EXHIBIT 1(3)(b)
Form of Selling Agreement between Pacific Mutual,
PEN and Various Broker-Dealers
[LOGO OF PACIFIC LIFE INSURANCE COMPANY]
PACIFIC LIFE INSURANCE COMPANY
VARIABLE CONTRACT SELLING AGREEMENT
This Agreement ("Agreement") is made as of _______________________, 20___
by and among PACIFIC LIFE INSURANCE COMPANY ("Pacific Life"), PACIFIC SELECT
DISTRIBUTORS, INC. ("Distributor"), a broker/dealer registered with the
Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange
Act of 1934, as amended ("Exchange Act"), and a member of the National
Association of Securities Dealers, Inc. ("NASD"),______________________________
_____________________________ ("Broker/Dealer"), and each undersigned agency
(jointly and severally referred to herein as "Agency"); Broker/Dealer and Agency
jointly and severally hereinafter referred to collectively as "Selling
Entities".
This Agreement is for the purpose of providing for the distribution of
certain variable life insurance policies and/or annuity contracts set forth in
Exhibit A hereto and of any successor additional SEC registered insurance
products (as discussed in Paragraph [3] of this Agreement) issued by Pacific
Life and distributed by Distributor through representatives who are both (a)
state insurance licensed and appointed agents of Pacific Life and associated
with the Agency and (b) NASD registered representatives of Broker/Dealer who are
appropriately licensed both with the NASD and with the relevant states. The
variable life insurance and/or annuity contracts set forth in Exhibit A hereto,
as such Exhibit may be amended and/or restated from time to time to include any
successor or additional SEC registered insurance products, and together with any
riders to such contracts, are referred to collectively herein as the
"Contracts".
1. APPOINTMENT
In consideration of the mutual promises and covenants contained in this
Agreement, Pacific Life and Distributor appoint Broker/Dealer and those persons
associated with Agency who are NASD registered representatives of Broker/Dealer
and state insurance licensed agents of Pacific Life to solicit and procure
applications for the Contracts.
These appointments are not deemed to be exclusive in any manner and extend
only to those jurisdictions, set forth in Exhibit B hereto as such Exhibit B may
be amended from time to time by Pacific Life in its sole discretion, where the
Contracts specified in such Exhibit B have been approved for sale.
From time to time, Pacific Life will provide Selling Entities with
information regarding the jurisdictions in which Pacific Life is authorized to
solicit applications for the Contracts and any limitations on the availability
of such Contracts in any jurisdiction.
2. RESPONSIBILITIES
Broker/Dealer is authorized to collect the premium on the Contracts and
shall promptly remit such premiums in full along with such application and any
other required documentation to PL & A. Contract applications shall be taken
only on preprinted, state-appropriate application forms supplied by Pacific
Life. All completed applications, supporting documents and payments are the sole
property of Pacific Life and must be promptly delivered to Pacific Life. All
applications are subject to acceptance by Pacific Life at its sole discretion.
3. NEW PRODUCTS
Distributor may propose and Pacific Life may issue additional or successor
products, in which event Broker/Dealer will be informed of the new product and
its related Compensation Schedule. If Broker/Dealer does not agree to distribute
such new product(s), it must notify Pacific Life in writing within 30 days of
receipt of the Compensation Schedule for such new product(s). If Broker/Dealer
does not indicate disapproval of the new product(s) or the terms contained in
its related Compensation Schedule, Broker/Dealer will be deemed to have thereby
agreed (a) to distribute such new product(s) and agreed to its related
Compensation Schedule, which shall be attached to and made a part of this
Agreement as an amendment or addendum to the Compensation Schedule or as a new
Compensation Schedule hereto, and (b) to the amendment of
Pacific Life Standard Selling Agreement
Exhibits A and B to this Agreement to name such new product(s) and to identify
where their offer and sale has been approved.
4. SUBAGENTS
Agency is authorized to appoint Subagents to solicit sales of the Contracts
("Subagents"); provided, however, that Pacific Life shall have the right in its
sole discretion to terminate the appointment of any Subagent upon notice from
Pacific Life to Agency. Agency warrants that no Subagent shall commence
solicitation nor aid, directly or indirectly, in the solicitation of any
application for any Contract unless, at the time of such solicitation or aid,
such Subagent is appropriately licensed for such product under applicable
insurance laws and is an NASD registered representative of Broker/Dealer.
Selling Entities each represent that they have, for each Subagent,
fulfilled all requirements set forth in the form of general letter of
recommendation set forth in Exhibit C hereto; and agree, upon reasonable request
by Pacific Life, to furnish proof of such fulfillment as Pacific Life may
require.
5. SALES MATERIAL
Neither Selling Entities nor any of their respective Subagents, officers,
directors, employees, affiliates, representatives or agents shall utilize in
their marketing efforts for the Contracts any written brochure, prospectus,
descriptive literature, printed and published material, audio-visual material or
standard letters; provided, however, that they may: (a) use material that has
been provided preprinted by Pacific Life or Distributor, and (b) use material,
the use of which Pacific Life or Distributor has specifically approved, in
writing, prior to such use. In order for Pacific Life or Distributor to review
and approve materials not produced by Pacific Life in accordance with clause (b)
above, Broker/Dealer must provide Pacific Life and Distributor with evidence
that any material proposed to be used was filed with the NASD in accordance with
applicable rules and copies of correspondence with the NASD relating to the
proposed material.
6. RECORDS
In accordance with the requirements of federal and state laws and rules of
applicable self-regulatory organizations as defined in the Exchange Act ("SROs")
including but not limited to the Rules of Fair Practice of the NASD ("NASD
Rules"), Selling Entities shall maintain complete records concerning the sale of
the Contracts, information regarding the customs relating to the sale and/or
servicing of the Contracts, including the manner and extent of distribution of
any sales, marketing or other solicitation material, shall make such records and
files available to staff of Pacific Life or Distributor at such times as Pacific
Life or Distributor may reasonably request and shall make such material
available to personnel of state insurance departments, the NASD or other
regulatory agency, including the SEC, that have regulatory authority over
Pacific Life or Distributor.
7. DELIVERY OF PROSPECTUSES
Selling Entities warrant that each solicitation, specifically including any
solicitation effected by any Subagent, will be made by use of a currently
effective prospectus, that a prospectus will be delivered concurrently with each
sales presentation and that no statements shall be made to a client superseding
or controverting any statement made in the prospectus. Pacific Life and
Distributor shall furnish Selling Entities, at no cost to Selling Entities,
reasonable quantities of prospectuses and such other material as Pacific Life
and Distributor deem necessary to aid in the solicitation of Contracts.
8. BROKER/DEALER REPRESENTATIONS
The representations, warranties and covenants of Broker/Dealer set forth in
this Agreement are continuous during the term of this Agreement and
Broker/Dealer agrees to notify each of Pacific Life and Distributor immediately,
in writing, if, at any time during the course of this Agreement, any of the
representations, warranties or covenants set forth herein become inaccurate or
untrue of the facts related thereto.
Broker/Dealer represents, warrants and covenants that:
(a) Broker/Dealer is affiliated with Agency which is an entity properly
licensed under the insurance laws of the jurisdiction(s) in which Broker/Dealer
will act under this Agreement;
(b) Broker/Dealer is registered with the SEC as a broker/dealer under the
Exchange Act, a member of the NASD and will, throughout the duration of this
Agreement, remain in compliance with the requirements of the NASD and of the
Exchange Act, including but not limited to laws requiring that the Broker/Dealer
and each of its Subagents/registered
Pacific Life Standard Selling Agreement
representatives be appropriately securities registered, insurance licensed and
appointed by Pacific Life, and such other applicable federal or state laws;
(c) Broker/Dealer has established rules, procedures, and supervisory and
inspection techniques necessary to train and to supervise diligently the
activities of its NASD registered representatives who are state insurance
licensed and appointed agents of Pacific Life;
(d) Broker/Dealer shall ensure that no registered representative of
Broker/Dealer, including any Subagent, shall sell or recommend for sale any
Contract to any person without reasonable grounds for believing, after
appropriate inquiry, that the purchase of that Contract is suitable for that
person;
(e) Upon request by Pacific Life and Distributor, Broker/Dealer will
furnish such appropriate records as are necessary to document the training,
licensing and diligent supervision required by subparagraph (b) above, and
client suitability determinations required by subparagraph (c) above.
9. AGENCY REPRESENTATIONS
The representations, warranties and covenants of Agency set forth in this
Agreement are continuous during the term of this Agreement and Agency agrees to
notify each of Pacific Life and Distributor immediately, in writing, if, at any
time during the course of this Agreement, any of the representations, warranties
or covenants set forth herein become inaccurate or untrue of the facts related
thereto.
Agency represents, warrants and covenants that it will, and will cause each
Subagent to, comply fully with the requirements of state insurance law and
applicable federal laws, including but not limited to assuring appropriate state
insurance licensing and appointment by Pacific Life, and will establish rules
and procedures necessary to supervise diligently the activities of licensed and
appointed agents of Pacific Life associated with Agency. Upon request by Pacific
Life or Distributor, Agency will furnish such appropriate records as are
necessary to document such diligent supervision.
10. PACIFIC LIFE REPRESENTATIONS
Pacific Life represents that the prospectus(es) and registration
statement(s) relating to the Contracts that are and shall be in effect from time
to time contain no untrue statements of material fact and do not omit to state
material facts, the omission of which makes any statement contained in such
prospectus(es) and registration statement(s) misleading.
11. COMPENSATION
11.1 Pacific Life, through Distributor, will remit to Broker/Dealer or
Agency compensation as set forth in the applicable Compensation Schedule hereto,
which payments or termination thereof shall be governed by the administrative
rules established by Pacific Life in its sole discretion. Selling Entities shall
pay all Subagents. Pacific Life reserves the right not to pay compensation on a
Contract, the premium for which 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 Life.
11.2 Pacific Life may offset, against any claim for commission and any
other compensation payable to Broker/Dealer or Agency under this Agreement, any
existing or future indebtedness of, respectively, Broker/Dealer or Agency,
whether fixed or contingent, whether such indebtedness arises under this
Agreement or otherwise. Such indebtedness shall constitute a first lien against
any such compensation. Neither Broker/Dealer nor Agency may offset, against any
such indebtedness, any compensation accruing under this Agreement.
12. COMPLAINTS AND INVESTIGATIONS
Pacific Life, Distributor, Broker/Dealer and Agency agree to cooperate
fully in any insurance or securities regulatory investigation or proceeding or
judicial proceeding with respect to Pacific Life, Distributor, Broker/Dealer
and/or Agency, 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 Entities shall promptly notify Pacific Life and Distributor
of any complaint or comment regarding the Contracts and/or any allegation that
Selling Entities or any of its Subagents/representatives violated any law,
regulation or rule in soliciting applications for or servicing the Contracts.
Selling Entities shall promptly investigate such complaint or allegation, take
appropriate remedial measures and notify Pacific Life and Distributor of same.
Selling Entities shall provide
Pacific Life Standard Selling Agreement
Pacific Life and Distributor with full details of and correspondence relating to
any of the foregoing, including copies of all legal documents pertaining
thereto.
(b) Selling Entities shall cooperate fully with Pacific Life and
Distributor in any regulatory proceeding or judicial proceeding involving the
solicitation of applications for or the servicing of Contracts by the Selling
Entities or any of their representatives.
13. INDEMNIFICATION
13.1 Pacific Life and Distributor agree to indemnify and hold
harmless Selling Entities, their officers, directors, agents and employees,
against any and all losses, claims, damages, or liabilities to which they may
become subject under the Securities Act, the Exchange Act, the Investment
Company Act of 1940, 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 Securities Act, or any prospectus included as a part thereof, as from
time to time amended and supplemented, or in any advertisement or sales
literature provided by Pacific Life and Distributor.
13.2 Selling Entities agree to, jointly and severally, hold harmless
and indemnify Pacific Life and Distributor and any of their respective
affiliates, employees, officers, agents and directors (collectively,
"Indemnified Persons") against any and all claims, liabilities and expenses
(including, without limitation, losses occasioned by any rescission of any
Contract pursuant to a "free look" provision or by any return of initial
purchase payment in connection with an incomplete application), including,
without limitation, reasonable attorneys' fees and expenses and any loss
attributable to the investment experience under a Contract, that any Indemnified
Person may incur from liabilities resulting or arising out of or based upon (a)
any untrue or alleged untrue statement other than statements contained in the
registration statement or prospectus relating to any Contract, (b) (i) any
inaccurate or misleading, or allegedly inaccurate or misleading sales material
used in connection with any marketing or solicitation relating to any Contract,
other than sales material provided preprinted by Pacific Life or Distributor,
and (ii) any use of any sales material that either has not been specifically
approved in writing by Pacific Life or Distributor or that, although previously
approved in writing by Pacific Life or Distributor, has been disapproved, in
writing by either of them, for further use, or (c) any act or omission of a
Subagent, director, officer or employee of Selling Entities, including, without
limitation, any failure of Selling Entities or any Subagent to be registered as
required as a broker/dealer under the 1934 Act, or licensed in accordance with
the rules of any applicable SRO or insurance regulator.
14. FIDELITY BOND
Selling Entities each represent and covenant that all directors,
officers, employees and Subagents of Selling Entities licensed pursuant to this
Agreement or who have access to funds of Pacific Life are and will continue to
be covered by a blanket fidelity bond including coverage for larceny,
embezzlement and other defalcation, issued by a bonding company rated A- or
better from A.M. Best or equivalent rating from another nationally recognized
statistical rating organization. This bond shall be maintained at
Broker/Dealer's and/or Agency's expense. Such bond shall be at least equivalent
to the minimal coverage required under the NASD Rules, and endorsed to extend
coverage to life insurance and annuity transactions. Selling Entities
acknowledge that Pacific Life may require evidence that such coverage is in
force, and Broker/Dealer or Agency shall promptly give notice to Pacific Life of
any notice of cancellation or change of coverage.
Selling Entities each assign any proceeds received from the fidelity
bond company, error and omissions or other liability coverage, to Pacific Life
to the extent of Pacific Life's loss due to activities covered by the bond. If
there is any deficiency, Selling Entities will promptly pay Pacific Life the
amount of such deficiency on demand. Selling Entities each shall indemnify and
hold harmless Pacific Life from any such deficiency and from the cost of
collection.
15. LIMITATIONS OF AUTHORITY
The Contract forms are the sole property of Pacific Life. No person
other than Pacific Life has the right or authority to: (i) make, alter or
discharge any policy, Contract, certificate, supplemental contract or form
issued by Pacific Life; (ii) make, alter, modify or discharge any Contract;
(iii) waive or modify any provision with respect to any Contract or policy; (iv)
incur indebtedness or liability, or expend or contract for expenditure of any
funds on behalf of Pacific Life or the Contracts; (v) extend the time for
payment of any premiums, bind Pacific Life to reinstate any terminated
Contracts, or accept notes for payment of premiums; (vi) enter into any
proceeding in a court of law or before a regulatory agency in the name of or on
behalf of Pacific Life; or (vii) institute or file any response to any legal
proceeding in connection with any
Pacific Life Standard Selling Agreement
matter pertaining to the Contracts on behalf of Pacific Life without the prior
written consent of Pacific Life (except that if Selling Entities themselves are
named as a party or parties in such proceedings each named party may enter into
legal proceedings on its own behalf without the written consent of Pacific
Life).
16. GENERAL PROVISIONS
16.1 Waiver
Failure of any of the parties to insist promptly upon strict compliance
with any of the obligations of any other party under this Agreement will not be
deemed to constitute a waiver of the right to enforce strict compliance.
16.2 Independent Contractors
Selling Entities are each an independent contractor and not an employee
or subsidiary of Pacific Life or Distributor. Nothing contained in this
Agreement or otherwise shall be deemed to make any registered representative of
Broker/Dealer or any Subagent appointed by Agency an employee or agent of
Pacific Life or Distributor for tax or any other purposes. Neither Pacific Life
nor Distributor shall have any responsibility for training or supervision of any
such Subagent or registered representative or of any other employee or affiliate
of any Selling Entities.
16.3 Independent Assignment
No assignment of this Agreement or of commissions or other payments
under this Agreement shall be valid without prior written consent of Pacific
Life. Any purported assignment in violation of this Paragraph 16.3 is void.
16.4 Notice
Any notice required or otherwise given pursuant to this Agreement may
be given electronically by facsimile or electronic mail (but not orally by
telephone) or by mail, postage paid, (including any express mail service),
transmitted to the last address communicated by the receiving party to the other
parties to this Agreement. The current address for mailing purposes of this
Agreement shall be set forth on the signature page.
16.5 Severability
To the extent this Agreement may be in conflict with any applicable law
or regulation, this Agreement shall be construed in a manner consistent with
such law or regulation. The invalidity or illegality of any provisions of this
Agreement shall not be deemed to affect the validity or legality of any other
provision of this Agreement.
16.6 Amendment
Except as expressly provided herein, this Agreement may be amended only
by a writing signed by all parties. The Exhibits hereto may be amended by
Pacific Life or Distributor upon 10 days' written notice to Broker/Dealer and
Agency which shall be deemed received the earlier of actual receipt or 10 days
after mailing or transmission. The submission of an application for the
Contracts by Broker/Dealer or Agency after the date of any such amendment shall
constitute such party's agreement to such amendment. No amendment will impair
the right to receive commissions as accrued with respect to Contracts issued and
applications procured prior to the amendment.
16.7 Termination
This Agreement may be terminated by any party for any reason upon 10
days' prior written notice. It may be terminated, for cause, by any party
immediately. Termination of this Agreement shall not impair the right to receive
commissions accrued with respect to applications procured prior to the
termination except as otherwise specifically provided in the applicable
Compensation Schedule hereto.
16.8 Survival
All representations and warranties made in or pursuant to this
Agreement and the provisions of Paragraphs 11, 12 and 16.10 of this Agreement
shall survive the termination of this Agreement.
16.9 Governing Law
This Agreement shall be construed in accordance with the laws of the
State of California, without giving effect to the conflict of law provisions
thereof. Broker/Dealer and Agency consent to the jurisdiction of the courts of
the State of California and to the jurisdiction of federal courts located within
California.
Pacific Life Standard Selling Agreement
16.10 Proprietary Information
Selling Entities acknowledge that information pertaining to any
Distributor program or service, including names of Contract owners, is
proprietary in nature and belongs exclusively to Distributor. Selling Entities
agree that they will not disclose any information concerning Distributor
programs or services to any person, for consideration or otherwise, unless (a)
Pacific Life or Distributor has authorized such disclosure in writing or (b) if
such disclosure is expressly required by state or federal regulatory authorities
and Pacific Life and Distributor have received notice, in writing, of such
disclosure. Selling Entities agree further that, following termination of this
Agreement for any reason, they will not solicit or otherwise contact any
Contract owner for any reason except as expressly agreed in writing by
Distributor or Pacific Life.
16.11 Confidentiality Clause
The parties acknowledge that as a result of this Agreement, either party may
have access to and receive from the other party non-public personally
identifiable financial and/or health information (NPI), as defined in federal
and state law, regarding consumers, customers, former customers and/or their
beneficiaries. The parties agree to maintain the confidentiality of such NPI and
shall not use, disclose, furnish or make accessible such NPI to anyone other
than authorized employees and agents of that party as necessary to carry out the
party's obligations under this Agreement. Each party further agrees to establish
and maintain administrative, technical and physical safeguards to protect the
security, confidentiality and integrity of the NPI. At the request of the party
that owns the NPI, or in the absence of such request, upon termination of this
Agreement, the other party shall promptly return all NPI which has been provided
to it, or dispose of such NPI in a manner agreed upon by the parties
16.12 Entire Agreement
This Agreement shall constitute the entire agreement among the parties
and supersedes all prior agreements and understandings, whether written or
verbal.
By signing below, each of the undersigned agrees to have read and be
bound by the terms and conditions of this Agreement. Each of the undersigned
acknowledges receipt of a copy of this Agreement.
This Agreement shall be effective as of :__________________________
Pacific Life Insurance Company Pacific Select Distributors, Inc.
000 Xxxxxxx Xxxxxx Xxxxx 000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000 Xxxxxxx Xxxxx, XX 00000
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EXHIBIT A
PACIFIC LIFE INSURANCE COMPANY
CONTRACTS COVERED BY THIS AGREEMENT
Contract Name Contract Number
------------------------------------------------------------ ---------------------------------------------------------
Pacific Select Variable Annuity 90-53
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Pacific One 95-01
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Pacific Portfolios 96/95-00
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Pacific Frontiers 97-00
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Pacific Value PV9808
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Pacific Innovations PI-00-04
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Pacific Select Exec 88-52
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Pacific Select Exec II 98-52
------------------------------------------------------------ ---------------------------------------------------------
Pacific Select Exec Policies Issued with C.O.L.I 88-52
------------------------------------------------------------ ---------------------------------------------------------
Pacific Select Estate Preserver 96-56
------------------------------------------------------------ ---------------------------------------------------------
Pacific Select Estate Preserver II 97-56
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Pacific Select Estate Maximizer 97-50 & 97-50-J
------------------------------------------------------------ ---------------------------------------------------------
Date:
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EXHIBIT B
JURISDICTIONS IN WHICH PACIFIC LIFE INSURANCE COMPANY
IS APPROVED FOR SALE OF CONTRACTS
COVERED BY THIS AGREEMENT
Contract Name Jurisdictions
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Approved in all States Except:
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Pacific Select Variable Annuity New York
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Pacific One New Jersey-, New York, Oregon, Texas, Washington
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Pacific Innovations Please call 000-000-0000 for an updated list.
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Pacific Select Exec New York
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Pacific Select Choice New York
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Date:
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EXHIBIT C
GENERAL LETTER OF RECOMMENDATION
Selling Entities hereby certify to Pacific Life that all of the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as Subagents ("Applicant")
submitted by Agency. Agency will, upon request, forward proof of compliance with
same to Pacific Life in a timely manner, including but not limited to general
background check information, NASD background information/reports, fingerprint
reports, etc.
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. Our inquiries and
investigations were sufficient to meet the requirements of requisite state
insurance regulation, federal securities regulation and NASD requirements. Each
individual is trustworthy, competent, and qualified to act as an agent for
Pacific Life, and to hold himself out in good faith to the general public. We
vouch for each applicant.
2. We have on file a X-000, X-000 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 Life are those of the
applicant and that the securities registration and any insurance licenses are
true copies of the original.
5. We hereby warrant that the applicant is not applying for a license with
Pacific Life 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 been 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 Selling Entities and applicant shall have entered into a
written agreement pursuant to which: (i) applicant is appointed a Subagent of
Agency and a registered representative of Broker/Dealer; (ii) applicant agrees
that his/her selling activities relating to securities-regulated Contracts shall
be under the supervision and control of Broker/Dealer and his/her selling
activities relating to all other Contracts shall be under the supervision and
control of Agency; and (iii) applicant's right to continue to sell such
Contracts is subject to his/her continued compliance with such agreement and any
procedures, rules or regulations implemented by Selling Entities.
SCHEDULE B
COMPENSATION SCHEDULE FOR
PACIFIC SELECT ESTATE PRESERVER - LAST SURVIVOR FLEXIBLE PREMIUM
VARIABLE LIFE POLICY
(FORM 96-56)
This Schedule B is to be attached to and is made a part of the Selling Agreement
(the "Agreement") between Pacific Life Insurance Company ("Pacific Life"),
Pacific Select Distributors, Inc. ("Distributor"), Selling Broker/Dealer and
General Agent. It is subject to the terms and conditions of the Agreement. In no
event shall Pacific Life be liable for the payment of any compensation with
respect to any solicitation made, in whole or in part, by any person not
appropriately state insurance and securities licensed and registered prior to
the commencement of such solicitation. The variable life insurance policy to
which this Compensation Schedule applies, together with riders or endorsements
to such policies, certificates relating to such policies, supplemental contracts
and forms, are referred to collectively herein as the "Contracts".
Pursuant to the Agreement (V. Compensation, A. commissions and Fees), Pacific
Life and Distributor have the right to terminate or amend this Schedule B at
their sole discretion. After a change of Compensation Schedule or a change of
Selling Broker/Dealer, compensation due on existing Contracts shall be payable
to Selling Broker/Dealer in accordance with the Schedule B in effect at the time
of the solicitation of the Contract.
Compensation: The Standard Compensation noted below shall govern commission
payments unless Selling Broker/Dealer executes and Pacific Life and Distributor
accept and execute an "Affiliate Compensation Election Form" governing the sales
by a particular Sub-Agent (Registered Representative). Once an "Affiliate
Acknowledgment Approval Form" is executed by Selling Broker/Dealer, Pacific Life
and Distributor, all compensation for sales by that Sub-Agent (Registered
Representative) and accepted by Pacific Life will be governed by the Affiliate
Compensation Schedule below. (If an effective Affiliate Compensation Election
Form is rescinded/terminated, the Standard Compensation will resume
effectiveness for Contracts sold on or after such rescission/termination.) In
any case, commissions based on premium will be calculated only on premiums
actually received and accepted by Pacific Life. Commissions will be paid only on
an earned basis. Commissions will be paid to Selling Broker/Dealer unless state
insurance laws require payment to an insurance agency, in which case commissions
shall be paid to the appropriate General Agent.
1. Commission Rate: Distributor shall pay commissions at the appropriate commission rate set forth below
for the sale of each Contract sold by Broker/Dealer's Subagent, except as otherwise provided below.
Premium Payments Accepted by PL on Contracts Solicited
by Broker/Dealer And Issued For Which Applications Were Commissions On
Solicited in Accordance With: Premium Payments
A B C D
--------------------------------------------------------------------------------------------------------------
Standard Compensation
---------------------
Non-Guaranteed Issue 90% 6% 4% 2%
Trail Commission of .20% annualized (See (P) 4)
Affiliate Compensation
----------------------
Non-Guaranteed Issue 90% 5% 2% 2%
Trail Commission of .20% annualized (See (P) 4)
2. Commission Structure:
Target Premium Calculation
First target A% of all premium allocated to the first target for years 1-10.
Second and Third targets B% of all premium allocated to the second and third targets
for years 1-10
Fourth through Tenth targets C% of all premium allocated to the fourth and later targets
for policy years 1-10
Eleventh target and thereafter D% of all premium allocated for policy years 11 on.
3. Vested Commission: Notwithstanding any other provisions in this
Compensation Schedule or in the Selling Agreement, any Vested Commission amount
due and payable as defined below in Paragraph 4 shall be paid to or through
whatever broker/dealer maintains the registration for the Sub-Agent (Registered
Representative) who sold the Contract (the "Selling Representative") which
generated the commission payment, provided (i) such subsequent broker/dealer and
affiliated agency have a currently valid and binding Selling Agreement in place
with Pacific Life and Distributor; (ii) such broker/dealer and agency have all
requisite licenses and registrations; and (iii) the Sub-Agent remains
appropriately licensed and registered. If subsequent broker/dealer does not meet
the aforementioned criteria, the balance of any Vested Commission due and
payable shall be paid to the servicing broker/dealer of record as determined by
Pacific Life. With respect to Contracts issued prior to and in-force on October
1, 1997, the Sub-Agent (Registered Representative) who is servicing such
Contract on October 1, 1997 shall be deemed the Selling Representative for
purposes of determining Vested Commissions on a prospective basis.
4. Definitions:
(a) Vested Commission: The term "Vested Commission" shall mean 50% of all
commissions due (including trail commissions. No other right, inference,
entitlement or implication is intended by use of this term.
(b) Trail Commission: Trail commissions at the annual rate shown above are
computed monthly, as of the end of each Contract month, on the Contract's
Accumulated Value less any Contract debt (including any interest accrued
but not yet paid). Trail commissions commence on the first Contract
anniversary and will be made annually on each Contract anniversary
thereafter. Trail commissions will be paid only if the Contract is in force
on the date the commission is payable.
(c) Target Premiums: The Target Premium is an amount determined from tables
published by Pacific Life with respect to a Contract or rider upon which
commissions are based. Target Premiums shall be calculated in accordance
with rates and methods of calculation described in the Pacific Select
Choice Rates and Values Booklet. As it applies to future business, the
Target Premium may be changed from time to time by Pacific Life. The Target
Premium applicable to a particular coverage shall be determined from the
table in force when the first premium for such coverage is entered as paid
in the accounting records of Pacific Life.
5. Compensation Payments: Compensation on initial premium will be due to the
Broker/Dealer at the time of issuance of the Contract and for all other premium
payments at the time of the receipt and acceptance of premium by Pacific Life.
The amount, if any, and the time of payment of compensation on replacements,
changes, exchanges, term renewals, premiums paid in advance, conversions,
policies in excess of Pacific Life's retention or policies requiring
reinsurance, and other special cases and programs, will be governed by Pacific
Life's underwriting and administrative rules then in effect.
6. Internal Exchanges: No commission will be earned on the initial exchange of
any Pacific Life Contract for Pacific Select Estate Preserver. All subsequent
premium payments will receive commissions calculated in accordance with the
administrative rules established by Pacific Life, in its sole discretion
(generally set forth in its Administrative Reference Guide).
7. Commission Chargeback: In the event that a Contract for which a commission
has been paid is lapsed or surrendered by the Contract Owner, then the following
percentage of commissions paid will be due back from all entities which received
commissions:
. 0% if the event occurs within 13 (thirteen) months of the
Contract issue date; and
. 0% thereafter.
In the event the Contract Owner exercises the "free look" provision of the
Contract or in the event premium is refunded to the Contract Owner by Pacific
Life, including for a Contract rescission, then Pacific Life will charge back
100% of all commissions paid.
Distributor may deduct reimbursement amounts from compensation otherwise due to
Selling Broker/Dealer and/or General Agent. If the amount to be deducted exceeds
compensation otherwise due, Selling Broker/Dealer will promptly reimburse
Distributor before the next commission cycle or within 10 business days from the
date of mailing of a written demand for reimbursement, whichever is later.
8. Miscellaneous: Pacific Life recognizes the Contract owner's right on issued
Contracts to terminate Selling Broker/Dealer and/or change a Broker/Dealer,
provided that the Contract owner notifies Distributor 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
Contract after termination, shall be payable to that Broker/Dealer in accordance
with this Schedule B except Vested Commissions, if applicable, after the notice
of termination is received and accepted by Distributor. However, when a Contract
owner designates a broker/dealer other than the 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
broker/dealer in accordance with the Schedule B in effect at the time of
issuance of the Contract.
Pacific Life reserves the right to reduce first year commissions and renewal
commissions, if necessary, on any Contracts sold to residents of any state,
city, county, municipality or other locality which imposes new and/or additional
premium, excise or other taxes on Pacific Life relating to the Contracts. Such
reduction shall be in an amount sufficient to cover any premium or other tax
levied by such state, city, county, municipality or other locality which is over
and above the premium or other tax currently paid by Pacific Life to such state,
city, county, municipality or other locality.
