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EXHIBIT 99.3(a)
Distribution and Wholesaling Agreement
Between Pacific Mutual and
Pacific Mutual Distributors, Inc. ("PMD")
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EXHIBIT 3(a)
DISTRIBUTION AND WHOLESALING AGREEMENT
This Distribution and Wholesaling Agreement ("Agreement") is made as
of ______________, 1996 by and between Pacific Mutual Life Insurance Company
("Pacific Mutual"), a California company on its own behalf and on behalf of its
Separate Account B (the "Separate Account"), and Pacific Mutual Distributors,
Inc. ("PMD"), a California corporation.
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 PMD, 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, PMD, a wholly owned subsidiary of Pacific Mutual, 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
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WHEREAS, Pacific Mutual desires to retain PMD as the distributor and
wholesaler of a proprietary Variable Annuity (the "Annuity") for Bank of
America National Trust and Savings Association ("BofA") to provide for the sale
and distribution to the public of the Annuity issued by Pacific Mutual and
funded by interests in the General Account of Pacific Mutual and in the
Separate Account, and PMD 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. DISTRIBUTOR/UNDERWRITER. Pacific Mutual hereby appoints PMD,
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 underwriter for the sale of the Annuity to the public in each
state and other jurisdiction in which the Annuity may be lawfully sold.
Pacific Mutual also appoints PMD as its independent general agent for sale of
the Annuity. PMD shall offer the Annuity 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 of the Annuity ("Services and Duties", see
below), and reserves the right to direct, approve or disapprove any action
hereunder taken on its behalf by PMD.
2. SERVICES AND DUTIES. PMD as wholesaler and distributor of the
Annuity will provide to Pacific Mutual the following services and will assume
the following duties:
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a) develop a wholesaling network ("sub-wholesalers") or contract
with sub-wholesalers which will sell and market the Annuity;
b) initial sub-wholesaler training;
c) oversee and supervise sub-wholesaler activities;
d) actively participate in the initial marketing strategy (i.e.
product roll-out) of the Annuity;
e) representation at periodic training and due diligence
meetings;
f) provide advanced market support;
g) develop, design, create and produce all sales literature and
promotional items and fulfillment of requests for sales literature;
h) provide sales reporting;
i) provide consulting services to Pacific Mutual in connection
with information concerning competitive products in the marketplace; and
j) provide the asset allocation model.
3. SELLING AND SUB-WHOLESALING AGREEMENTS. PMD is hereby
authorized to enter into separate written agreements, on such terms and
conditions as PMD determines are not inconsistent with this Agreement, with
such organizations which agree to participate as a general agent and/or
broker-dealer in the distribution of the Annuity and to use their best efforts
to solicit applications for the Annuity. 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 5 hereof, PMD shall be
responsible for ensuring that Broker
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and its agents or representatives and general agent and its sub-agents
soliciting applications for the Annuity shall be duly and appropriately
licensed, registered and otherwise qualified for the sale of such Annuity under
the annuity and insurance laws and any applicable blue sky laws or federal laws
of each state or other jurisdiction in which such Annuity may be lawfully sold
and in which Pacific Mutual is licensed to sell such Annuity. 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 appoint any proposed representative,
agent, or sub- agent, or once appointed, to terminate such appointment.
Pacific Mutual shall incur the expenses to appoint the first 500 qualified
agents or representatives and general agent's sub-agents as life insurance
agents of Pacific Mutual and, as mutually agreed, contribute to the expense to
appoint more than 500. PMD shall be responsible for ensuring that Broker and
general agent supervise its agents, representatives or sub-agents.
4. AGENTS. Pacific Mutual shall be responsible for ensuring that
Broker and its agents or representatives and general agent and its sub-agents
meet all qualifications and hold any licenses or authorizations that may be
required for the solicitation or sale of the Annuity under the insurance laws
of the applicable jurisdictions.
5. SUITABILITY. Pacific Mutual desires to ensure that the
Annuity will be sold to purchasers for whom the Annuity will be suitable. PMD
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 an Annuity in the absence of reasonable grounds to
believe the purchase of the Annuity is suitable for such applicant. While not
limited to the following, a determination of suitability shall be based on
information
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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
Annuity.
6. CONFORMITY WITH REGISTRATION STATEMENT AND APPROVED SALES
MATERIALS. In performing its duties as distributor, PMD 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, and all other
applicable federal and state laws and regulations. PMD shall not give any
information nor make any representations concerning any aspect of the Annuity
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.
PMD 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.
7. APPLICATIONS. Completed applications for the Annuity
solicited by such Broker through its agents or representatives or by general
agent through its sub-agents shall be transmitted directly to Pacific Mutual.
All payments under the Annuity shall be made by check payable to "Pacific
Mutual" or by other method acceptable to Pacific Mutual, and if received by
PMD, 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
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ultimate responsibility for underwriting each Annuity. Anything in this
Agreement to the contrary notwithstanding, Pacific Mutual retains the ultimate
right to control the sale of the Annuity and to appoint and discharge life
insurance agents of Pacific Mutual.
8. STANDARD OF CARE. PMD shall be responsible for exercising
reasonable care in carrying out the provisions of this Agreement.
9. REPORTS AND RECORDS. PMD 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
Annuity, as required by applicable laws and regulations, or as Pacific Mutual
may reasonably request for its own recordkeeping 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 the Annuity
made pursuant to this Agreement. The books, accounts and records of Pacific
Mutual, the Separate Account and PMD shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions.
10. INVESTIGATION AND PROCEDURES. PMD and Pacific Mutual agree to
cooperate fully in any regulatory investigation or proceeding or judicial
proceeding arising in connection with the Annuity distributed under this
Agreement. PMD 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
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laws and regulations. PMD and Pacific Mutual further agree to cooperate fully
in any securities regulatory investigation or proceeding with respect to
Pacific Mutual, PMD, their affiliates and their agents or representatives to
the extent that such investigation or proceeding is in connection with any
Annuity distributed under this Agreement. Without limiting the foregoing:
(a) PMD 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 PMD or any agent, representative, or
sub-agent of a Broker or general agent or which may affect Pacific Mutual's
issuance of any Annuity sold under this Agreement; and
(b) PMD will promptly notify Pacific Mutual of any customer
complaint or notice of any regulatory investigation or proceeding received by
PMD or its affiliates with respect to PMD or any agent, representative, or
sub-agent of a Broker or general agent in connection with any Annuity
distributed under this Agreement or any activity in connection with any such
Annuity.
In the case of a customer complaint, PMD 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 (5) 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, telegraph or telecopier.
11. LITIGATION. PMD and Pacific Mutual represent and warrant that
there are no legal or artibtral proceedings, or any proceedings by or before
any governmental or regulatory authority or agency, now pending (or to the
knowledge of PMD or Pacific Mutual)
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threatened, against PMD or Pacific Mutual in respect of this Agreement, or the
transactions contemplated hereby, if adversely determined, could either
individually or in the aggregate, have a material adverse effect.
12. INDEMNIFICATION. 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 any Annuity: (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
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failure to deliver a currently effective prospectus; (3) the use of any
unauthorized sales literature by any officer, employee, agent, or sub-agent of
PMD, Broker or general agent; or (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 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
PMD ("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 12. 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.
13. AGENT OF PACIFIC MUTUAL OR SEPARATE ACCOUNT. Any person, even
though also an officer, director, employee, or agent of PMD, 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
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or one under the control or direction of PMD even though paid by PMD.
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 PMD shall be deemed when rendering services to
PMD or acting in any business of PMD to be rendering such services to or acting
solely for PMD 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.
14. 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 PMD shall be held by PMD 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
PMD. During the term of this Agreement and for a period of three years from
the date of termination of this Agreement, PMD 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 PMD 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. PMD further acknowledges
and agrees that, in the event of a breach or threatened breach by it of the
provisions of this Section 14, Pacific
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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.
15. EMPLOYEES. PMD 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 PMD:
a) in the last ten (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 Section 1341, 1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx Code; or
b) within the last ten (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 ten (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.
16. 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
sixty (60) days' written notice to the
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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 the Annuity in effect at time of termination, and the
agreements contained in Section 10 and 11 hereof.
17. 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.
18. INDEPENDENT CONTRACTOR. PMD shall act as an independent
contractor and nothing herein contained shall constitute PMD or its agents,
officers or employees as agents, officers, or employees of Pacific Mutual in
connection with the sale of any Contract.
19. AUTHORITY. Wholesaler shall have no authority on behalf of
Pacific Mutual to:
(a) Have any contact with potential or existing purchasers of the
Annuities other than in the presence of the client's registered representative;
(ii) Make, alter, modify or discharge any Annuity;
(iii) Incur any indebtedness or liability, or expend or contract for
expenditure of any funds on behalf of Pacific Mutual or the Annuity;
(iv) Extend the time for payment of any premiums, bind Pacific
Mutual to reinstate any terminated Annuity, or accept notes for payment of
premiums;
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(v) Waive or modify any terms, conditions or limitations of any
Annuity;
(vi) Adjust or settle any claim or commit Pacific Mutual with
respect thereto; or
(vii) Institute or file any response to any legal proceeding in
connection with any matter pertaining to the Annuities on behalf of Pacific
Mutual without the prior written consent of Pacific Mutual (except that if
Wholesaler itself is named as a party in such proceedings it may enter into
legal proceedings on Wholesaler's behalf without the written consent of Pacific
Mutual.)
20. NOTICES. Notices of any kind to be given to PMD 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 PMD at 000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or at such other address or to such
individual as shall be specified by PMD. 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, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or
at such other address or to such individual as shall be specified by Pacific
Mutual.
21. 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.
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22. 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.
23. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with an governed by the laws of the State of California. 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.
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: --------------------------------
Title:
ATTEST:
By: --------------------------------
Title:
PACIFIC MUTUAL DISTRIBUTORS, INC.
By: --------------------------------
Title:
By: --------------------------------
Title:
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