EXHIBIT (h)(2)
FORM OF FUND PARTICIPATION AGREEMENT
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This Agreement is made the 1st day of January, 2000, by and among PACIFIC
LIFE INSURANCE COMPANY (formerly Pacific Mutual Life Insurance Company)
("Pacific Life"), a life insurance company domiciled in California, on its
behalf and on behalf of its segregated asset accounts listed on Exhibit A to
this Agreement; PACIFIC LIFE & ANNUITY COMPANY (formerly PM Group Life Insurance
Company) ("PL&A", and, together with Pacific Life, the "Companies"), a life
insurance company domiciled in Arizona, on its behalf and on behalf of its
segregated asset accounts listed on Exhibit A to this Agreement (the segregated
asset accounts of the Companies are referred to collectively as the "Separate
Accounts"); PACIFIC SELECT FUND (the "Fund"), a Massachusetts business trust;
and PACIFIC MUTUAL DISTRIBUTORS, INC. (formerly Pacific Equities Network )
("Distributor"), a California corporation.
W I T N E S S E T H
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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, Pacific Life, the Fund and the Distributor are currently parties
to a Fund Participation Agreement dated November 6, 1992, as amended by an
Addendum to the Agreement dated January 4, 1994, an
Addendum to the Agreement dated August 15, 1994, an Addendum to the Agreement
dated November 20, 1995, and an Addendum to the Agreement dated December 18,
1998 (the "Current Agreement"), pursuant to which Fund shares are offered and
sold to certain segregated asset accounts of Pacific Life; 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 ("Participating Insurance Companies")
substantially similar to the Current Agreement, and the Fund is currently
comprised of multiple 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, inter alia, 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
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Companies wish to purchase shares of one or more of the Fund's
series on behalf of their 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; and
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, the parties hereby agree to amend and
restate the Current Agreement as follows:
ARTICLE I. Sale of Fund Shares
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1.1. The Distributor agrees to sell to the Companies those shares of the
series offered and made available by the Fund and identified in Exhibit B
("Series"), that a 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 Companies
on behalf of their 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
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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 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.
1.4. The Fund and the Distributor will not sell shares of the Series to any
insurance company other than the Companies or to the separate account of any
such other insurance company unless an agreement containing provisions
substantially the same as those in Article IV and Sections 5.5 and 5.6 of
Article V of this Agreement is in effect to govern such sales.
1.5. Upon receipt of a request for redemption in proper form from a
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. Each Company agrees to purchase and redeem the shares of each Series
in accordance with the provisions of the current prospectus for the Fund.
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1.7. Each Company shall pay for shares of the Series in federal funds
transmitted by wire no later than 11:00 a.m. Eastern time the next following
business day after it places an order to purchase shares.
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 Companies 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 each Company of any income dividends or capital gain
distributions payable on the shares of the Series. Each 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. Each Company reserves the right to revoke this election
in writing and to receive all such dividends and distributions in cash. The Fund
shall notify each 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 each
Company on each business day of the net asset value per share for each Series as
soon as reasonably practicable after the net asset value per share is
calculated.
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ARTICLE II. Representations and Warranties
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2.1. Pacific Life 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. PL&A 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.
2.3. Pacific Life represents and warrants that it has legally and validly
established each of its Separate Accounts as a segregated asset account under
the California Insurance Code, and that each of its Separate Accounts is a
validly existing segregated asset account under applicable federal and state
law.
2.4. PL&A represents and warrants that it has legally and validly
established each of its Separate Accounts as a segregated asset account under
the Arizona Insurance Code, and that each of the Separate Accounts is a validly
existing segregated asset account under applicable federal and state law.
2.5. Pacific Life represents and warrants that the Variable Contracts
issued by it or interests in its 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.
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2.6. PL&A represents and warrants that the Variable Contracts issued by it
or interests in its 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.
2.7. Each Company represents and warrants that each of its 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.
2.8. Each Company represents that it believes, in good faith, that the
Variable Contracts issued by that 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.
2.9. 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.
2.10. The Fund represents and warrants that the shares of the Series are
duly authorized for issuance in accordance with applicable law and that the Fund
is registered as an open-end management investment company under the 1940 Act.
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2.11. 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.
2.12. 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 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 Companies 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.
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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 Companies immediately upon having 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
Section 3.2 and 3.3 hereof.
3.5. Each 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 that 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. Each Company shall make every effort to maintain the treatment of the
Variable Contracts issued by that 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.
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3.7. Each Company shall offer and sell the Variable Contracts issued by
that Company in accordance with applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Conduct Rules, 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 Conduct Rules, 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, as defined by Section
2(a)(19) of the 1940 Act ("disinterested Trustees"), 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. Each Company agrees to provide, as promptly as possible, notice to
the Fund and to the Distributor if that 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
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corresponding shares of the Fund or a Series, as described in Section 9.1(e) and
to which the notice provision of Section 9.2 shall apply). In such an event,
that 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 that Company at least 30 days prior
to the meeting. That 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
scheduled premium variable life insurance policies and owners of flexible
premium variable life insurance policies; (2) between the interests of owners of
variable annuity contracts and owners of scheduled premium or flexible premium
variable life insurance policies, and (3) 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
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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; (e) a decision by a Participating Insurance Company to
disregard the voting instructions of Variable Contract Owners.
4.2. Each Company agrees that it shall be responsible for reporting any
potential or existing conflict to the Fund's Board of Trustees. Each 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 each Company to inform
the Board whenever Variable Contract Owner voting instructions are disregarded.
Each Company shall carry out its responsibility under this Section 4.2 with a
view only to the interests of its Variable Contract Owners.
4.3. Each 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, that
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
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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 a Company's
decision to disregard Variable Contract Owners' voting instructions and that
decision represents a minority position or would preclude a majority vote, that
Company shall be required, at the Fund's election, to withdraw its 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 or 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 in the minutes of the Board of
Trustees of the Fund or other appropriate
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records, and such minutes or other records shall be made available to the SEC
upon request. Each 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 each Company
in writing of its determination of the existence of an irreconcilable material
conflict and its implications.
ARTICLE V. Prospectuses and Proxy Statements; Voting
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5.1. Each Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by that
Company as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2. The Distributor shall provide each Company with as many copies of the
current prospectus of the Fund as that Company may reasonably request. If
requested by a Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type,
electronic file 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 each Company shall bear the expense of printing copies of the Fund's
prospectus that are used in connection with offering those Variable Contracts
issued by that Company.
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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
each Company and to any owner of a Variable Contract issued by a Company who
requests such SAI, (2) at a Company's expense, such additional copies of the
Fund's current SAI as that Company shall reasonably request and that that
Company shall require in accordance with applicable law in connection with
offering the Variable Contracts issued by that Company.
5.4. The Fund, at its expense, shall provide a Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as that Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by that Company.
The Fund, at a Company's expense, shall provide that Company with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as that Company shall reasonably request for use in connection
with offering the Variable Contracts issued by that Company. If requested by a
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 that Company to print
such shareholder communications for distribution to owners of Variable Contracts
issued by that 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 1940 Act, each Company shall vote
shares of each Series of the Fund held
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in a Separate Account or a subaccount thereof that is registered as an
investment company under the 1940 Act, at regular and special meetings of the
Fund in accordance with instructions timely received by that 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. Each
Company shall vote shares of a Series of the Fund held in a such a registered
Separate Account or a subaccount thereof that are attributable to its 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
its 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. Each 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 that Company or subaccounts thereof, whether or not registered, in
the aggregate.
5.6. The Fund shall disclose in its prospectus or Statement of Additional
Information, to the extent pertinent, 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 and, (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 Companies that
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prospectus disclosure may be appropriate, to the extent pertinent, regarding
potential risks of offering shares of the Fund to separate accounts funding both
variable annuity contracts and variable life insurance policies, to separate
accounts funding Variable Contracts of unaffiliated life insurance companies.
ARTICLE VI. Sales Material and Information
------------------------------
6.1. Each 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 advisers 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. Each 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 or by the Distributor or its designee, except with the permission of
the Fund or its designee or the Distributor or its designee.
6.3. The Fund or the Distributor or the designee of either shall furnish to
each Company or its designee, each piece of sales literature or other
promotional material in which
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that Company or its Separate Accounts are named, and no such material shall be
used without the approval of that Company or its designee.
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 a Company or concerning that Company, its Separate Accounts, or the
Variable Contracts issued by that 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 that Company or its
designee, except with the permission of that Company.
6.5. The Fund will provide to each 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. Each 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 that 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 that Company or
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its 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, 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 Pacific Life
-------------------------------
7.1(a). Pacific Life 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 and Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of Pacific Life) 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,
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liabilities or litigation expenses are related to the sale or acquisition of the
Fund's shares or the Variable Contracts issued by Pacific Life 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 (which shall include an offering memorandum) for the Variable
Contracts issued by Pacific Life 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 Pacific Life by or on behalf of the Fund for use in the registration
statement or prospectus for the Variable Contracts issued by Pacific Life 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 for the Variable Contracts not
supplied by Pacific Life or persons under its control) or wrongful conduct of
Pacific Life or any of its affiliates, employees or agents with respect to the
sale or distribution of the Variable Contracts issued by Pacific Life 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 Pacific Life;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b). Pacific Life 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.
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7.1(c). Pacific Life shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have notified Pacific Life 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 Pacific Life of any such claim shall not relieve Pacific Life
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, Pacific Life
shall be entitled to participate, at its own expense, in the defense of such
action. Pacific Life also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from Pacific
Life to such party of Pacific Life's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and Pacific Life 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.
7.1(d). The Indemnified Parties shall promptly notify Pacific Life 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
Pacific Life or the operation of the Fund.
21
7.2. Indemnification By PL&A
-----------------------
7.2(a). PL&A agrees to indemnify and hold harmless the Indemnified
Parties against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of PL&A) or litigation
expenses (including legal and other expenses), to which the Indemnified Parties
may become subject under any statue, 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 PL&A 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 (which shall include an offering memorandum) for the Variable
Contracts issued by PL&A 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 PL&A by or on behalf of the Fund for use in the registration statement or
prospectus for the Variable Contracts issued by PL&A 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 for the Variable Contracts not
supplied by PL&A or persons under its control) or wrongful conduct of PL&A or
any of its affiliates, employees or agents with respect to the sale or
distribution of the Variable Contracts issued by PL&A 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 PL&A;
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
22
7.2(b). PL&A 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.
7.2(c). PL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such Party
shall have notified PL&A 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
PL&A of any such claim shall not relieve PL&A 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, PL&A shall be entitled to participate, at its
own expense, in the defense of such action. PL&A also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from PL&A to such party of PL&A's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and PL&A 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.
23
7.2(d). The Indemnified Parties shall promptly notify PL&A 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 PL&A
or the operation of the Fund.
7.3. Indemnification By the Distributor
----------------------------------
7.3(a). The Distributor agrees to indemnify and hold harmless the Fund
and each Company and each of their trustees, directors and officers and each
person, if any, who is an affiliated person of the Fund or that Company within
the meaning of Section 2(a)(3) the 1940 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7.3) 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 that 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 or either by or on behalf of that 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 that 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
24
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 that 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 that 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 that Company by or
on behalf of the Fund;
except to the extent provided in Sections 7.3(b) and 7.3(c) hereof.
7.3(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 a Company or its Separate Accounts.
7.3(c). The Distributor 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 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
25
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.
7.3(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 Amended Shared Funding Order) and the terms
hereof shall be interpreted and construed in accordance therewith.
26
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) as to a Company, at the option of that Company if shares of the
Series are not reasonably available to meet the requirements of the Variable
Contracts issued by that Company, as determined by that Company, and upon prompt
notice by that Company to the other parties; or
(c) as to a Company, at the option of the Fund or the Distributor upon
institution of formal proceedings against that Company or its agent by the NASD,
the SEC, or any state securities or insurance department or any other regulatory
body regarding that Company's duties under this Agreement or related to the sale
of the Variable Contracts issued by that Company, the operation of the Separate
Accounts, or the purchase of the Fund shares; or
(d) as to a Company, at the option of that 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) as to a Company, upon requisite vote of the Variable Contract
Owners having an interest in its 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
27
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 the 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 a 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) as to any Company, at the option of that 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 8.1(c) and (d) hereof. Each Company shall
give 60 days prior written notice to the Fund of the date of any proposed vote
of its Variable Contract Owners to replace the Fund's shares as described in
Section 9.1(e) hereof.
9.3. 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.
28
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.
If to the Fund: If to PL&A:
Pacific Select Fund Pacific Life and Annuity Company
Attn: Variable Regulatory Attn: Variable Regulatory Compliance
Compliance Department Department
000 Xxxxxxx Xxxxxx Xxxxx 700 Newport Center Drive
X.X. Xxx 0000 X.X. Xxx 0000
Xxxxxxx Xxxxx, XX 00000 Xxxxxxx Xxxxx, XX 00000
If to the Distributor: If to Pacific Life:
Pacific Mutual Distributors Pacific Life Insurance Company
Attn: Compliance Officer Attn: Variable Regulatory
000 Xxxxxxx Xxxxxx Xxxxx, XX-0 Compliance Department
Xxxxxxx Xxxxx, XX 00000 000 Xxxxxxx Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxx Xxxxx, XX 00000
ARTICLE XI. Miscellaneous
-------------
11.1. The Fund and the Company agree that if and to the extent Rule 6e-2 or
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 those Rules, as may be applicable, 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
29
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 Trustee 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 Life", "Pacific
Select" or any derivative thereof or logo associated with that name is the
valuable property of Pacific Life, and that the Fund 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 Companies shall forthwith cease to 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.
30
11.8. This Agreement may not be assigned by any party to the Agreement
except with the written consent of the other parties to the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC SELECT FUND
ATTEST:_______________________ BY:_______________________
Name: Name:
Title: Title:
PACIFIC MUTUAL DISTRIBUTORS, INC.
ATTEST:_______________________ BY:_______________________
Name: Name:
Title: Title:
31
PACIFIC LIFE INSURANCE COMPANY
ATTEST:_______________________ BY:_______________________
Name: Name:
Title: Title:
ATTEST:_______________________ BY:_______________________
Name: Name:
Title: Title:
PACIFIC LIFE & ANNUITY COMPANY
ATTEST:_______________________ BY:_______________________
Name: Name:
Title: Title:
ATTEST:_______________________ BY:_______________________
Name: Name:
Title: Title:
32
Exhibit A
Separate Accounts of Pacific Life Insurance Company:
Pacific Select Separate Account
Pacific Select Exec Separate Account
Pacific Select COLI Separate Account
Pacific Select Variable Annuity Separate Account
Separate Account A
Separate Account B
Pacific Select Value Separate Account
Pacific Corinthian Variable Separate Account
Pacific COLI Separate Account II
Pacific COLI Separate Account III
Separate Accounts of Pacific Life and Annuity Company:
Pacific Select Exec Separate Account
Separate Account A
33
Exhibit B
Money Market Portfolio
High Yield Bond Portfolio
Managed Bond Portfolio
Government Securities Portfolio
Small-Cap Equity Portfolio
Aggressive Equity Portfolio
Growth LT Portfolio
Equity Income Portfolio
Multi-Strategy Portfolio
Large-Cap Value Portfolio
Mid-Cap Value Portfolio
Equity Portfolio
Bond and Income Portfolio
Equity Index Portfolio
Small-Cap Index Portfolio
REIT Portfolio
International Value Portfolio
Emerging Markets Portfolio
International Large-Cap Portfolio
Diversified Research Portfolio
Internet Toll Keeper Portfolio*
*Effective 05/01/2000
34
