund agrees to redeem any full or fractional shares of the Series held by
the Company, ordinarily executing such requests on each business day at the net
asset value next computed after receipt and acceptance by the Fund or its agent
of the request for redemption, except that the Fund reserves the right to
suspend the right of redemption, consistent with Section 22(e) of the 1940 Act
and any rules thereunder. Such redemption shall be paid consistent with
applicable rules of the SEC and procedures and policies of the Fund as described
in the current prospectus.
1.6. The Company agrees to purchase and redeem the shares of each Series in
accordance with the provisions of the current prospectus for the Fund.
1.7. The Company shall pay for shares of the Series on the same day that it
places an order to purchase shares of the Series. Payment shall be in federal
funds transmitted by wire.
1.8. Issuance and transfer of shares of the Series will be by book entry only
unless otherwise agreed by the Fund. Stock certificates will not be issued to
the Company or the Separate Accounts unless otherwise agreed by the Fund.
Shares ordered from the Fund will be recorded in an appropriate title for the
Separate Accounts or the appropriate subaccounts of the Separate Accounts.
1.9. The Fund shall promptly furnish notice (by wire or telephone, followed by
written confirmation) to the Company of any income dividends or capital gain
distributions payable on the
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shares of the Series. The Company hereby elects to reinvest in the Series all
such dividends and distributions as are payable on a Series' shares and to
receive such dividends and distributions in additional shares of that Series.
The Company reserves the right to revoke this election in writing and to receive
all such dividends and distributions in cash. The Fund shall notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall instruct its recordkeeping agent to advise the Company on
each business day of the net asset value per share for each Series as soon as
reasonably practical after the net asset value per share is calculated.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it is taxed as an
insurance company under Subchapter L of the Code.
2.2. The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the ________________________ Insurance Code, and that each of the Separate
Accounts is a validly existing segregated asset account under applicable federal
and state law.
2.3. The Company represents and warrants that the Variable Contracts issued by
the Company or interests in the Separate Accounts under such Variable Contracts
(1) are or, prior to issuance, will be registered as securities under the
Securities Act of 1933 ("1933 Act") or, alternatively (2) are not registered
because they are properly exempt from registration under the 1933 Act or will be
offered exclusively in transactions that are properly exempt from registration
under the 1933 Act.
2.4. The Company represents and warrants that each of the Separate Accounts (1)
has been registered as a unit investment trust in accordance with the provisions
of the 1940 Act or, alternatively (2) has not been registered in proper reliance
upon an exclusion from registration under the 1940 Act.
2.5. The Company represents that it believes, in good faith, that the Variable
Contracts issued by the Company are currently treated as annuity contracts or
life insurance policies (which may include modified endowment contracts),
whichever is appropriate, under applicable provisions of the Code.
2.6. The Company represents and warrants that any of its Separate Accounts that
fund variable life insurance contracts and that are registered with the SEC as
investment companies rely on the exemptions provided by Rule 6e-3(T), or any
successor thereto, and not on Rule 6e-2 under the 1940 Act.
2.7. The Fund represents and warrants that it is duly organized as a business
trust under the laws of the Commonwealth of Massachusetts, and is in good
standing under applicable law.
2.8. The Fund represents and warrants that the shares of the Series are duly
authorized for issuance
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in accordance with applicable law and that the Fund is registered as an open-end
management investment company under the 1940 Act.
2.9. The Fund represents that it believes, in good faith, that the Series
currently comply with the diversification provisions of Section 817(h) of the
Code and the regulations issued thereunder relating to the diversification
requirements for variable life insurance policies and variable annuity
contracts.
2.10. The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. General Duties
3.1. The Fund shall take all such actions as are necessary to permit the sale
of the shares of each Series to the Separate Accounts, including maintaining its
registration as an investment company under the 1940 Act, and registering the
shares of the Series sold to the Separate Accounts under the 1933 Act for so
long as required by applicable law. The Fund shall amend its Registration
Statement filed with the SEC under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of the shares of the
Series. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states to the extent deemed necessary by the Fund
or the Distributor.
3.2. The Fund shall make every effort to maintain qualification of each Series
as a Regulated Investment Company under Subchapter M of the Code (or any
successor or similar provision) and shall notify the Company immediately upon
having a reasonable basis for believing that a Series has ceased to so qualify
or that it might not so qualify in the future.
3.3. The Fund shall make every effort to enable each Series to comply with the
diversification provisions of Section 817(h) of the Code and the regulations
issued thereunder relating to the diversification requirements for variable life
insurance policies and variable annuity contracts and any prospective amendments
or other modifications to Section 817 or regulations thereunder, and shall
notify the Company immediately upon having a reasonable basis for believing that
any Series has ceased to comply.
3.4. The Fund shall be entitled to receive and act upon advice of its General
Counsel or its outside counsel in meeting the requirements specified in Sections
3.2 and 3.3 hereof.
3.5 The Company shall take all such actions as are necessary under applicable
federal and state law to permit the sale of the Variable Contracts issued by the
Company, including registering each Separate Account as an investment company to
the extent required under the 1940 Act, and registering the Variable Contracts
or interests in the Separate Accounts under the Variable Contracts to the extent
required under the 1933 Act, and obtaining all necessary approvals to offer the
Variable Contracts from state insurance commissioners.
3.6. The Company shall make every effort to maintain the treatment of the
Variable Contracts issued
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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
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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.
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7.2(b). The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations and
duties under this Agreement or to the Company or the Separate Accounts.
7.2(c). The Distributor shall not be liable under this indemnification
provision with respect to any claim made against the Indemnified Party unless
such Party shall have notified the Distributor in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Party shall have received notice of such service on any designated agent),
but failure to notify the Distributor of any such claim shall not relieve the
Distributor from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
Indemnification Provision. In case any such action is brought against the
Indemnified Parties, the Distributor will be entitled to participate, at its own
expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Distributor to such party of the Distributor's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Distributor
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
7.2(d). The Company shall promptly notify the Distributor of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issuance or sale of the Variable Contracts issued by the
Company or the operation of the Separate Accounts.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of California.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934, and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. Termination
9.1. This Agreement shall terminate:
(a) at the option of any party upon 180 days advance written notice to the other
parties; or
(b) at the option of the Company if shares of the Series are not reasonably
available to meet the requirements of the Variable Contracts issued by the
Company, as determined by the Company, and upon prompt notice by the Company to
the other parties; or
12
<PAGE>
(c) at the option of the Fund or the Distributor upon institution of formal
proceedings against the Company or its agent by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the Variable
Contracts issued by the Company, the operation of the Separate Accounts, or the
purchase of the Fund shares; or
(d) at the option of the Company upon institution of formal proceedings against
the Fund or the Distributor by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; or
(e) upon requisite vote of the Variable Contract Owners having an interest in
the Separate Accounts (or any subaccounts thereof) to substitute the shares of
another investment company for the corresponding shares of the Fund or a Series
in accordance with the terms of the Variable Contracts for which those shares
had been selected to serve as the underlying investment media; or
(f) in the event any of the shares of a Series are not registered, issued or
sold in accordance with applicable state and/or federal law, or such law
precludes the use of such shares as the underlying investment media of the
Variable Contracts issued or to be issued by the Company; or
(g) by any party to the Agreement upon a determination by a majority of the
Trustees of the Fund, or a majority of its disinterested Trustees, that an
irreconcilable conflict exists; or
(h) at the option of the Company if the Fund or a Series fails to meet the
diversification requirements specified in Section 3.3 hereof.
9.2. Each party to this Agreement shall promptly notify the other parties to
the Agreement of the institution against such party of any such formal
proceedings as described in Sections 9.1(c) and (d) hereof. The Company shall
give 60 day's prior written notice to the Fund of the date of any proposed vote
of Variable Contract Owners to replace the Fund's shares as described in Section
9.1(e) hereof.
9.3. Except as necessary to implement Variable Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Fund shares attributable to the Variable Contracts issued by
the Company (as opposed to Fund shares attributable to the Company's assets held
in the Separate Accounts), and the Company shall not prevent Variable Contract
Owners from allocating payments to a Series, until 60 days after the Company
shall have notified the Fund or Distributor of its intention to do so.
9.4. If this Agreement terminates, any provision of this Agreement necessary to
the orderly windup of business under it will remain in effect as to that
business, after termination.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
13
<PAGE>
If to the Fund:
Pacific Select Fund
Attn: SEC Regulatory Compliance Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92260
If to the Distributor:
Pacific Equities Network
Attn: Compliance Officer
700 Newport Center Drive, NB-4
Newport Beach, CA 92660
If to the Company:
Pacific Mutual Life Insurance Company
Attn: SEC Regulatory Compliance Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92660
ARTICLE XI. Miscellaneous
11.1. The Fund and the Company agree that if and to the extent Rule 6e-3(T)
under the 1940 Act is amended or if Rule 6e-3 is adopted in final form, to the
extent applicable, ,the Fund and the Company shall each take such steps as may
be necessary to comply with the Rule as amended or adopted in final form.
11.2. A copy of the Fund's Agreement and Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts and notice is hereby given
that the Agreement has been executed on behalf of the Fund by a Trustee of the
Fund in his or her capacity as Trustee and not individually. The obligations of
this Agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
11.3. Nothing in this Agreement shall impede the Fund's Trustees or
shareholders of the shares of the Fund's Series from exercising any of the
rights provided to such Trustees or shareholders in the Fund's Agreement and
Declaration of Trust, as amended, a copy of which will be provided to the
Company upon request.
11.4. It is understood that the name "Pacific", "Pacific Mutual", "Pacific
Select" or any derivative thereof or logo associated with that name is the
valuable property of the Distributor and its affiliates, and that the Company
has the right to use such name (or derivative or logo) only so long as this
Agreement is in effect. Upon termination of this Agreement the Company shall
forthwith cease to
14
<PAGE>
use such name (or derivative or logo).
11.5. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
11.6. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.7. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.8. This Agreement may not be assigned by any party to the Agreement except
with the written consent of the other parties to the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC SELECT FUND
ATTEST: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON
Name: AUDREY L. MILFS Name: THOMAS C. SUTTON
Title: SECRETARY Title: PRESIDENT
PACIFIC EQUITIES NETWORK
ATTEST: /s/ AUDREY L. MILFS BY: /s/ ARTHUR M. KESSELHAUT
Name: AUDREY L. MILFS Name: ARTHUR M. KESSELHAUT
Title: SECRETARY Title: PRESIDENT
PACIFIC MUTUAL LIFE INSURANCE CO.
ATTEST: /s/ AUDREY L. MILFS BY: /s/ WILLIAM D. CVENGROS
Name: AUDREY L. MILFS Name: WILLIAM D. CVENGROS
Title: SECRETARY Title: CHIEF INVESTMENT OFFICER
15
<PAGE>
EXHIBIT A
PACIFIC SELECT SEPARATE ACCOUNT
PACIFIC SELECT EXEC SEPARATE ACCOUNT
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
PACIFIC COLI SEPARATE ACCOUNT
SEPARATE ACCOUNT A
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to be executed
by their Officers designated below on this 3rd day of January, 1995.
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GERALD W. ROBINSON
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: President
17
<PAGE>
EXHIBIT B
MONEY MARKET SERIES
MANAGED BOND SERIES
GOVERNMENT SECURITIES SERIES
HIGH YIELD BOND SERIES
GROWTH SERIES
GROWTH LT SERIES
EQUITY INCOME SERIES
MULTI-STRATEGY SERIES
EQUITY SERIES
BOND AND INCOME SERIES
EQUITY INDEX SERIES
INTERNATIONAL SERIES
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit B to be executed
by their Officers designated below on this 3rd day of January, 1995.
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GERALD W. ROBINSON
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: President
19
<PAGE>
ADDENDUM TO PARTICIPATION AGREEMENT
The Participation Agreement, made the 6th day of November, 1992 by and between
PACIFIC MUTUAL LIFE INSURANCE COMPANY (the "Company"), a life insurance company
domiciled in California, on its behalf and on behalf of the segregated asset
accounts of the Company listed on Exhibit A to this Agreement (the "Separate
Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts business trust;
and Pacific Equities Network ("Distributor"), a California Corporation ("the
Agreement") is hereby amended by the addition of the provisions set forth in
this Addendum to the Agreement ("Addendum"), which is made this 4th day of
January, 1994.
WITNESSETH:
WHEREAS, the Fund is authorized to issue separate classes of shares of
beneficial interest ("shares") each representing an interest in a separate
portfolio of assets known as a "series" and each series has its own investment
objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts"); and
WHEREAS, the Fund currently consists of nine separate series designated as the
Money Market Series, Managed Bond Series, High Yield Bond Series, Government
Securities Series, Growth Series, Equity Income Series, Multi-Strategy Series,
International Series and Equity Index Series; and
WHEREAS, the Fund intends to establish one additional Series to be designated as
the Growth LT Series; and
NOW THEREFORE, in consideration of the mutual promises and covenants contained
in this
Addendum, it is agreed between the parties hereto as follows:
The Agreement is amended by replacing the second paragraph with the following
language:
"WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts') and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is comprised of
multiple separate series, and other series may be established in the future;
and"
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
by their officers designated below on the date written above.
1
<PAGE>
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GLENN S. SCHAFER
Name: Audrey L. Milfs Name: Glenn S. Schafer
Title: Secretary Title: President
Attest: /s/ AUDREY L. MILFS By: /s/ DIANE N. LEDGER
Name: Audrey L. Milfs Name: Diane N. Ledger
Title: Secretary Title: Assistant Vice President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ WILLIAM D. CVENGROS
Name: Diane N. Ledger Name: William D. Cvengros
Title: Assistant Vice President Title: Chief Investment Officer
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
2
<PAGE>
ADDENDUM TO PARTICIPATION AGREEMENT
The Participation Agreement, made the 6th day of November, 1992, by and between
PACIFIC MUTUAL LIFE INSURANCE COMPANY (the "Company"), a life insurance company
domiciled in California, on its behalf and on behalf of the segregated asset
accounts of the company listed on Exhibit A to this Agreement (the "Separate
Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts business trust;
and Pacific Equities Network ("Distributor"), a California Corporation ("the
Agreement") is hereby amended by the addition of the provisions set forth in
this Addendum to the Agreement ("Addendum"), which is made this 15th day of
August, 1994.
WITNESSETH:
WHEREAS, the Fund is authorized to issue separate classes of shares of
beneficial interest ("shares") each representing an interest in a separate
portfolio of assets known as a "series" and each series has its own investment
objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts"); and
WHEREAS, the Fund currently consists of ten separate series designated as the
Money Market Series, Managed Bond Series, High Yield Bond Series, Government
Securities Series, Growth Series, Equity Income Series, Multi-Strategy Series,
International Series, Equity Index Series and Growth LT Series; and
WHEREAS, the Fund intends to establish two additional Series to be designated as
the Equity Series and Bond and Income Series; and
NOW THEREFORE, in consideration of the mutual promises and covenants contained
in this addendum, it is agreed between the parties hereto as follows:
The Agreement is amended by replacing the second paragraph with the following
language:
"WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is comprised of
multiple separate series, and other series may be established in the future;
and"
IN WITNESS WHEREOF, the parties hereto have caused this addendum to be executed
by their officers designated below on the date written above.
PACIFIC SELECT FUND
1
<PAGE>
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GLENN S. SCHAFER
Name: Audrey L. Milfs Name: Glenn S. Schafer
Title: Secretary Title: President
Attest: /s/ AUDREY L. MILFS By: /s/ DIANE N. LEDGER
Name: Audrey L. Milfs Name: Diane N. Ledger
Title: Secretary Title: Assistant Vice President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ WILLIAM D. CVENGROS
Name: Diane N. Ledger Name: William D. Cvengros
Title: Assistant Vice President Title: Chief Investment Officer
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
2
<PAGE>
ADDENDUM TO PARTICIPATION AGREEMENT
-----------------------------------
The Participation Agreement, made the 6th day of November, 1992 and
subsequently amended on January 4, 1994 and August 15, 1994, by and between
PACIFIC MUTUAL LIFE INSURANCE COMPANY (the "Company"), a life insurance
company domiciled in California, on its behalf and on behalf of the segregated
asset accounts of the Company listed on Exhibit A to this Agreement (the
"Separate Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts
business trust; and Pacific Equities Network ("Distributor"), a California
Corporation (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement ("Addendum"), which
is made this 20th day of November, 1995.
WITNESSETH:
WHEREAS, the Fund is authorized to issue separate classes of shares of
beneficial interest ("Shares") each representing an interest in a separate
portfolio of assets known as a "series" and each series has its own
investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its
series to separate accounts of insurance companies that fund variable
life insurance policies and variable annuity contracts ("Variable
Contracts"); and
WHEREAS, the Fund currently consists of twelve separate series
designated as the Money Market Portfolio, Managed Bond Portfolio, High
Yield Bond Portfolio, Government Securities Portfolio, Growth Portfolio,
Equity Income Portfolio, Multi-Strategy Portfolio, International
Portfolio, Equity Index Portfolio, Growth LT Portfolio, Equity Portfolio
and Bond and Income Portfolio (each referred to as a "Series" in the
Agreement, and hereinafter referred to as a "Portfolio"); and
WHEREAS, the Fund intends to establish two additional Portfolios to
be designated as the Emerging Markets Portfolio and Aggressive Equity
Portfolio; and
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as
follows:
The Agreement is amended by replacing the second paragraph
with the following language:
"WHEREAS, the Fund is available to offer shares of one or more
of its Portfolios to separate accounts of insurance companies that
fund variable life insurance policies and variable annuity contracts
("Variable Contracts") and to serve as an investment medium for
Variable Contracts offered by insurance companies that have entered
into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is
comprised of multiple separate Portfolios, and other Portfolios may
be established in the future; and"
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GERALD W. ROBINSON
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President, Director & CEO
Attest: /s/ AUDREY L. MILFS By: /s/ EDWARD R. BYRD
Name: Audrey L. Milfs Name: Edward R. Byrd
Title: Secretary Title: CFO & Treasurer
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ THOMAS C. SUTTON
Name: Diane N. Ledger Name: Thomas C. Sutton
Title: Assistant Vice President Title: Chairman and CEO
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
<PAGE>
EXHIBIT B
MONEY MARKET PORTFOLIO
MANAGED BOND PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
HIGH YIELD BOND PORTFOLIO
GROWTH PORTFOLIO
GROWTH LT PORTFOLIO
EQUITY INCOME PORTFOLIO
MULTI-STRATEGY PORTFOLIO
EQUITY PORTFOLIO
BOND AND INCOME PORTFOLIO
EQUITY INDEX PORTFOLIO
INTERNATIONAL PORTFOLIO
EMERGING MARKETS PORTFOLIO
AGGRESSIVE EQUITY PORTFOLIO
<PAGE>
EXHIBIT 99.9
Opinion and Consent of Legal Officer of Pacific Mutual
as to the Legality of Contracts Being Registered
<PAGE>
[LETTERHEAD OF PACIFIC MUTUAL]
April 19, 1996
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 Portfolios 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. 33-88460) 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 Portfolios 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 Portfolios 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 to the Registraton Statement No. 33-88460 of Separate Account A (for the
offering of Pacific Portfolios) on Form N-4 of our report dated February 23,
1996 related to Pacific Mutual Life Insurance Company's financial statements for
the years ended December 31, 1995 and 1994, which is included in the Statement
of Additional Information of such Registration Statement, and to references
to us under the heading "Financial Statements" in the Statement of Additional
Information for Separate Account A which are part of such Registration
Statement.
Deloitte & Touche LLP
April 18, 1996
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 PORTFOLIOS VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
ANNUAL TO DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94
Beginning AUV 1.321672 1.659276 1.595310 1.818287 1.769326
Ending AUV (12/31/95) 1.377303 1.949659 1.870888 2.133456 2.298743
Days 364 364 364 364 364
Admin Charge (0.0125%) $1.53 $1.62 $1.61 $1.61 $1.70
Contract Charge ($40.00) $1.00 $1.00 $1.00 $1.00 $0.00
Surrender Charge $63.00 $63.00 $63.00 $63.00 $63.00
Ending ERV $976.53 $1,109.25 $1,106.99 $1,107.58 $1,234.28
AATR Surrender* -2.35% 10.92% 10.70% 10.76% 23.43%
AATR Account Value** 3.95% 17.22% 17.00% 17.06% 29.73%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94
Beginning AUV 1.734548 1.405461 1.503728 1.118541 3.244657 2.865253
Ending AUV (12/31/95) 2.144132 1.898753 1.641350 1.509259 3.966703 3.783278
Days 364 364 364 364 364 364
Admin Charge (0.0125%) $1.66 $1.73 $1.56 $1.73 $1.65 $1.71
Contract Charge ($40.00) $1.00 $0.00 $1.00 $0.00 $1.00 $0.00
Surrender Charge $63.00 $63.00 $63.00 $63.00 $63.00 $63.00
Ending ERV $1,170.28 $1,285.96 $1,025.89 $1,284.29 $1,156.71 $1,255.42
AATR Surrender* 17.03% 28.60% 2.59% 28.43% 15.67% 25.54%
AATR Account Value** 23.33% 34.90% 8.89% 34.73% 21.97% 31.84%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
* Average Annual total Return upon Surrender = [(ERV/1000) (To the power of
(1/Years))] - 1
** Average Annual Total Return of Account Value = [{(ERV + SURR CHRG)/1000}
(To the power of (1/Years))] - 1
<PAGE>
PACIFIC PORTFOLIOS VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
LAST THREE YEARS ENDING DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 12/31/92 12/31/92 12/31/92 12/31/92 12/31/92
Beginning AUV 1.273459 1.593510 1.555701 1.573391 1.680132
Ending AUV (12/31/95) 1.377303 1.949659 1.870888 2.133456 2.298743
Days 1,093 1,093 1,093 1,093 1,093
Admin Charge (0.0125%) $4.62 $4.85 $4.80 $5.20 $4.91
Contract Charge ($40.00) $3.00 $3.00 $3.00 $2.00 $2.00
Surrender Charge $54.00 $54.00 $54.00 $54.00 $54.00
Ending ERV $1,019.59 $1,160.73 $1,139.94 $1,293.55 $1,305.48
AATR Surrender* 0.65% 5.09% 4.46% 8.96% 9.29%
AATR Account Value** 2.40% 6.70% 6.09% 10.45% 10.78%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/31/92 12/31/92 12/31/92 n/a 12/31/92 12/31/92
Beginning AUV 1.652800 1.303966 1.151387 2.951595 2.685557
Ending AUV (12/31/95) 2.144132 1.898753 1.641350 3.966703 3.783278
Days 1,093 1,093 1,093 1,093 1,093
Admin Charge (0.0125 $4.88 $5.02 $5.66 $5.08 $5.12
Contract Charge ($40.00) $2.00 $2.00 $0.00 $2.00 $2.00
Surrender Charge $54.00 $54.00 $54.00 $54.00 $54.00
Ending ERV $1,235.02 $1,392.91 $1,365.15 $1,281.50 $1,345.92
AATR Surrender* 7.29% 11.68% 10.93% 8.62% 10.41%
AATR Account Value** 8.83% 13.10% 12.38% 10.12% 11.87%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
* Average Annual total Return upon Surrender = [(ERV/1000) (To the power of
(1/Years))] - 1
** Average Annual Total Return of Account Value = [{(ERV + SURR CHRG)/1000}
(To the power of (1/Years))] - 1
<PAGE>
PACIFIC PORTFOLIOS VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
LAST FIVE YEARS ENDING DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 12/31/90 12/31/90 12/31/90 12/31/90 12/31/90
Beginning AUV 1.196419 1.284536 1.271536 1.090424 1.244171
Ending AUV (12/31/95) 1.377303 1.949659 1.870888 2.133456 2.298743
Days 1,824 1,824 1,824 1,824 1,824
Admin Charge (0.0125%) $8.00 $9.38 $9.22 $11.12 $10.29
Contract Charge ($40.00) $5.00 $2.00 $3.00 $1.00 $0.00
Surrender Charge $27.00 $27.00 $27.00 $27.00 $27.00
Ending ERV $1,110.31 $1,476.93 $1,429.73 $1,913.34 $1,806.80
AATR Surrender* 2.11% 8.11% 7.41% 13.86% 12.56%
AATR Account Value** 2.61% 8.50% 7.81% 14.18% 12.89%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/31/90 n/a 12/31/90 n/a 12/31/90 12/31/90
Beginning AUV 1.250556 1.180244 2.193587 2.048679
Ending AUV (12/31/95) 2.144132 1.641350 3.966703 3.783278
Days 1,824 1,824 1,824 1,824
Admin Charge (0.0125%) $9.97 $8.60 $10.46 $10.23
Contract Charge ($40.00) $1.00 $3.00 $0.00 $1.00
Surrender Charge $27.00 $27.00 $27.00 $27.00
Ending ERV $1,673.34 $1,349.51 $1,767.80 $1,804.39
AATR Surrender* 10.85% 6.18% 12.07% 12.53%
AATR Account Value** 11.20% 6.60% 12.41% 12.86%
</TABLE>
DOLLAR vALUES ARE PER $1,000 OF INITIAL PREMIUM
* Average Annual total Return upon Surrender = [(ERV/1000) (To the power of
(1/Years))] - 1
** Average Annual Total Return of Account Value = [{(ERV + SURR CHRG)/1000}
(To the power of (1/Years))] - 1
<PAGE>
PACIFIC PORTFOLIOS VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
LAST TEN YEARS ENDING DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date n/a n/a n/a n/a n/a
Beginning AUV
Ending AUV (12/31/95)
Days
Admin Charge (0.0125%)
Contract Charge ($40.00)
Surrender Charge
Ending ERV
AATR Surrender*
AATR Account Value**
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date n/a n/a n/a n/a 12/31/85 12/31/85
Beginning AUV 1.392217 1.428138
Ending AUV (12/31/95) 3.966703 3.783278
Days 3,650 3,650
Admin Charge (0.0125%) $26.14 $23.75
Contract Charge ($40.00) $2.00 $3.00
Surrender Charge $0.00 $0.00
Ending ERV $2,802.06 $2,603.04
AATR Surrender* 10.85% 10.04%
AATR Account Value** 10.85% 10.04%
</TABLE>
DOLLAR vALUES ARE PER $1,000 OF INITIAL PREMIUM
* Average Annual total Return upon Surrender = [(ERV/1000) (To the power of
(1/Years))] - 1
** Average Annual Total Return of Account Value = [{(ERV + SURR CHRG)/1000}
(To the power of (1/Years))] - 1
<PAGE>
PACIFIC PORTFOLIOS VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $40,000
<TABLE>
<CAPTION>
FROM INCEPTION TO DECEMBER 31, 1995
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 1/4/88 1/4/88 1/4/88 1/4/88 1/4/88
Beginning AUV 1.000000 1.000000 1.000000 1.000000 1.000000
Ending AUV (12/31/95) 1.377303 1.949659 1.870888 2.133456 2.298743
Days 2,916 2,916 2,916 2,916 2,916
Admin Charge (0.0125%) $14.38 $17.07 $16.72 $16.86 $18.04
Contract Charge ($40.00) $4.00 $2.00 $2.00 $3.00 $2.00
Surrender Charge $0.00 $0.00 $0.00 $0.00 $0.00
Ending ERV $1,356.13 $1,922.99 $1,845.28 $2,102.19 $2,267.39
AATR Surrender* 3.89% 8.53% 7.97% 9.75% 10.79%
AATR Account Value** 3.89% 8.53% 7.97% 9.75% 10.79%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 1/4/88 1/30/91 1/4/88 1/4/94 1/2/84 1/2/84
Beginning AUV 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000
Ending AUV (12/31/95) 2.144132 1.898753 1.641350 1.509259 3.966703 3.783278
Days 2,916 1,794 2,916 724 4,379 4,379
Admin Charge (0.0125%) $17.58 $10.17 $15.53 $3.51 $39.68 $37.34
Contract Charge ($40.00) $2.00 $1.00 $3.00 $1.00 $1.00 $1.00
Surrender Charge $0.00 $27.00 $0.00 $63.00 $0.00 $0.00
Ending ERV $2,114.87 $1,856.27 $1,617.60 $1,440.43 $3,892.31 $3,712.47
AATR Surrender* 9.83% 13.41% 6.20% 20.20% 11.99% 11.55%
AATR Account Value** 9.83% 13.75% 6.20% 22.82% 11.99% 11.55%
</TABLE>
DOLLAR vALUES ARE PER $1,000 OF INITIAL PREMIUM
* Average Annual total Return upon Surrender = [(ERV/1000) (To the power of
(1/Years))] - 1
** Average Annual Total Return of Account Value = [{(ERV + SURR CHRG)/1000}
(To the power of (1/Years))] - 1
