-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U9sV6JBHi8F+fFR9tKFAre3LyiIx1xRzMqHrxx3ddmSfmCDr6wrYmMsInFU8IZhL SjYW0JkGg2/A6BAqzGyFxA== 0001017062-01-500429.txt : 20010608 0001017062-01-500429.hdr.sgml : 20010608 ACCESSION NUMBER: 0001017062-01-500429 CONFORMED SUBMISSION TYPE: S-6 PUBLIC DOCUMENT COUNT: 22 FILED AS OF DATE: 20010607 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFIC SELECT EXEC SEPARATE ACCOUNT OF PACIFIC LIFE & ANNUI CENTRAL INDEX KEY: 0001074487 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-6 SEC ACT: SEC FILE NUMBER: 333-62446 FILM NUMBER: 1655440 BUSINESS ADDRESS: STREET 1: 700 NEWPORT CTR DR STREET 2: P O BOX 7500 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7146403326 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC SELECT EXEC SEPARATE ACCT OF PM GP LIFE INSURANCE CO DATE OF NAME CHANGE: 19981201 S-6 1 ds6.txt PACIFIC LIFE SEP NY FORM S-6 As filed with the Securities and Exchange Commission on June 6, 2001 Registration No. 333- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-6 FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 PACIFIC SELECT EXEC SEPARATE ACCOUNT OF PACIFIC LIFE & ANNUITY COMPANY (Exact Name of Registrant) PACIFIC LIFE & ANNUITY COMPANY (Name of Depositor) 700 Newport Center Drive P.O. Box 9000 Newport Beach, California 92660 (Address of Depositor's Principal Executive Office) (949)219-3743 (Depositor's Telephone Number, including Area Code) Diane N. Ledger Vice President Pacific Life Insurance Company 700 Newport Center Drive P.O. Box 9000 Newport Beach, California 92660 (Name and Address of Agent for Service of Process) Copies to: Jeffrey S. Puretz, Esq. Dechert 1775 Eye Street, N.W. Washington, D.C. 20006-2401 Title of securities being registered: interests in the Separate Account under Pacific Select Estate Preserver-NY Flexible Premium Variable Life Insurance Policies. Approximate date of proposed public offering: As soon as practicable after the effective date of the Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Filing fee: None Pacific Select Exec Separate Account of Pacific Life & Annuity Company RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B2 AND THE PROSPECTUS (PURSUANT TO INSTRUCTION 4 OF FORM S-6) CROSS-REFERENCE SHEET Pursuant to Rule 404(c) of Regulation C under the Securities Act of 1933 (Form N-8B-2 Items required by Instruction as to the Prospectus in Form S-6)
Form N-8B-2 Form S-6 Item Number Heading in Prospectus 1. (a) Name of trust............................... Prospectus front cover (b) Title of securities issued.................. Prospectus front cover 2. Name and address of each depositor............... Prospectus front cover; Back Cover 3. Name and address of trustee...................... N/A 4. Name and address of each principal underwriter... About PL&A 5. State of organization of trust................... Pacific Select Exec Separate Account 6. Execution and termination of trust agreement..... Pacific Select Exec Separate Account 7. Changes of name.................................. N/A 8. Fiscal year...................................... N/A 9. Material Litigation.............................. N/A II. General Description of the Trust and Securities of the Trust 10. (a) Registered or bearer securities............. Pacific Select Estate Preserver-NY basics; The death benefit (b) Cumulative or distributive
securities................................ Pacific Select Estate Preserver-NY basics; The death benefit (c) Withdrawal or redemption......... Withdrawals, surrenders and loans (d) Conversion, transfer, etc........ Withdrawals, surrenders and loans (e) Periodic payment plan............ N/A (f) Voting rights.................... Voting Rights (g) Notice to security holders....... Reports we'll send you (h) Consents required................ Voting Rights (i) Other provisions................. N/A 11. Type of securities comprising units................................. Pacific Select Estate Preserver-NY basics 12. Certain information regarding periodic payment plan certificates.... N/A 13. (a) Load, fees, expenses, etc......... Deductions from your premiums; Surrendering your policy (b) Certain information regarding periodic payment plan certificates.... N/A (c) Certain percentages................... Deductions from your premiums; Surrendering your policy (d) Difference in price................... N/A (e) Certain other fees, etc............... Deductions from your premiums; Surrendering your policy (f) Certain other profits or benefits.............................. The death benefit; Your policy's accumulated value (g) Ratio of annual charges to income................................ N/A 14. Issuance of trust's securities........ Pacific Select Exec Estate Preserver-NY basics
15. Receipt and handling of payments From purchasers..................... How premiums work 16. Acquisition and disposition of Your policy's accumulated underlying securities............... value: Your investment options 17. Withdrawal or redemption............ Withdrawals, surrenders and loans 18. (a) Receipt, custody and disposition of income....................... Your policy's accumulated value (b) Reinvestment of distributions... N/A (c) Reserves or special funds....... N/A (d) Schedule of distributions....... N/A 19. Records, accounts and reports....... Statements and Reports 20. Certain miscellaneous provisions of trust agreement: (a) Amendment....................... N/A (b) Termination..................... N/A (c) and (d) Trustees, removal and successor....................... N/A (e) and (f) Depositors, removal and successor................... N/A 21. Loans to security holders........... Withdrawals, surrenders and loans 22. Limitations on liability............ N/A 23. Bonding arrangements................ N/A 24. Other material provisions of trust agreement..................... N/A
III. Organizations, Personnel and Affiliated Persons of Depositor 25. Organization of depositor...................................................... About PL&A 26. Fees received by depositor..................................................... See Items 13(a) and 13(e) 27. Business of depositor.......................................................... About PL&A 28. Certain information as to officials and affiliated persons of depositor........ About PL&A 29. Voting securities of depositor................................................. N/A 30. Persons controlling depositor.................................................. N/A 31. Payments by depositor for certain services rendered to trust................... N/A 32. Payments by depositor for certain other services rendered to trust............. N/A 33. Remuneration of employees of depositor for certain services rendered to trust.. N/A 34. Remuneration of other persons for certain services rendered to trust........... N/A IV. Distribution and Redemption of Securities 35. Distribution of trust's securities by states................................... N/A 36. Suspension of sales of trust's securities...................................... N/A 37. Revocation of authority to distribute.......................................... N/A
38. (a) Method of distribution.......................................... How policies are distributed (b) Underwriting agreements......................................... How policies are distributed (c) Selling agreements.............................................. How policies are distributed 39. (a) Organization of principal underwriters.......................... How policies are distributed (b) N.A.S.D. membership of principal underwriters................... How policies are distributed 40. Certain fees received by principal underwriters...................... How policies are distributed 41. (a) Business of each principal underwriter.......................... How policies are distributed (b) Branch offices of each principal underwriter.................... N/A (c) Salesmen of each principal underwriter.......................... N/A 42. Ownership of trust's securities by certain persons................... N/A 43. Certain brokerage commissions received by principal underwriters..... N/A 44. (a) Method of valuation............................................. Your policy's accumulated value (b) Schedule as to offering price................................... How premiums work (c) Variation in offering price to certain persons.................. Monthly deductions 45. Suspension of redemption rights...................................... Timing of payments, forms, and requests
46. (a) Redemption valuation................................................... Withdrawals, surrenders and loans (b) Schedule as to redemption price........................................ Withdrawals, surrenders and loans 47. Maintenance of position in underlying securities............................ Your investment options V. Information Concerning the Trustee or Custodian 48. Organization and regulation of trustee...................................... N/A 49. Fees and expenses of trustees............................................... N/A 50. Trustee's lien.............................................................. N/A VI. Information Concerning Insurance of Holders of Securities 51. Insurance of holders of trust's securities.................................. The death benefit VII. Policy of Registrant 52. (a) Provisions of trust agreement with respect to selection or elimination of under lying securities............................... How our accounts work (b) Transactions involving elimination of underlying securities............ How our accounts work (c) Policy regarding substitution or elimination of underlying securities.. How our accounts work (d) Fundamental policy not otherwise covered............................... N/A 53. Tax status of trust......................................................... Variable life insurance and your taxes VIII. Financial and Statistical Information
54. Trust's securities during last ten years.......... N/A 55. N/A 56. Certain information regarding periodic payment plan certificates................................. N/A 57. N/A 58. N/A 59. Financial statements (Instruction 1(c) of "Instructions as to the Prospectus" of Form S-6).. Financial Statements
PACIFIC SELECT PROSPECTUS , 2001 ESTATE PRESERVER - NY Pacific Select Estate Preserver - NY is a last survivor flexible premium variable life insurance policy issued by Pacific Life & Annuity Company. This policy is not This prospectus provides information that you should available in all know before buying a policy. It's accompanied by a states. This current prospectus for the Pacific Select Fund, a fund prospectus is not that provides the underlying portfolios for the an offer in any variable investment options offered under the policy. state or Please read these prospectuses carefully and keep them jurisdiction where for future reference. we're not legally permitted to offer Here's a list of all of the investment options the policy. available under your policy: The policy is VARIABLE INVESTMENT OPTIONS described in detail in this prospectus. Blue Chip Growth LT The Pacific Select Fund is described Aggressive Growth Focused 30 in its prospectus and in its Aggressive Equity Mid-Cap Value Statement of Additional Emerging Markets International Value Information (SAI). No one has the Diversified Research Capital Opportunities right to describe the policy or the Small-Cap Equity Mid-Cap Growth Pacific Select Fund any differently International Large-Cap Global Growth than they have been described in these Equity Equity Index documents. I-Net Tollkeeper(SM) Small-Cap Index You should be aware that the Securities Financial Services REIT and Exchange Commission (SEC) Health Sciences Inflation Managed has not reviewed (formerly called the policy for its Technology "Government Securities") investment merit, and does not Telecommunications Managed Bond guarantee that the information in this Multi-Strategy Money Market prospectus is accurate or Equity Income High Yield Bond complete. It's a criminal offense Strategic Value Large-Cap Value to say otherwise. FIXED OPTIONS Fixed Account Fixed LT Account YOUR GUIDE TO THIS PROSPECTUS An overview of Pacific Select Estate Preserver - NY 4 - ---------------------------------------------------------------------- Pacific Select Estate Preserver - NY basics 12 Owners, people insured by the policy, and beneficiaries 13 Policy date, monthly payment date, policy anniversary date 14 Statements and reports we'll send you 15 Your right to cancel 15 Timing of payments, forms and requests 16 Telephone and electronic transactions 17 - ---------------------------------------------------------------------- The death benefit 18 Choosing your death benefit option 18 The guideline minimum death benefit 19 When we pay the death benefit 19 Comparing the death benefit options 20 Changing your death benefit option 20 Decreasing the face amount 21 Optional riders 21 - ---------------------------------------------------------------------- How premiums work 22 Planned periodic premium payments 22 Deductions from your premiums 23 Allocating your premiums 23 Limits on the premium payments you can make 23 - ---------------------------------------------------------------------- Your policy's accumulated value 25 Calculating your policy's accumulated value 25 Monthly deductions 25 Lapsing and reinstatement 27 - ---------------------------------------------------------------------- Your investment options 29 Variable investment options 29 Fixed options 34 Transferring among investment options 34 Transfer programs 35 - ---------------------------------------------------------------------- Withdrawals, surrenders and loans 37 Making withdrawals 37 Taking out a loan 38 Ways to use your policy's loan and withdrawal features 39 Surrendering your policy 40 - ---------------------------------------------------------------------- General information about your policy 42 - ---------------------------------------------------------------------- Variable life insurance and your taxes 45 - ---------------------------------------------------------------------- About PL&A 49 - ---------------------------------------------------------------------- PL&A Financial Statements - Statutory Basis 65 - ---------------------------------------------------------------------- Appendices 79 Appendix A: Joint equal age 79 Appendix B: Rates per $1,000 of initial face amount 80 Appendix C: Death benefit percentages 81 Appendix D: Death benefit factor table 82 - ---------------------------------------------------------------------- Where to go for more information back cover
2 Terms used in this prospectus We've tried to make this prospectus easy to read and understand, but you may find some words and terms that are new to you. We've identified some of these below and the pages where you'll find an explanation of what they mean. If you have any questions, please ask your registered representative or call us at 1-888-595-6997. Accumulated value 25 Joint owners 13 Accumulation units 32 Lapse 27 Age 13 Loan account 38 In this prospectus, Allocation 23 Modified endowment contract 47 you and your mean Assignment 44 Monthly payment date 14 the policy holder Beneficiary 14 Net amount at risk 20 or owner. PL&A, we, Business day 16 Net cash surrender value 40 us and our refer to Cash surrender value 40 Net premium 22 Pacific Life & Contingent beneficiary 14 Outstanding loan amount 38 Annuity Company. Cost of insurance rate 25 Planned periodic premium 22 The fund refers to Death benefit 18 Policy anniversary 14 Pacific Select Death benefit factor 19 Policy date 14 Fund. Policy means Death benefit percentage 19 Policy year 14 a Pacific Select Face amount 18 Portfolio 29 Estate Preserver - Fixed account 34 Proper form 16 NY variable life Fixed LT account 34 Reinstatement 28 insurance policy, Fixed options 34 Riders 21 unless we state General account 50 Sales surrender target 41 otherwise. Guideline minimum death benefit 19 Separate account 50 Guideline premium limit 23 Seven-pay limit 47 Illustration 15 Tax code 45 In force 12 Unit value 32 Income benefit 42 Variable account 29 Joint equal age 27 Variable investment option 29
3 AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY This overview tells you some key things you should know about your policy. It's designed as a summary only - please read the entire prospectus and your policy for more detailed information. Some states have different rules about how life insurance policies are described or administered. The terms of your policy, or of any endorsement or rider, prevail over what's in this prospectus. --------------------------------------------------------- Pacific Select Pacific Select Estate Preserver - NY is a last survivor Estate Preserver - flexible premium variable life insurance policy. NY basics . Last survivor means the policy insures the lives of Last survivor life two people and provides a death benefit that's insurance may be payable after both people have died. appropriate for two spouses who want to . Flexible premium means you can vary the amount and provide a death frequency of your premium payments. benefit for their children. . Variable means the policy's value depends on the performance of the investment options you choose. This may not be the right kind of . Life insurance means the policy provides a death policy for someone benefit to the beneficiary you choose. who wants to provide a death In addition to providing a death benefit that is benefit for his or generally free of federal income tax, any growth in her spouse. In that your policy's accumulated value is tax-deferred. You case, a policy that can choose from 31 variable investment options, each of insures a single which invests in a corresponding portfolio of the life may be more Pacific Select Fund, and from two fixed options, both appropriate. of which provide a guaranteed minimum rate of interest. Please discuss your You may choose to allocate net premium and accumulated insurance needs and value to no more than 20 investment options at any one financial time. objectives with your registered Pacific Select Estate Preserver - NY is designed for representative. long-term financial planning. Please take some time to read the information in this prospectus before you You'll find more decide if this life insurance policy meets your about the basics insurance needs and financial objectives. of Pacific Select Estate Preserver - Your right to cancel NY starting on During the free look period, you have the right to page 12. cancel your policy and return it to us or your registered representative for a refund. We'll refund the amount of your premium payments. We'll hold the net premiums in the Money Market investment option until the free look transfer date. 4 --------------------------------------------------------- The death benefit You can choose one of four death benefit options depending on what is more important to you: a larger Your policy death benefit or building the accumulated value of your provides a death policy. benefit for your beneficiary after You can change your death benefit option and reduce both of the people your policy's face amount (with certain restrictions) insured by the while your policy is in force. policy have died, as long as your Optional riders policy is in force. There are five optional riders that provide extra benefits, some at additional cost. Not all riders are You'll find more available in every state, and some riders may only be about the death added when you apply for your policy. benefit starting on page 18. --------------------------------------------------------- How premiums work Deductions from your premiums We deduct a premium load from each premium payment you Your policy gives make. The premium load is made up of a sales load, a you the flexibility state and local tax charge, and a federal tax charge. to choose the amount and Limits on the premium payments you can make frequency of your Federal tax law puts limits on the premium payments you premium payments, can make in relation to your policy's death benefit. We within certain may refuse all or part of a premium payment you make, limits. Each or remove all or part of a premium from your policy and premium payment return it to you under certain circumstances. must be at least $50. You'll find more about how premiums work starting on page 22. --------------------------------------------------------- Your policy's Accumulated value is the value of your policy on any accumulated value business day. It is not guaranteed - it depends on the performance of the investment options you've chosen, Accumulated value the premium payments you've made, policy charges, and is used as the how much you've borrowed or withdrawn from the policy. basis for determining policy Monthly deductions benefits and We deduct a monthly charge from your policy's charges. If there accumulated value on each monthly payment date. The is not enough charge is made up of cost of insurance, an accumulated value administrative charge, and a mortality and expense risk to cover policy charge. If you add any riders, we'll add any charges charges, your for them to your monthly charge. policy could lapse. Lapsing and reinstatement You'll find more If there is not enough accumulated value to cover the about accumulated monthly charge on the day we make the deduction, your value starting on policy may lapse - which means you'll no longer have page 25. any insurance coverage. If your policy is in danger of lapsing, we'll give you a grace period of 61 days to pay the required premium. If your policy lapses at the end of the grace period, you have five years from the day it lapses to apply for a reinstatement. 5 AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY --------------------------------------------------------- Your investment You can choose from 31 variable investment options, options each of which invests in a corresponding portfolio of the Pacific Select Fund. Pacific Life is the investment The investment adviser for the Pacific Select Fund. It oversees the options you choose management of all the fund's portfolios and manages two will affect your of the portfolios directly. It has retained other policy's portfolio managers to manage the other portfolios. The accumulated value, value of each portfolio will fluctuate with the value and may affect the of the investments it holds, and returns are not death benefit. guaranteed. Your policy's You can also choose from two fixed options, the Fixed accumulated value account and the Fixed LT account, both of which provide may be allocated to a guaranteed minimum annual interest rate of 3% during up to 20 investment the first 10 policy years, 3.6% during policy years 11 options at any one through 20, and 3.85% during policy year 21 and time. thereafter. We may offer a higher interest rate. If we do, we'll guarantee that rate for one year. Please review the investment options We allocate your premium payments and accumulated value carefully and ask to the investment options you choose. Your policy's your registered accumulated value will fluctuate depending on the representative to investment options you've chosen. You bear the help you choose the investment risk of any variable investment options you right ones for your choose. goals and risk tolerance. We'll hold your premium payments in the Money Market investment option until the free look transfer date. You'll find more Please turn to Your right to cancel for details. about the investment options Transferring among investment options starting on page You can transfer among the investment options during 29. the life of your policy without paying any current income tax. There is currently no charge for transfers. You can make as many transfers as you like between variable investment options. You can also make automatic transfers from one variable investment option to another using our dollar cost averaging or portfolio rebalancing program. These programs are not available for the fixed options. You can only make one transfer from each fixed option in any 12-month period. For the Fixed account, each transfer may be no more than $5,000 or 25% of the accumulated value in the Fixed account, whichever is greater. For the Fixed LT account, each transfer may be no more than $5,000 or 10% of the accumulated value in the Fixed LT account, whichever is greater. You can only transfer to the fixed options in the policy month right before each policy anniversary. You'll find out You can also make automatic transfers from the Fixed more about our account to other investment options during the first automatic transfer policy year using our first year transfer program. programs starting on page 35. --------------------------------------------------------- Withdrawals, You can take out all or part of your policy's surrenders and accumulated value while your policy is in force by loans making withdrawals or surrendering your policy. You can take out a loan from us using your policy as security. Making a You can also use your policy's loan and withdrawal withdrawal, taking features to supplement your income, for example, during out a loan or retirement. surrendering your policy can change Making withdrawals your policy's tax You can withdraw part of your policy's net cash status, generate surrender value starting on your policy's first taxable income, or anniversary. This reduces your policy's accumulated make your policy value and could affect the face amount and death more susceptible to benefit. lapsing. Be sure to plan carefully before using these policy benefits. You'll find more about withdrawals, surrenders and loans starting on page 37. 6 Taking out a loan You can take out a loan from us using your policy's accumulated value as security. You pay interest on the amount you borrow at an annual rate of 4.1%. The accumulated value used to secure your loan is set aside in a loan account, where it earns interest at an annual rate of 3% during the first 10 policy years, 3.6% during policy years 11 through 20, and 3.85% during policy year 21 and thereafter. The amount in the loan account is not available to help pay for any policy charges. Taking out a loan affects the accumulated value of your policy because the amount set aside in the loan account misses out on the potential earnings available through the investment options. Surrendering your policy You can surrender or cash in your policy for its net cash surrender value while either of the two people insured by the policy is still living. If you surrender your policy during the first 10 policy years, we'll apply a surrender charge. --------------------------------------------------------- Variable life Your beneficiary generally will not have to pay federal insurance and your income tax on death benefit proceeds. You'll also taxes generally not be taxed on any or all of your policy's accumulated value unless you receive a cash There are tax distribution by making a withdrawal or surrendering issues to consider your policy. when you own a life insurance policy. If your policy is a modified endowment contract, all These are described distributions you receive during the life of the policy in detail starting may be subject to tax and a 10% penalty. on page 45. --------------------------------------------------------- About PL&A PL&A is a life insurance company based in Arizona. We issue the policies. Pacific Select Distributors, Inc., When you buy a life our affiliate, is the distributor of the policies. insurance policy, you're relying on How our accounts work the insurance We put your premium payments in our general and company that issues separate accounts. We own the assets in our accounts it to be able to and make the allocations to the investment options meet its financial you've chosen. obligations to you. Amounts allocated to the fixed options are held in our You'll find more general account. Our general account includes all of about PL&A, and our our assets, except for those held in our separate strength as a accounts. Our ability to meet our obligations under the company, starting policy is backed by our strength as an insurance on page 49. company. We may use any Amounts allocated to the variable investment options profit derived from are held in our separate account. The assets in this any charges under account are kept separate from the assets in our the policy for any general account and our other separate accounts, and lawful purpose, are protected from our general creditors. including our distribution and administrative expenses. 7
AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY This section of the overview explains the fees and expenses associated with your Pacific Select Estate Preserver - NY Policy. ------------------------------------------------------------------------------------- Understanding policy expenses and ----------------- cash flow Your premium You make a The chart to the right illustrates how cash premium normally flows through a Pacific Select payment ------------------------------------ Estate Preserver - NY policy. v ----------------- ----------------- The dark shaded boxes show the fees and We deduct a expenses you pay directly or indirectly premium load under your policy. These are explained in ----------------- the pages that follow. Net premium ----------------- We allocate the In some states we'll hold your net premium net premium to ------------------------- payments in the Money Market investment the investment option until the free look transfer date. options you Please turn to Your right to cancel for choose details. ----------------- v v -------------------- -------------------- ------------------- --------------------- Fixed options Variable Pacific Select The fund We hold investment Fund deducts advisory amounts you options fees and other allocate to these ---- The variable ---- fund expenses from options in our We hold investment the portfolios general account amounts you options invest allocate to these in the fund's options in our portfolios separate account -------------------- -------------------- ------------------- --------------------- --------------------- We deduct: . cost of insurance . administrative We make monthly deductions charge -------------------------- . mortality and expense risk charge . rider charges v ----------------- ------------------- ------------------- --------------------- --------------------- Loan account Accumulated We deduct a Accumulated value If you make a withdrawal withdrawal charge value set aside --- ------------------------ to secure a The total value policy loan of your policy ----------------- ------------------- --------------------- --------------------- We deduct a surrender charge If you surrender your policy . during the first ---------------------------- 10 policy years --------------------
8 --------------------------------------------------------- Deductions from We deduct a premium load from each premium payment you your premiums make. The load is made up of three charges: The premium load is Sales load - 0% of each premium payment during the explained in more first 10 policy years and 3% after the 10th policy detail on page 23. year. State and local tax charge - 2.35% of each premium payment. Federal tax charge - 1.50% of each premium payment. --------------------------------------------------------- Deductions from We deduct a monthly charge from your policy's your policy's accumulated value in the investment options on each accumulated value monthly payment date. This charge is made up of three charges: The monthly charge is explained in Cost of insurance - We calculate this charge by more detail multiplying the current cost of insurance rate by a starting on page discounted net amount at risk at the beginning of each 25. policy month. When the younger of the two people insured by the policy reaches age 100, the cost of An example insurance charge is zero -- in other words, you no longer pay any cost of insurance charge. For a policy with: Administrative charge - We deduct a charge of $7.50 a . a joint equal age month. When the younger of the two people insured by of 50 the policy reaches age 100, the administrative charge is zero -- in other words, you no longer pay any . a face amount of administrative charge. $100,000 Mortality and expense risk charge - The mortality and . accumulated expense risk charge varies depending on your policy's value of $60,000 face amount, and age and sex of both people insured by after deducting the policy on the policy date and accumulated value. any outstanding It's made up of two components: loan amount. . The face amount component, which we deduct every The maximum monthly month during the first 10 policy years at a rate that charge for the face is based on the age and sex of both people insured by amount component of the policy, and each $1,000 of the initial face the mortality and amount of your policy. expense risk charge is $15.20 . The accumulated value component, which we deduct (($100,000 / 1,000) X every month during the first10 policy years at an 0.152). annual rate of 0.90% (0.075% monthly) of your policy's accumulated value in the investment options. The monthly charge During policy years 11 through 20, we reduce the for the accumulated annual rate to 0.30% (0.025% monthly) of the value component is accumulated value. During policy year 21 and $45 thereafter, we further reduce the annual rate to ($60,000 X 0.075%). 0.05% (0.0042% monthly) of the accumulated value. The charge in policy years 11 Riders - If you add any riders to your policy, we add through 20 would be any charges for them to your monthly charge. $15 ($60,000 X 0.025%) if the policy's accumulated value was $60,000. The charge in policy year 21 (and thereafter) would be $2.52 ($60,000 X 0.0042%) if the policy's accumulated value was $60,000. Joint equal age is explained in Appendix A. The maximum rates for the face amount component are shown in Appendix B. 9 AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY --------------------------------------------------------- Withdrawal and You can withdraw part of your policy's net cash surrender charges surrender value at any time starting on your policy's first anniversary. There is a $25 charge for each Withdrawal and withdrawal you make. We deduct this charge surrender charges proportionately from all of your investment options. are explained in more detail on If you surrender or cash in your policy, or decrease pages 37 and 41. its face amount, during the first 10 years of owning the policy, we'll deduct a surrender charge. The An example surrender charge is made up of two components: For a policy that . The underwriting surrender charge, which is assessed is surrendered at at a rate that is based on the joint equal age and the end of the each $1,000 of the initial face amount of your first policy year, policy. The amount of the charge does not change with: during the first policy year. Starting on the first . a joint equal age policy anniversary, we reduce the charge by 0.9259% a of 50 month until it reaches zero at the end of 10 policy . an initial face years. amount of $100,000. . The sales surrender charge, which, during the first policy year, equals the smaller of the following The underwriting amounts: surrender charge is $520. . 70% of the premium payments you've made, or The maximum sales . 70% of the sales surrender target, which is based surrender target is on the joint equal age of the people insured by the $1,236. The maximum policy for each $1,000 of a policy's initial face sales surrender amount. charge is $865.20. The sales surrender charge increases until the premiums The underwriting you pay reach the sales surrender target. In the 13th surrender charge month you own your policy, we reduce the sales and sales surrender surrender charge so that it is 99.0741% of the charge target rates appear as calculated above. After that, we reduce it by in Appendix B. 0.9259% a month until it reaches zero at the end of 10 policy years. --------------------------------------------------------- Fees and expenses The Pacific Select Fund pays advisory fees and other paid by the expenses. These are deducted from the assets of the Pacific Select Fund fund's portfolios and may vary from year to year. They are not fixed and are not part of the terms of your You'll find more policy. If you choose a variable investment option, about the Pacific these fees and expenses affect you indirectly because Select Fund they reduce portfolio returns. starting on page 29, and in the Advisory fee fund's prospectus, Pacific Life is the investment adviser to the fund. The which accompanies fund pays an advisory fee to us for these services. The this prospectus. table below shows the advisory fee as a annual percentage of each portfolio's average daily net assets. 10 Other expenses The table also shows the advisory fee and fund expenses as an annual percentage of each portfolio's average daily net assets, based on the year 2000 unless otherwise noted. To help limit fund expenses, effective July 1, 2000 Pacific Life contractually agreed to waive all or part of its investment advisory fees or otherwise reimburse each portfolio for operating expenses (including organizational expenses, but not including advisory fees, additional costs associated with foreign investing and extraordinary expenses) that exceed an annual rate of 0.10% of its average daily net assets. Such waiver or reimbursement is subject to repayment to Pacific Life to the extent such expenses fall below the 0.10% expense cap. For each portfolio, Pacific Life's right to repayment is limited to amounts waived and/or reimbursed that exceed the new 0.10% expense cap and, except for portfolios that started on or after October 2, 2000, that do not exceed the previously established 0.25% expense cap. Any amounts repaid to Pacific Life will have the effect of increasing such expenses of the portfolio, but not above the 0.10% expense cap. There is no guarantee that Pacific Life will continue to cap expenses after December 31, 2001. In 2000, Pacific Life reimbursed approximately $13,202 to the I-Net Tollkeeper Portfolio, $36,311 to the Strategic Value Portfolio, $34,134 to the Focused 30 Portfolio and $27,505 to the Small-Cap Index Portfolio.
---------------------------------------------------------------------------------------- Less Advisory Other 12b-1 Total adviser's Total net Portfolio fee expenses amounts+ expenses reimbursement expenses ---------------------------------------------------------------------------------------- As an annual % of average daily net assets Blue Chip/1/ 0.95 0.06 -- 1.01 -- 1.01 Aggressive Growth/1/ 1.00 0.06 -- 1.06 -- 1.06 Aggressive Equity/2/ 0.80 0.04 0.02 0.86 -- 0.86 Emerging Markets/2/ 1.10 0.21 -- 1.31 -- 1.31 Diversified Research/2/ 0.90 0.08 0.01 0.99 -- 0.99 Small-Cap Equity/2/ 0.65 0.05 -- 0.70 -- 0.70 International Large-Cap 1.05 0.12 -- 1.17 -- 1.17 Equity 0.65 0.04 -- 0.69 -- 0.69 I-Net Tollkeeper/2/ 1.50 0.13 -- 1.63 (0.02) 1.61 Financial Services/1/ 1.10 0.15 -- 1.25 (0.05) 1.20 Health Sciences/1/ 1.10 0.11 -- 1.21 (0.01) 1.20 Technology/1/ 1.10 0.08 -- 1.18 -- 1.18 Telecommunications/1/ 1.10 0.08 -- 1.18 -- 1.18 Multi-Strategy 0.65 0.04 -- 0.69 -- 0.69 Equity Income/2/ 0.65 0.04 0.01 0.70 -- 0.70 Strategic Value 0.95 0.49 -- 1.44 (0.39) 1.05 Growth LT 0.75 0.04 -- 0.79 -- 0.79 Focused 30 0.95 0.42 -- 1.37 (0.32) 1.05 Mid-Cap Value/2/ 0.85 0.03 0.10 0.98 -- 0.98 International Value 0.85 0.11 -- 0.96 -- 0.96 Capital Opportunities/1/ 0.80 0.06 -- 0.86 -- 0.86 Mid-Cap Growth/1/ 0.90 0.06 -- 0.96 -- 0.96 Global Growth/1/ 1.10 0.19 -- 1.29 -- 1.29 Equity Index 0.25 0.04 -- 0.29 -- 0.29 Small-Cap Index/2/ 0.50 0.13 -- 0.63 (0.02) 0.61 REIT 1.10 0.04 -- 1.14 -- 1.14 Inflation Managed/2/ 0.60 0.05 -- 0.65 -- 0.65 Managed Bond/2/ 0.60 0.05 -- 0.65 -- 0.65 Money Market 0.34 0.04 -- 0.38 -- 0.38 High Yield Bond/2/ 0.60 0.05 -- 0.65 -- 0.65 Large-Cap Value/2/ 0.85 0.05 0.05 0.95 -- 0.95 ----------------------------------------------------------------------------------------
/1/ Expenses are estimated. There were no actual advisory fees or expenses for these portfolios in 2000 because the portfolios started after December 31, 2000. /2/ Total adjusted net expenses for these portfolios, after deduction of an offset for custodian credits and the 12b-1 recapture were: 0.84% for Aggressive Equity Portfolio, 1.30% for Emerging Markets Portfolio, 0.98% for Diversified Research Portfolio, 0.69% for Small-Cap Equity Portfolio, 1.60% for I-Net Tollkeeper Portfolio, 0.69% for Equity Income Portfolio, 0.88% for Mid-Cap Value Portfolio, 0.60% for Small-Cap Index Portfolio, 0.62% for Inflation Managed Portfolio, 0.64% for Managed Bond Portfolio, 0.64% for High Yield Bond Portfolio, and 0.90% for Large-Cap Value Portfolio. + The fund has a brokerage enhancement 12b-1 plan under which brokerage transactions, subject to best price and execution, may be placed with certain broker-dealers in return for credits, cash or other compensation ("recaptured commissions"). While a portfolio pays the cost of brokerage when it buys or sells a portfolio security, there are no fees or charges to the fund under the plan. Recaptured commissions may be used to promote and market fund shares and the distributor may therefore defray expenses for distribution that it might otherwise incur. The SEC staff requires that the amount of recaptured commissions be shown as an expense in the chart above. 11 PACIFIC SELECT ESTATE PRESERVER - NY BASICS When you buy a Pacific Select Estate Preserver - NY life insurance policy, you're entering into a contract with Pacific Life & Annuity Company. Your contract with us is made up of your application, your policy, applications to change or reinstate the policy, any amendments, riders or endorsements to your policy, and specification pages. Policy amendments When we approve your signed application, we'll issue and endorsements your policy. If your application does not meet our are a part of your underwriting and administrative requirements, we can policy and confirm reject it or ask you for more information. Once we changes you or we receive your first premium payment, and any contractual make to the policy. and administrative requirements have been met, we'll consider your policy to be in force. Our obligations Specification pages under the policy begin when the policy is in force and summarize has been delivered to you. information specific to your Your policy will be in force until one of the following policy at the time happens: the policy is . both people insured by the policy die issued. . the grace period expires and your policy lapses, or . you surrender your policy. Riders provide If your policy is not in force when both people insured extra benefits, by the policy die, we are not obligated to pay the some at additional death benefit proceeds to your beneficiary. cost. Not all riders are Pacific Select Estate Preserver - NY is a last survivor available in every flexible premium variable life insurance policy that state and some insures the lives of two people and pays death benefit riders may only be proceeds after both people have died. added when you apply for your Under a flexible premium life insurance policy, you policy. have the flexibility to choose the amount and frequency of your premium payments. You must, however, pay enough Last survivor life premiums to cover the ongoing cost of policy benefits. insurance may be appropriate for two A premium load is deducted from each premium payment spouses who want to you make. The resulting net premium is allocated to the provide a death investment options you choose, and becomes part of your benefit for their policy's accumulated value. children. Charges are deducted from the accumulated value each This may not be the month to help cover the cost of the policy's death right kind of benefit and other expenses. If there is not enough policy for someone accumulated value to cover the monthly charge on the who wants to day we make the deduction, your policy may lapse after provide a death a grace period - which means you'll no longer have any benefit for his or insurance coverage. her spouse. In that case, a policy that Investment earnings will increase your policy's insures a single accumulated value, while investment losses will life may be more decrease it. The premium payments you'll be required to appropriate. make to keep your policy in force will be influenced by the investment results of the investment options you've Please discuss your chosen. insurance needs and financial objectives with your registered representative. We'll hold your net premium payments in the Money Market investment option until the free look transfer date. Please turn to Your right to cancel for details. 12 --------------------------------------------------------- Owners, people Owners insured by the The owner is the person named on the application who policy, and makes the decisions about the policy and its benefits beneficiaries while it's in force. You can own a policy by yourself or with someone else. Two or more owners are called joint owners. You need the signatures of all owners for Please consult your all policy transactions. financial advisor or a lawyer about If one of the joint owners dies, the surviving owners designating will hold all rights under the policy. If the last ownership joint owner dies, his or her estate will own the policy interests. unless you've given us other instructions. A policy can also be owned by an institution, trust, corporation or group or sponsored arrangement. These If you would like owners often buy more than one policy, which may to change the owner qualify them for reduced charges or lower premium of your policy, payments. please contact us or your registered We may reduce or waive the sales load or surrender representative for charges on policies sold to our directors or employees, a change of owner to any of our affiliates, or to trustees, employees or form. We can affiliates of the fund. process the change only if we receive You can change the owner of your policy by completing a your instructions change of owner form. Once we've received and recorded in writing. your request, the change will be effective as of the day you signed the change of owner form. People insured by the policy This policy insures the lives of two people who are between the ages of 20 and 85 at the time you apply for your policy, and who have given us satisfactory evidence of insurability. Your policy refers to these people as the insureds. The policy pays death benefit proceeds after both of these people have died. Risk classes are Each person to be insured by the policy is assigned an usually based on underwriting or insurance risk class which we use to age, gender, health calculate cost of insurance and other charges. We and whether or not normally use the medical or paramedical underwriting the person to be method to assign underwriting or insurance risk insured by the classes, which may require a medical examination. We policy smokes. Most may, however, use other forms of underwriting if we insurance companies think it's appropriate. use similar risk classification criteria. When we refer to When we use a person's age in policy calculations, we age throughout this generally use his or her age as of the nearest policy prospectus, we're date, and we add one year to this age on each policy using the word as anniversary date. For example, when we talk about we've defined it someone "reaching age 100", we're referring to the here, unless we policy anniversary date closest to that person's 100th tell you otherwise. birthday, not to the day when he or she actually turns 100. 13 PACIFIC SELECT ESTATE PRESERVER - NY BASICS Beneficiaries The beneficiary is the person, people, entity or If you would like entities you name to receive the death benefit to change the proceeds. Here are some things you need to know about beneficiary of your naming beneficiaries: policy, please contact us or your . You can name one or more primary beneficiaries who registered each receive an equal share of the death benefit representative for proceeds unless you tell us otherwise. If one a change of beneficiary dies, his or her share will pass to the beneficiary form. surviving primary beneficiaries in proportion to the We can process the share of the proceeds they're entitled to receive, change only if we unless you tell us otherwise. receive your instructions in . You can also name a contingent beneficiary for each writing. primary beneficiary you name. The contingent beneficiary will receive the death benefit proceeds if the primary beneficiary dies. . You can choose to make your beneficiary permanent (sometimes called irrevocable). You cannot change a permanent beneficiary's rights under the policy without his or her permission. . If none of your beneficiaries is still living when the death benefit proceeds are payable, you as the policy owner will receive the proceeds. If you're no longer living, the proceeds will go to your estate. . You can change your beneficiary at any time while either person insured by the policy is still living, and while the policy is in force. The change will be effective as of the day you signed the change of beneficiary form. --------------------------------------------------------- Policy date, Your policy date monthly payment This is usually the day we approve your policy date, policy application. It's also the beginning of your first anniversary date policy year. Your policy's monthly, quarterly, semi- annual and annual anniversary dates are based on your policy date. The policy date is set so that it never falls on the 29th, 30th or 31st of any month. We'll apply your first premium payment as of your policy date or as of the day we receive your premium, whichever is later. Backdating your policy You can have your policy backdated up to six months, as long as we approve it. Backdating in some cases may lower your cost of insurance rates since these rates are based on the ages of the people insured by the policy. Your first premium payment must cover the premium load and monthly charges for the period between the backdated policy date and the day your policy is issued. Your monthly payment date This is the day we deduct the monthly charges from your policy's accumulated value. The first monthly payment date is your policy date, and it's the same day each month thereafter. Monthly charges are explained in the section called Your policy's accumulated value. Your policy anniversary date This is the same day as your policy date every year after we issue your policy. A policy year starts on your policy date and each anniversary date, and ends on the day before the next anniversary date. 14 --------------------------------------------------------- Statements and We send the following statements and reports to policy reports owners: we'll send you . a confirmation for many financial transactions, usually including premium payments and transfers, We can create loans, loan repayments, withdrawals and surrenders. customized Monthly deductions and scheduled transactions made hypothetical under the dollar cost averaging and portfolio illustrations of rebalancing programs are reported on your quarterly benefits under your policy statement. policy based on different . a quarterly policy statement. The statement will tell assumptions. you the accumulated value of your policy by investment option, cash surrender value, the amount We'll send you one of the death benefit, the policy's face amount, and policy illustration any outstanding loan amount. It will also include a free of charge each summary of all transactions that have taken place policy year if you since the last quarterly statement, as well as any ask for one. We other information required by law. reserve the right to charge $25 for . supplemental schedules of benefits and planned additional periodic premiums. We'll send these to you if you illustrations. change your policy's face amount or change any of the policy's other benefits. . financial statements, at least annually or as required by law, of the separate account and Pacific Select Fund, that include a listing of securities for each portfolio of the Pacific Select Fund. --------------------------------------------------------- Your right to During the free look period, once your policy is in cancel force you have the right to cancel (or refuse) your policy and return it to us or your registered Please call us or representative for a refund. your registered representative if The amount of your refund will be the amount of the you have questions premium payments you've made. We'll always deduct any about your right to outstanding loan amount from the amount we refund to cancel your policy. you. You'll find a complete description of the free look period that applies to your policy on the policy's cover sheet, or on a notice that accompanied your policy. The free look period ends 10 days after you receive your policy. If you are replacing another life insurance policy, your free look period ends 60 days after you receive your policy. If you cancel your policy during the free look period, we're required to refund the premium payments you've made. We'll hold the net premiums in the Money Market investment option until the free look transfer date. On that day, we'll transfer the accumulated value in the Money Market investment option to the investment options you've chosen. The free look transfer date is the latest of the following: . 10 days after we issue your policy . when we consider your policy to be in force. 15 PACIFIC SELECT ESTATE PRESERVER - NY BASICS --------------------------------------------------------- Timing of payments, Effective date forms and requests Once your policy is in force, the effective date of payments, forms and requests you send us is usually A business day, determined by the day and time we receive the item in called a valuation proper form at the mailing address that appears on the date in your back cover of this prospectus. policy, is any day that the New York Planned periodic premium payments, loan requests, Stock Exchange and transfer requests, loan payments or withdrawal or our life insurance surrender requests that we receive in proper form client services before 4:00 p.m. Eastern time on a business day will offices are open. normally be effective as of the end of that day, unless It usually ends at the transaction is scheduled to occur on another 4:00 p.m. Eastern business day. If we receive your payment or request on time. or after 4:00 p.m. Eastern time on a business day, your payment or request will be effective as of the end of The New York Stock the next business day. If a scheduled transaction falls Exchange is usually on a day that is not a business day, we'll process it closed on weekends as of the end of the next business day. and on the following days: Other forms, notices and requests are normally . New Year's Day, effective as of the next business day after we receive Martin Luther them in proper form, unless the transaction is King, Jr. Day, scheduled to occur on another business day. Change of President's Day, owner and beneficiary forms are effective as of the day Good Friday, you sign the change form, once we receive them in Memorial Day, proper form. July Fourth, Labor Day, Proper form Thanksgiving Day We'll process your requests once we receive all and Christmas letters, forms or other necessary documents, completed Day, and to our satisfaction. Proper form may require, among . the Friday before other things, a signature guarantee or some other proof New Year's Day, of authenticity. We do not generally require a July Fourth or signature guarantee, but we may ask for one if it Christmas Day if appears that your signature has changed, if the that holiday signature does not appear to be yours, if we have not falls on a received a properly completed application or Saturday confirmation of an application, or for other reasons to . the Monday protect you and us. following New Year's Day, July When we make payments and transfers Fourth or We'll normally send the proceeds of transfers, Christmas Day if withdrawals, loans, surrenders, exchanges and death that holiday benefit payments within seven days after the effective falls on a Sunday date of the request in proper form. We may delay unless unusual payments and transfers, or the calculation of payments business conditions and transfers based on the value in the variable exist, such as the investment options under unusual circumstances, for ending of a monthly example, if: or yearly accounting period. . the New York Stock Exchange closes on a day other than a regular holiday or weekend Our client services . an emergency exists as determined by the SEC, as a offices are also result of which the sale of securities is not usually closed on practicable, or it is not practicable to determine the following days: the value of a variable account's assets. . the Monday before New Year's Day, We may delay transfers and payments from the fixed July Fourth, or options, including the proceeds from withdrawals, Christmas Day, if surrenders and loans, for up to six months. We'll pay any of these interest at an annual rate of at least 3% on any holidays falls on withdrawals or surrender proceeds from the fixed a Tuesday options that we delay for 30 days or more. . the Tuesday before Christmas We pay interest at an annual rate of at least 3% on Day if that death benefit proceeds, calculated from the day the holiday falls on last surviving person insured by the policy dies to the a Wednesday day we pay the proceeds. . the Friday after New Year's Day, July Fourth or Christmas Day, if any of these holidays falls on a Thursday . the Friday after Thanksgiving. Call us or contact your registered representative if you have any questions about the proper form required for a request. To request payment of death benefit proceeds, send us proof of death and payment instructions. 16 --------------------------------------------------------- Telephone and You can make loans or transfers, and give us electronic instructions regarding the dollar cost averaging transactions program or portfolio rebalancing program, by telephone any time after the free look period as long as we have Please ask your your signed authorization form on file. registered representative for Certain registered representatives are able to give us more information instructions electronically if authorized by you. You regarding may appoint your registered representative to give us electronic instructions on your behalf by completing and filing a transactions. telephone and electronic authorization form with us. Here are some things you need to know about telephone and electronic transactions: . You must complete a telephone and electronic authorization form. . If your policy is jointly owned, all joint owners must sign the telephone and electronic authorization. We'll take instructions from any owner or anyone you appoint. . We may use any reasonable method to confirm that your telephone or electronic instructions are genuine. For example, we may ask you to provide personal identification or we may record all or part of the telephone conversation. We may refuse any transaction request made by telephone or electronically. We'll send you a written confirmation of each telephone and electronic transaction. Sometimes, you may not be able to make loans or transfers by telephone or electronically, for example, if our telephone lines or our website are busy because of unusual market activity or a significant economic or market change, or our telephone lines or the Internet are out of service during severe storms or other emergencies. In these cases, you can send your request to us in writing, or call us the next business day or when service has resumed. When you send us your telephone and electronic authorization form, you agree that: . we can accept and act upon instructions you or anyone you appoint give us over the telephone or electronically . neither we, the administrator, any of our affiliates, the Pacific Select Fund, or any director, trustee, officer, employee or agent of ours or theirs will be liable for any loss, damages, cost or expenses that result from transactions processed because of a request by telephone or submitted electronically that we believe to be genuine, as long as we have followed our own procedures . you bear the risk of any loss that arises from your right to make loans or transfers over the telephone or electronically. 17 THE DEATH BENEFIT We'll pay death benefit proceeds to your beneficiary after the last surviving person insured by the policy dies while the policy is still in force. Your beneficiary generally will not have to pay federal income tax on death benefit proceeds. This policy offers four death benefit options, Options Your policy's A, B, C and D. The option you choose will generally initial amount of depend on which is more important to you: a larger insurance coverage death benefit or building the accumulated value of your is its initial face policy. amount. We determine the face Here are some things you need to know about the death amount based on benefit: instructions provided in your . You choose your death benefit option on your policy application. application. The minimum face . If you do not choose a death benefit option, we'll amount when a assume you've chosen Option A. policy is issued is usually $100,000, . The death benefit will always be the greater of the but we may reduce death benefit under the option you choose or the this in some guideline minimum death benefit. circumstances. . The death benefit will never be lower than the face You'll find your amount of your policy if you've chosen Option A, B or policy's face D. Of course, the death benefit proceeds will always amount, which be reduced by any outstanding loan amount. includes any increases or . We'll pay the death benefit proceeds to your decreases, in the beneficiary when we receive proof of the deaths of specification pages both of the people insured by the policy. in your policy. . After the youngest person insured by the policy reaches age 100, the death benefit equals the accumulated value. --------------------------------------------------------- Choosing your death You can choose one of the following four options for benefit option the death benefit on your application. The graphs below help you compare the options using several hypothetical examples. Option A - the Option B - the face amount of face amount of your policy plus its accumulated your policy. value. [ILLUSTRATION [ILLUSTRATION APPEARS HERE] APPEARS HERE] The death benefit changes as your policy's accumulated value changes. The better your investment options perform, the larger the death benefit will be. Option C - the Option D - the face amount of face amount of your policy multiplied by a your policy plus death benefit factor. the total premiums you've paid minus any withdrawals or [ILLUSTRATION APPEARS HERE] distributions made. The death benefit gradually increases over time no matter how your investment options [ILLUSTRATION perform, as long as there is APPEARS HERE] enough accumulated value to keep your policy in force. The more premiums you pay and the less you withdraw, the larger the death benefit will be. 18 --------------------------------------------------------- How we calculate the death benefit for Option D If you choose Option D, we'll calculate the death benefit by multiplying the face amount by a death benefit factor. The death benefit factor is a number from 1.0 to 2.0. A factor of 1.0 means the death benefit equals the face amount. A factor of 2.0 means the death benefit is two times the face amount. The factor changes on each policy anniversary and is based on the joint equal age of the people insured by the policy and the number of completed policy years. Joint equal age is a calculation that blends the ages and insurance risks of the two people insured by the policy. Generally, the death benefit factor will reach the maximum of 2.0 when joint equal age plus the number of completed policy years is between 85 and 90. You'll find more information about how we calculate joint equal age in Appendix A. You'll find more information about the death benefit factor in Appendix D and in your policy. --------------------------------------------------------- The guideline The guideline minimum death benefit is the minimum minimum death death benefit needed for your policy to qualify as life benefit insurance under Section 7702 of the Internal Revenue Code. If the amount of the death benefit under the If your policy's option you choose is less than the guideline minimum death benefit is death benefit, we'll adjust your death benefit to equal equal to the the guideline minimum death benefit. guideline minimum death benefit, and We calculate the guideline minimum death benefit by the net amount at multiplying the accumulated value of your policy by a risk is more than death benefit percentage. This percentage is based on three times the the age of the younger person insured by the policy, death benefit on and will increase over time. You'll find a table of the policy date, we guideline minimum death benefit percentages in may reduce the Appendix C. death benefit by making withdrawals from your policy. We will not charge you our usual $25 withdrawal fee, but the withdrawals may be taxable. Please turn to Withdrawals, surrenders and loans for information about making withdrawals. --------------------------------------------------------- When we pay the We calculate the amount of the death benefit proceeds death benefit as of the end of the day the last surviving person insured by the policy dies. If that person dies on a Your beneficiary day that is not a business day, we calculate the can choose to proceeds as of the next business day. receive the death benefit proceeds in Your policy's beneficiary must send us proof that both a lump sum or use people insured by the policy died while the policy was it to buy an income in force, along with payment instructions. If both benefit. Please see people insured by the policy die at the same time, or the discussion if it's not clear who died first, we'll assume the about income younger of the two died first. benefits in General information about Death benefit proceeds equal the total of the death your policy. benefits provided by your policy and any riders you've added, minus any outstanding loan amount, minus any It is important overdue charges. that we have a current address for We'll pay interest at an annual rate of at least 3% on your beneficiary so the death benefit proceeds, calculated from the day the that we can pay last surviving person insured by the policy dies to the death benefit day we pay the proceeds. proceeds promptly. If we cannot pay the proceeds to your beneficiary within five years of the death of the last surviving person insured by the policy, we'll be required to pay them to the state. 19 THE DEATH BENEFIT --------------------------------------------------------- Comparing the death The tables below compare the death benefits provided by benefit options the policy's four death benefit options. The examples are intended only to show differences in death benefits and net amounts at risk. Accumulated value assumptions may not be realistic. Example A assumes These examples show that each death benefit option the following: provides a different level of protection. Keep in mind that cost of insurance charges, which affect your . the people policy's accumulated value, increase with the amount of insured by the the death benefit, as well as over time. The cost of policy are male insurance is charged at a rate per $1,000 of the and female non- discounted net amount at risk. As the net amount at smokers, each age risk increases, your cost of insurance increases. 45 at the time Accumulated value also varies depending on the the policy was performance of the investment options in your policy. issued . face amount is $1,000,000 . accumulated value at year 20 is $600,000 . total premiums paid into the policy at year 20 is $300,000 . the death benefit percentage for the guideline minimum death benefit is 120% . the death benefit factor for Option D at year 20 is 108.4% . the guideline minimum death benefit is $720,000 (accumulated value times a death benefit percentage factor of 120%)
------------------------------------------------------------------------------------------ Example A The death benefit is the larger of these two amounts ------------------------------- Death Death benefit Guideline Net amount at risk benefit How it's under minimum used for cost of option calculated the option death benefit insurance charge ------------------------------------------------------------------------------------------ Option A Face amount $1,000,000 $720,000 $397,540.10 Option B Face amount plus accumulated value $1,600,000 $720,000 $996,064.16 Option C Face amount plus premiums less distributions $1,300,000 $720,000 $696,802.13 Option D Face amount times death benefit factor $1,084,000 $720,000 $481,333.47 ------------------------------------------------------------------------------------------
Example B uses the same assumptions as Example A, but has an accumulated value of $1,400,000. Because accumulated value has increased, the guideline minimum death benefit is now $1,680,000 ($1,400,000 times a death benefit factor of 120%).
------------------------------------------------------------------------------------------ Example B The death benefit is the larger of these two amounts ------------------------------- Death Death benefit Guideline Net amount at risk benefit How it's under minimum used for cost of option calculated the option death benefit insurance charge ------------------------------------------------------------------------------------------ Option A Face amount $1,000,000 $1,680,000 $275,867.37 Option B Face amount plus accumulated value $2,400,000 $1,680,000 $994,096.24 Option C Face amount plus premiums less distributions $1,300,000 $1,680,000 $275,867.37 Option D Face amount times death benefit factor $1,084,000 $1,680,000 $275,867.37 ------------------------------------------------------------------------------------------
--------------------------------------------------------- Changing your death You can change your death benefit option after your benefit option fifth policy year. Here's how it works: We will not change . You can change the death benefit once in any policy your death benefit year. option if it means . You must send us your request in writing. your policy will be . You can only change to Option A or Option B. treated as a . The change will become effective on the first monthly modified endowment payment date after we receive your request. If we contract, unless receive your request on a monthly payment date, we'll you've told us in process it that day. writing that this . The face amount of your policy will change by the would be acceptable amount needed to make the death benefit under the new to you. Modified option equal the death benefit under the old option endowment contracts just before the change. We will not let you change are discussed in the death benefit if doing so means the face amount Variable life of your policy will become less than $100,000. We may insurance and your waive this minimum amount under certain taxes. circumstances. . Changing the death benefit option can also affect the Net amount at risk monthly cost of insurance charge since this charge is the difference varies with the net amount at risk. between the death . The new death benefit option will be used in all benefit that would future calculations. be payable if both people insured by the policy died, and the accumulated value of your policy. 20 --------------------------------------------------------- Decreasing the face You can decrease your policy's face amount starting on amount the first policy anniversary as long as we approve it. Here's how it works: Decreasing the face amount may affect . You can decrease the face amount as long as at least your policy's tax one of the people insured by the policy is still status. To ensure living. your policy . You can only decrease the face amount once in any continues to policy year. qualify as life . You must send us your request in writing while your insurance, we might policy is in force. be required to . The decrease will become effective on the first return part of your monthly payment date after we receive your request. premium payments to If we receive your request on a monthly payment date, you, or make we'll process it that day. distributions from . Decreasing the face amount can affect the monthly the accumulated cost of insurance charge since this charge varies value, which may be with the net amount at risk. taxable. . We can refuse your request to make the face amount less than $100,000. We can waive this minimum amount We will not in certain situations, such as group or sponsored decrease the face arrangements. amount if it means your policy will be If you decrease your face amount in the first 10 years treated as a of the policy, we'll deduct a surrender charge from modified endowment your policy's accumulated value. Please turn to contract, unless Withdrawals, surrenders and loans for information about you've told us in how we calculate surrender charges. writing that this would be acceptable to you. For more information, please see Variable life insurance and your taxes. --------------------------------------------------------- Optional riders There are five optional riders that provide extra benefits, some at additional cost. Not all riders are We offer other available in every state, and some riders may only be variable life added when you apply for your policy. insurance policies which provide . Last survivor added protection benefit insurance Provides level or varying term insurance on the two protection on the people insured by the policy. lives of two people or on the life of . Individual annual renewable term rider one person. The Provides level or varying term insurance on either or loads and charges both people insured by the policy. on these policies may be different. . Policy split option rider Combining a policy Splits the policy into two individual policies with and a rider, evidence of insurability. however, may be more economical . Accelerated living benefits rider than adding another Gives the policy owner access to a portion of the policy. It may also policy's death benefit if the last surviving person be more economical insured by the policy has been diagnosed with a to provide an terminal illness resulting in a life expectancy of amount of insurance six months or less (or longer than six months in some coverage through a states). policy alone. . Estate tax repeal rider Gives the policy owner a conditional right to return the policy to us and receive its accumulated value less any outstanding loan amount, plus a refund of certain loads and charges. Ask your registered representative for Certain restrictions may apply and are described in the more information rider or benefit. We'll add any rider charges to the about the riders monthly charge we deduct from your policy's accumulated available with the value. policy, or about other kinds of life insurance policies offered by PL&A. There may be tax consequences if you exercise your rights under the Accelerated living benefits rider, the Estate tax repeal rider, or either of the two Policy split option riders. Please see Variable life insurance and your taxes for more information. Samples of the provisions for the extra optional benefits are available from us upon written request. 21 HOW PREMIUMS WORK Your policy gives you the flexibility to choose the amount and frequency of your premium payments. The amount, We usually set the amount of your first premium frequency, and payment. You can schedule the amount and frequency of period of time over remaining premium payments within certain limits. Each which you make premium payment must be at least $50. premium payments may affect whether We deduct a premium load from each premium payment, and your policy will be then allocate your net premium to the investment classified as a options you've chosen. Depending on the performance of modified endowment your investment options, and on how many withdrawals, contract, or no loans or other policy features you've taken advantage longer qualifies as of, you may need to make additional premium payments to life insurance for keep your policy in force. tax purposes. See Variable life If we do not receive the minimum initial premium insurance and your payment within 20 days after we issue your policy, we taxes for more can cancel the policy and refund any partial premium information. payment you've made. We may waive the 20 day requirement in some cases. --------------------------------------------------------- Planned periodic You can schedule the amount and frequency of your premium payments premium payments. We refer to scheduled premium payments as your planned periodic premium. Here's how it works: Even if you pay all your premiums when . On your application, you choose a fixed amount of at they're scheduled, least $50 for each premium payment. your policy could lapse if the . You indicate whether you want to make premium accumulated value, payments annually, semi-annually, or quarterly. You less any can also choose monthly payments using our monthly outstanding loan Uni-check plan, which is described below. amount, is not enough to pay your . We send you a notice to remind you of your scheduled monthly charges. premium payment (except for monthly Uni-check Turn to Your payments, which are paid automatically). While you do policy's not have to make the premium payments you've accumulated value scheduled, not making a premium payment may have an for more impact on any financial objectives you may have set information. for your policy's accumulated value and death benefit, and could cause your policy to lapse. . We'll treat any payment you make during the life of your policy as a loan repayment, not as a premium payment, unless you tell us otherwise. When a payment, or any portion of it, exceeds your outstanding loan amount, we'll treat it as a premium payment. Some states may require us to consider your payments as premium payments if you have not given us instructions to do otherwise. Monthly Uni-check plan Once you've made your first premium payment, you can make monthly premium payments using our Uni-check plan. Here's how it works: . you authorize us to withdraw a specified amount from your checking account each month . you can choose any day between the 4th and 28th of the month . if you do not specify a day for us to make the withdrawal, we'll withdraw the premium payment on your policy's monthly anniversary. If your policy's monthly anniversary falls on the 1st, 2nd or 3rd of the month, we'll withdraw the payment on the 4th of each month. 22 --------------------------------------------------------- Deductions from We deduct a premium load from each premium payment you your premiums make. The load is made up of three charges: Your net premium is Sales load your premium During the first 10 years of your policy, we deduct a payment less the 0% sales load from each premium payment you make. The premium load. sales load is 3% after the 10th policy year. This charge helps pay for the cost of distributing our policies and is guaranteed not to increase. If our sales and distribution expenses are more than the sales load, we can recover these expenses from other charges, such as the mortality and expense risk charge and the surrender charge, and from any mortality gains. State and local tax charge We deduct 2.35% from each premium payment to pay state and local premium and other taxes. The actual taxes we pay vary from state to state, and in some instances, among municipalities. This rate approximates the average rate we pay for all states. We do not expect to profit from this charge, and do not expect to change the rate unless the rate we pay increases. Federal tax charge We deduct 1.50% from each premium payment to pay federal taxes. We reserve the right to change this rate to respond to changes in law. --------------------------------------------------------- Allocating your We generally allocate your net premiums to the premiums investment options you've chosen on your application on the day we receive them. We currently limit your There are special allocations to 20 investment options at one time. restrictions when allocating premiums to the Fixed LT We allocate your first premium on the free look account. transfer date. We'll hold your net premiums in the Money Market investment option until the free look transfer date, and then transfer them to the investment Please turn to Your options you've chosen. investment options for more information about the investment options. --------------------------------------------------------- Limits on the Federal tax law puts limits on the amount of premium premium payments payments you can make in relation to your policy's you can make death benefit. These limits apply in the following situations: Before you buy a . If accepting the premium means your policy will no policy, you can ask longer qualify as life insurance for federal income us or your tax purposes. registered representative for The total amount you can pay in premiums and still have a personalized your policy qualify as life insurance is your policy's illustration that guideline premium limit. The sum of the premiums paid, will show you the less any withdrawals, at any time cannot exceed the guideline single guideline premium limit, which is the greater of: premium and guideline level . the guideline single premium or annual premiums. . the sum of the guideline level annual premiums. Your policy's guideline single premium and guideline level annual premiums appear on your policy's specification pages. We may refuse to accept all or part of a premium payment if, by accepting it, you will exceed your policy's guideline premium limit. If we find that you've exceeded your guideline premium limit, we may remove all or part of a premium you've paid from your policy as of the day we applied it, and return it to you. We'll adjust the death benefit retroactively to that date to reflect the reduction in premium payments. 23 HOW PREMIUMS WORK You'll find a . If applying the premium in that policy year means your detailed discussion policy will become a modified endowment contract. of modified endowment contracts A life insurance policy will become a modified in Variable life endowment contract if the sum of premium payments made insurance and your during the first seven contract years, less a portion taxes. of withdrawals, exceeds the seven-pay limit defined in Section 7702A of the Internal Revenue Code. Unless you've told us in writing that you want your policy to become a modified endowment contract, we'll remove all or part of the premium payment from your policy as of the day we applied it and return it to you. We'll also adjust the death benefit retroactively to that date to reflect the reduction in premium payments. If we receive such a premium within 20 days before your policy anniversary, we'll hold it and apply it to your policy on the anniversary date. In both of these situations, if we remove an excess premium from your policy, we'll return the premium amount to you no later than 60 days after the end of that policy year. We may adjust the amount for interest or for changes in accumulated value that relate to the amount of the excess premium payment we're returning to you. If we do not return the premium amount to you within that time, we'll increase your policy's death benefit retroactively, to the day we applied the premium, and prospectively, so that it's always the amount necessary to ensure your policy qualifies as life insurance, or to prevent it from becoming a modified endowment contract. If we increase your death benefit, we'll adjust cost of insurance or rider charges retroactively and prospectively to reflect the increase. Net amount at risk . If applying the premium payment to your policy will is the difference increase the net amount at risk. This will happen if between the death your policy's death benefit is equal to the guideline benefit that would minimum death benefit or would be equal to it once we be payable if both applied your premium payment. people insured by the policy died and We may choose to accept your premium payment in this the accumulated situation, but before we do so, we may require value of your satisfactory evidence of the insurability of the two policy. people insured by the policy. We will not accept premium payments after the youngest person insured by the policy reaches age 100. 24 YOUR POLICY'S ACCUMULATED VALUE Accumulated value Accumulated value is the value of your policy on any is used as the business day. basis for determining policy We use it to calculate how much money is available to benefits and you for loans and withdrawals, and how much you'll charges. receive if you surrender your policy. It also affects the amount of the death benefit if you choose a death benefit option that's calculated using accumulated value. The accumulated value of your policy is not guaranteed - it depends on the performance of the investment options you've chosen, the premium payments you've made, policy charges and how much you've borrowed or withdrawn from the policy. --------------------------------------------------------- Calculating your Your policy's accumulated value is the total amount policy's allocated to the variable investment options and the accumulated value fixed options, plus the amount in the loan account. Please see Taking We determine the value allocated to the variable out a loan for investment options on any business day by multiplying information about the number of accumulation units for each variable loans and the loan investment option credited to your policy on that day, account. by the variable investment option's unit value at the end of that day. The process we use to calculate unit values for the variable investment options is described in Your investment options. --------------------------------------------------------- Monthly deductions We deduct a monthly charge from your policy's accumulated value in the investment options each If there is not monthly payment date. enough accumulated value to pay the Unless you tell us otherwise, we deduct the monthly monthly charge, charge from the investment options that make up your your policy could policy's accumulated value, in proportion to the lapse. The accumulated value you have in each option. This charge performance of the is made up of three charges: investment options you choose, not Cost of insurance making planned This charge is for providing you with life insurance premium payments, protection. Like other policy charges, we may profit or taking out a from the cost of insurance charge and may use these loan all affect the profits for any lawful purpose such as the payment of accumulated value distribution and administrative expenses. of your policy. There are maximum or guaranteed cost of insurance rates You'll find a associated with your policy. When the younger of the discussion about two people insured by your policy reaches age 100, the when your policy guaranteed cost of insurance rate is zero - in other might lapse, and words, you no longer pay any cost of insurance. what you can do to reinstate it, later The guaranteed rates include the insurance risks in this section. associated with insuring two people. They are calculated using 1980 Commissioners Standard Ordinary Unisex rates are Mortality Tables or the 1980 Commissioners Ordinary used when a policy Mortality Table B, which are used for unisex cost of is owned by an insurance rates. The rates are also based on the ages, employer in gender and risk classes of the people insured by the connection with policy unless unisex rates are required. employment-related or benefit Our current cost of insurance rates will apply programs. uniformly to all members of the same class. Any changes in the cost of insurance will apply uniformly to all Class is determined members of the same class. These rates generally by a number of increase as the ages of the two people increase, and factors, including they vary with the number of years the policy has been the age, risk in force. Our current rates are lower than the classification, guaranteed rates and they will not exceed the smoking status and guaranteed rates in the future. gender (unless unisex rates are required) of the two people insured by the policy, and the policy date and duration. 25 YOUR POLICY'S ACCUMULATED VALUE --------------------------------------------------------- How we calculate cost of insurance We calculate cost of insurance by multiplying the current cost of insurance rate by a discounted net amount at risk at the beginning of each policy month. Net amount at risk for the cost of insurance calculation is the difference between a discounted death benefit that would be payable if both people insured by the policy died, and the accumulated value of your policy. We calculate it in two steps: . Step 1: we divide the death benefit that would be payable at the beginning of the policy month by 1.002466. . Step 2: we subtract your policy's accumulated value at the beginning of the policy month from the amount we calculated in step 1. Administrative charge We deduct a charge of $7.50 a month. We guarantee that this charge will not increase. When the younger of the two people insured by the policy reaches age 100, the administrative charge is zero - in other words, you no longer pay any administrative charge. If you buy additional Pacific Select Estate Preserver - NY policies that insure the same two people, we will not deduct the administrative charge from the additional policies. Instead, we'll deduct $200 from each policy's first premium payment to help cover our processing costs. Mortality and expense risk charge Mortality risk is the chance that the people insured by policies we've issued do not live as long as expected. This means the cost of insurance charges specified in the policies may not be enough to pay out actual claims. Expense risk is the chance that our actual administrative and operating expenses are more than expenses we expected. The mortality and expense risk charge helps compensate us for these risks. It has two components, which are described in the box on the following page. We guarantee this charge will not increase. Charges for optional riders If you add any riders to your policy, we add any charges for them to your monthly charge. 26 --------------------------------------------------------- An example How we calculate the mortality and expense risk charge For a policy with: The mortality and expense risk charge has two . a joint equal age components: a face amount component and an accumulated of 50 value component. . a face amount of $100,000 . Face amount component We deduct a face amount . accumulated value component every month during the first 10 policy of $60,000 after years, at a rate that is based on the joint equal age deducting any on the policy date and each $1,000 of the initial outstanding loan face amount of your policy. The rates for the face amount. amount component are shown in Appendix B. Joint equal age is a calculation that combines the ages and The maximum monthly insurance risks of the two people insured by the charge for the face policy, and is explained in Appendix A. amount component is $15.50 . Accumulated value component We deduct an accumulated (($100,000 / 1,000) value component every month during the first 20 X 0.155). policy years at an annual rate of 0.90% (0.075% monthly) of your policy's accumulated value in the The monthly charge investment options. During policy years 11 through for the accumulated 20, we reduce the annual rate to 0.30% (0.025% value component is monthly) of the accumulated value. During policy year $45 ($60,000 X 21 and thereafter, we further reduce the annual rate 0.075%). The charge to 0.05% (0.0042% monthly) of the accumulated value. in policy years 11 For the purposes of this charge, the amount of through 20 would be accumulated value is calculated on the monthly $15 ($60,000 payment date after we deduct the cost of insurance X 0.025%) if the and charges for any optional riders. policy's accumulated value was $60,000. The charge in policy year 21 (and thereafter) would be $2.52 ($60,000 X .0042%) if the policy's accumulated value was $60,000. --------------------------------------------------------- Lapsing and Your policy will lapse if there is not enough reinstatement accumulated value, after subtracting any outstanding loan amount, to cover the monthly charge on the day we make the deduction. Your policy's accumulated value is affected by the following: . loans or withdrawals you make from your policy . not making planned premium payments . the performance of your investment options . charges under the policy. There is no guarantee that your policy will not lapse even if you pay your planned periodic premium. If there is not enough accumulated value to pay the total monthly charge, we deduct the amount that's available and send you, and anyone you've assigned your policy to, a notice telling you the minimum amount you have to pay to keep your policy in force. This minimum amount is equal to three times the monthly charge that was due on the monthly payment date when there was not enough accumulated value to pay the charge. We'll give you a grace period of 61 days from when we send the notice to pay the required premium. Your policy will remain in force during the grace period. If you do not make the minimum payment If we do not receive your payment within the grace period, your policy will lapse with no value. This means we'll end your life insurance coverage. 27 YOUR POLICY'S ACCUMULATED VALUE If you make the minimum payment If we receive your payment within the grace period, we'll allocate your net premium to the investment options you've chosen and deduct the monthly charge from your investment options in proportion to the accumulated value you have in each option. Remember to tell us If your policy is in danger of lapsing and you have an if a payment is a outstanding loan amount, you may find that making the premium payment. minimum payment would cause the total premiums paid to Otherwise, we'll exceed the maximum amount for your policy's face amount treat it as a loan under tax laws. In that situation, we will not accept repayment. the portion of your payment that would exceed the maximum amount. To stop your policy from lapsing, you'll have to repay a portion of your outstanding loan amount. How to avoid future lapsing To stop your policy from lapsing in the future, you may want to make larger or more frequent premium payments if tax laws permit it. Or if you have a loan, you may want to repay a portion if it. Paying death benefit proceeds during the grace period If the last surviving person insured by the policy dies during the grace period, we'll pay death benefit proceeds to your beneficiary. We'll reduce the payment by any unpaid monthly charges and any outstanding loan amount. Reinstating a lapsed policy If your policy lapses, you have five years from the end of the grace period to apply for a reinstatement. We'll reinstate it if you send us the following: . a written application . evidence satisfactory to us that the two people insured by the policy are still insurable . a premium payment sufficient to keep your policy in force for three months after the day your policy is reinstated . payment of all unpaid monthly charges that were due in the grace period. We'll reinstate your policy as of the first monthly payment date on or after the day we approve the reinstatement. When we reinstate your policy, its accumulated value will be the same as it was on the day your policy lapsed. We'll allocate it according to your most recent premium allocation instructions. Reinstating a lapsed policy with an outstanding loan amount If you had an outstanding loan amount when your policy lapsed, we will not pay or credit interest on it during the period between the lapsing and reinstatement of your policy. There are special rules that apply to reinstating a policy with an outstanding loan amount: . If we reinstate your policy on the first monthly payment date that immediately follows the lapse, we'll also reinstate the loan amount that was outstanding the day your policy lapsed. . If we reinstate your policy on any monthly payment date other than the monthly payment date that immediately follows the lapse, we'll deduct the outstanding loan amount from your policy's accumulated value. This means you will no longer have an outstanding loan amount when your policy is reinstated. 28 YOUR INVESTMENT OPTIONS This section tells you about the investment options available under your policy and how they work. You can change your We put your premium payments in our general and premium allocation separate accounts. We own the assets in our accounts instructions by and allocate your premiums, less any charges, to the writing or sending investment options you've chosen. Amounts allocated to a fax. If we have the fixed options are held in our general account. your completed Amounts allocated to the variable investment options telephone and are held in our separate account. electronic authorization form You choose your initial investment options on your on file you can application. If you choose more than one investment call us at 1-888- option, you must tell us the dollar amount or 595-6997 or submit percentage you want to allocate to each option. You can a request change your premium allocation instructions at any electronically time. through your appointed agent. Or The investment options you choose, and how they you can ask your perform, will affect your policy's accumulated value registered and may affect the death benefit. Please review the representative to investment options carefully and ask your registered contact us. representative to help you choose the right ones for your goals and tolerance for risk. Make sure you You'll find understand any costs you may pay directly and information about indirectly on your investment options because they will when we allocate affect the value of your policy. net premiums to your investment options in How premiums work. Your policy's accumulated value may be allocated to up to 20 investment options at any one time. --------------------------------------------------------- Variable investment You can choose from 31 variable investment options. options Each variable investment option is set up as a variable account under our separate account and invests in a Variable investment corresponding portfolio of the Pacific Select Fund. options are also Each portfolio invests in different securities and has known as variable its own investment goals, strategies and risks. The accounts. These value of each portfolio will fluctuate with the value variable accounts of the investments it holds, and returns are not are divisions of guaranteed. Your policy's accumulated value will our separate fluctuate depending on the investment options you've account. We bear chosen. You bear the investment risk of any variable the direct investment options you choose. operating expenses of our separate The following chart is a summary of the Pacific Select account. For more Fund portfolios. You'll find detailed descriptions of information about the portfolios in the Pacific Select Fund prospectus how these accounts that accompanies this prospectus. There's no guarantee work, see that a portfolio will achieve its investment objective. About PL&A. You should read the fund prospectus carefully before investing. Pacific Life is the investment adviser for the Pacific Select Fund. They oversee the management of all the fund's portfolios, and manage two of the portfolios directly. They've retained other portfolio managers to manage the other portfolios. 29 YOUR INVESTMENT OPTIONS
PORTFOLIO INVESTMENT GOAL THE PORTFOLIO'S PORTFOLIO MAIN INVESTMENTS MANAGER Blue Chip Long-term growth of Equity securities of "blue chip" A I M Capital capital. Current income companies--typically large companies Management, Inc. is of secondary that are well established in their importance. respective industries. Aggressive Growth Long-term growth of Equity securities of small- and A I M Capital capital. medium-sized growth companies. Management, Inc. Aggressive Equity Capital appreciation. Equity securities of small emerging- Alliance Capital growth companies and medium-sized Management L.P. companies. Emerging Markets Long-term growth of Equity securities of companies that Alliance Capital capital. are located in countries generally Management L.P. regarded as "emerging market" countries. Diversified Research Long-term growth of Equity securities of U.S. companies Capital Guardian capital. and securities whose principal markets Trust Company are in the U.S. Small-Cap Equity Long-term growth of Equity securities of smaller and Capital Guardian capital. medium-sized companies. Trust Company International Large-Cap Long-term growth of Equity securities of non-U.S. Capital Guardian capital. companies and securities whose Trust Company principal markets are outside of the U.S. Equity Capital appreciation. Equity securities of large U.S. Goldman Sachs Current income is of growth-oriented companies. Asset Management secondary importance. I-Net Tollkeeper Long-term growth of Equity securities of companies which Goldman Sachs capital. use, support, or relate directly or Asset Management indirectly to use of the Internet. Such companies include those in the media, telecommunications, and technology sectors. Financial Services Long-term growth of Equity securities in the financial INVESCO capital. services sector. Such companies Funds Group, Inc. include banks, insurance companies, brokerage firms and other finance- related firms. Health Sciences Long-term growth of Equity securities in the health INVESCO capital. sciences sector. Such companies Funds Group, Inc. include medical equipment or supplies, pharmaceuticals, health care facilities and other health sciences- related firms. Technology Long-term growth of Equity securities in the technology INVESCO capital. sector. Such companies include Funds Group, Inc. biotechnology, communications, computers, electronics, Internet telecommunications, networking, robotics, video and other technology- related firms. Telecommunications Long-term growth of Equity securities in the INVESCO capital. Current income telecommunications sector. Such as Funds Group, Inc. is of secondary companies that offer telephone importance. service, wireless communications, satellite communications, television and movie programming, broadcasting and Internet access. Multi-Strategy High total return. A mix of equity and fixed income J.P. Morgan securities. Investment Management Inc. Equity Income Long-term growth of Equity securities of large and medium- J.P. Morgan capital and income. sized dividend-paying U.S. companies. Investment Management Inc. Strategic Value Long-term growth of Equity securities with the potential Janus Capital capital. for long-term growth of capital. Corporation
30
PORTFOLIO INVESTMENT GOAL THE PORTFOLIO'S PORTFOLIO MAIN INVESTMENTS MANAGER Growth LT Long-term growth of Equity securities of a large number of Janus Capital capital consistent with companies of any size. Corporation the preservation of capital. Focused 30 Long-term growth of Equity securities selected for their Janus Capital capital. growth potential. Corporation Mid-Cap Value Capital appreciation. Equity securities of medium-sized U.S. Lazard Asset companies believed to be undervalued. Management International Value Long-term capital Equity securities of companies of any Lazard Asset appreciation primarily size located in developed countries Management through investment in outside of the U.S. equity securities of corporations domiciled in countries other than the U.S. Capital Opportunities Long-term growth of Equity securities with the potential MFS Investment capital. for long-term growth of capital. Management Mid-Cap Growth Long-term growth of Equity securities of medium-sized MFS Investment capital. companies believed to have above- Management average growth potential. Global Growth Long-term growth of Equity securities of any size located MFS Investment capital. within and outside of the U.S. Management Equity Index Investment results that Equity securities of companies that Mercury Advisors correspond to the total are included in the Standard & Poor's return of common stocks 500 Composite Stock Price Index. publicly traded in the U.S. Small-Cap Index Investment results that Equity securities of companies that Mercury Advisors correspond to the total are included in the Russell 2000 Small return of an index of Stock Index. small capitalization companies. REIT Current income and long- Equity securities of U.S. and non-U.S. Morgan Stanley term capital companies principally engaged in the Asset Management appreciation. U.S. real estate industry. Inflation Managed Maximize total return Inflation-indexed bonds of varying Pacific (formerly called consistent with prudent maturities issued by the U.S. and non Investment Government Securities) investment management. U.S. governments, their agencies and Management government sponsored enterprises, and Company corporations, forward contracts and derivative instruments relating to such securities. Managed Bond Maximize total return Medium and high-quality fixed income Pacific consistent with prudent securities with varying terms to Investment investment management. maturity. Management Company Money Market Current income consistent Highest quality money market Pacific Life with preservation of instruments believed to have limited capital. credit risk. High Yield Bond High level of current Fixed income securities with lower and Pacific Life income. medium-quality credit ratings and intermediate to long terms to maturity. Large-Cap Value Long-term growth of Equity securities of large U.S. Salomon Brothers capital. Current income companies. Asset Management is of secondary Inc importance.
31 YOUR INVESTMENT OPTIONS An example Calculating unit values When you choose a variable investment option, we credit You ask us to your policy with accumulation units. The number of allocate $6,000 to units we credit equals the amount we've allocated the Inflation divided by the unit value of the variable account. Managed investment Similarly, the number of accumulation units in your option on a policy will be reduced when you make a transfer, business day. At withdrawal or loan from a variable investment option, the end of that and when your monthly charges are deducted. day, the unit value of the variable The value of an accumulation unit is the basis for all account is $15. financial transactions relating to the variable We'll credit your investment options. We calculate the unit value for policy with 400 each variable account once every business day, usually units ($6,000 at or about 4:00 p.m. Eastern time. divided by $15). Generally, for any transaction, we'll use the next unit The value of an value calculated after we receive your written request. accumulation unit If we receive your written request before 4:00 p.m. is not the same as Eastern time, we'll use the unit value calculated as of the value of a the end of that business day. If we receive your share in the request on or after 4:00 p.m. Eastern time, we'll use underlying the unit value calculated as of the end of the next portfolio. business day. For information If a scheduled transaction falls on a day that is not a about timing of business day, we'll process it as of the end of the transactions, see next business day. For your monthly charge, we'll use Pacific Select the unit value calculated on your monthly payment date. Estate If your monthly payment date does not fall on a Preserver - NY business day, we'll use the unit value calculated as of basics. the end of the next business day. The unit value calculation is based on the following: . the investment performance of the underlying portfolio . any dividends or distributions paid by the underlying portfolio . any charges for any taxes that are, or may become, associated with the operation of the variable account. The unit value of a variable account will change with the value of its corresponding Pacific Select Fund portfolio. Changes in the unit value of a variable account will not change the number of accumulation units credited to your policy. A look at performance Performance information may appear in advertisements, sales literature, or reports to policy owners or prospective buyers. Information about the performance of any variable account of the separate account reflects only the performance of a hypothetical policy. The calculations are based on allocating the hypothetical policy's accumulated value to the variable account during a particular time period. Performance information is no guarantee of how a variable account will perform in the future. You should keep in mind the investment objectives and policies, characteristics and quality of the portfolio of the fund in which the variable account invests, and the market conditions during the period of time that's shown. We may show performance information in any way that's allowed under the law that applies to it. This may include presenting a change in accumulated value due to the performance of one or more variable accounts, or as a change in a policy owner's death benefit. 32 We may show performance as a change in accumulated value over time or in terms of the average annual compounded rate of return on accumulated value. This would be based on allocating premium payments for a hypothetical policy to a particular variable account over certain periods of time, including one year, or from the day the variable account started operating. If a portfolio has existed for longer than its corresponding variable account, we may also show the hypothetical returns that the variable account would have achieved had it invested in the portfolio from the day the portfolio started operating. Performance may reflect the deduction of all policy charges including premium load, the cost of insurance, the administrative charge, and the mortality and expense risk charge. The different death benefit options will result in different expenses for the cost of insurance, and the varying expenses will result in different accumulated values. Performance may also reflect the deduction of the surrender charge, if it applies, by assuming the hypothetical policy is surrendered at the end of the particular period. At the same time, we may give other performance figures that do not assume the policy is surrendered and do not reflect any deduction of the surrender charge. In our advertisements, sales literature and reports to policy owners, we may compare performance information for a variable account to: . other variable life separate accounts, mutual funds, or investment products tracked by research firms, ratings services, companies, publications, or persons who rank separate accounts or investment products on overall performance or other criteria . the Consumer Price Index, to assess the real rate of return from buying a policy by taking inflation into consideration. Reports and promotional literature may also contain our rating or a rating of our claims-paying ability. These ratings are set by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations. You'll find more Fees and expenses paid by the Pacific Select Fund about Pacific The Pacific Select Fund pays advisory fees and other Select Fund fees expenses. These are deducted from the assets of the and expenses in An fund's portfolios and may vary from year to year. They overview of Pacific are not fixed and are not part of the terms of your Select Estate policy. If you choose a variable investment option, Preserver - NY. these fees and expenses affect you indirectly because they reduce portfolio returns. The fund is governed by its own Board of Trustees. 33 YOUR INVESTMENT OPTIONS --------------------------------------------------------- Fixed options You can also choose from two fixed options: the Fixed account and the Fixed LT account. The fixed options The fixed options provide a guaranteed minimum annual rate of interest. are not securities, The amounts allocated to the fixed options are held in so they do not fall our general account. We have contracted with Pacific under any Life to manage our general account assets, subject to securities act. For investment policies, objectives, directions and this reason, the guidelines established by our Board. SEC has not reviewed the Here are some things you need to know about the fixed disclosure in this options: prospectus about these options. . Accumulated value allocated to the fixed options earn However, other interest on a daily basis, using a 365-day year. Our federal securities minimum annual interest rate is 3% during the first laws may apply to 10 policy years, 3.6% during policy years 11 through the accuracy and 20, and 3.85% during policy year 21 and thereafter. completeness of the . We may offer a higher annual interest rate on the disclosure about fixed options. If we do, we'll guarantee the higher these options. rate for one year. . There are no investment risks or direct charges. For more . There are limitations on when and how much you can information about transfer from the fixed options. These limitations the general are described below in Transferring among investment account, see About options. PL&A. . We may limit the total amount you allocate to the Fixed LT account for all Pacific Life policies you own to $1,000,000 in any 12-month period, and transfer any amount over $1,000,000 to your other investment options according to your most recent instructions. We may increase the $1,000,000 limit at any time at our sole discretion. You should contact us to find out if a higher limit is in effect. --------------------------------------------------------- Transferring among You can transfer among your investment options any time investment options during the life of your policy without triggering any current income tax. You can make transfers by writing You can make to us, by making a telephone or electronic transfer, or transfers and use by signing up for one of our automatic transfer transfer programs programs. You'll find more information about making only after the free telephone and electronic transfers in Pacific Select look transfer date. Estate Preserver - NY basics. For more information, please Transfers will normally be effective as of the end of see Pacific Select the business day we receive your written, telephone or Estate electronic request. Preserver - NY basics. Here are some things you need to know about making transfers: You'll find more about the first . Your policy's accumulated value may be invested in up year transfer to 20 investment options at one time. program later in . If you're making transfers between variable this section. investment options, there is no minimum amount required and you can make as many transfers as you like. . You can make transfers from the variable investment options to the Fixed account at any time. . You can make transfers from the variable investment options to the Fixed LT account only in the policy month right before each policy anniversary. . If you have transferred accumulated value out of the fixed options, you must wait 90 days before making a transfer to the Fixed account. However, you can make transfers to the Fixed account anytime during the first 18 months of your policy. . You can only make one transfer from each fixed option in any 12-month period, except if you've signed up for the first year transfer program. . You can only transfer up to the greater of $5,000 or 25% of your policy's accumulated value in the Fixed account in any 12-month period, except for scheduled transfers under the first year program. . You can only transfer up to the greater of $5,000 or 10% of your policy's accumulated value in the Fixed LT account in any 12-month period. . Currently, there is no charge for making a transfer but we may charge you in the future. You will always be permitted at least 12 free transfers per year. 34 . There is no minimum required value for the investment option you're transferring to or from. . You cannot make a transfer if your policy is in the grace period and is in danger of lapsing. . We can restrict or suspend transfers. . We may choose to impose limits on transfer amounts, the value of the investment options you're transferring to or from, or the number and frequency of transfers you can make. --------------------------------------------------------- Transfer programs We offer three programs that allow you to make automatic transfers of accumulated value from one investment option to another. Under the dollar cost averaging and portfolio rebalancing programs, you can transfer among the variable investment options. Under the first year transfer program, you can make transfers from the Fixed account to the Fixed LT account and the variable investment options. Since the value of Dollar cost averaging program accumulation units Our dollar cost averaging program allows you to make can change, more scheduled transfers of $50 or more between variable units are credited investment options. It does not allow you to make for a scheduled transfers to or from either of the fixed options. transfer when unit Here's how the program works: values are lower, and fewer units . You can set up this program at any time while your when unit values policy is in force. are higher. This . You need to complete a request form to enroll in the allows you to program. You may enroll by telephone or average the cost of electronically if you have a completed telephone and investments over electronic authorization form on file. time. Investing . You must have at least $5,000 in a variable this way does not investment option to start the program. guarantee profits . We'll automatically transfer accumulated value from or prevent losses. one variable investment option to one or more of the other variable investment options you've selected. . We'll process transfers as of the end of the business day on your policy's monthly, quarterly, semi-annual or annual anniversary, depending on the interval you've chosen. We will not make the first transfer until after the free look transfer date. . We will not charge you for the dollar cost averaging program or for transfers made under this program, even if we decide to charge you in the future for transfers outside of the program, except if we have to by law. . We have the right to discontinue, modify or suspend the program at any time. We'll keep making transfers at the intervals you've chosen until one of the following happens: . the total amount you've asked us to transfer has been transferred . there is no more accumulated value in the investment option you're transferring from . your policy enters the grace period and is in danger of lapsing . you tell us in writing to cancel the program . we discontinue the program. Because the Portfolio rebalancing program portfolio As the value of the underlying portfolios changes, the rebalancing program value of the allocations to the variable investment matches your options will also change. The portfolio rebalancing original percentage program automatically transfers your policy's allocations, we may accumulated value among the variable investment options transfer money from according to your original percentage allocations. an investment option with Here's how the program works: relatively higher returns to one with . You can set up this program at any time while your relatively lower policy is in force. returns. . You enroll in the program by sending us a written signed request or a completed automatic rebalancing form. You may enroll by telephone or electronically if you have a completed telephone and electronic authorization form on file. 35 YOUR INVESTMENT OPTIONS . Your first rebalancing will take place on the monthly payment date you choose. You choose whether we should make transfers quarterly, semi-annually or annually, based on your policy date. . If you cancel this program, you must wait 30 days to begin it again. . You cannot use this program if you're already using the dollar cost averaging program. . We do not currently charge for the portfolio rebalancing program or for transfers made under this program. . We can discontinue, modify or suspend the program at any time. This program allows First year transfer program you to average the Our first year transfer program allows you to make cost of investments monthly transfers during the first policy year from the over your first Fixed account to the variable investment options or the policy year. Fixed LT account. It does not allow you to transfer Investing this way among variable investment options. does not guarantee profits or prevent Here's how the program works: losses. . You enroll in the program when you apply for your policy. . You choose a regular amount to be transferred every month for 12 months. . We make the first transfer on the day we allocate your first net premium to the investment options you've chosen. Each transfer will be made on the same day every month. . If you sign up for this program, we'll waive the usual transfer limit for the Fixed account during the first policy year. . If we make the last transfer during the second policy year, we will not count it toward the usual one transfer per year limit for the Fixed account. . If the accumulated value in the Fixed account is less than the amount to be transferred, we'll transfer the balance and then cancel the program. . If there is accumulated value remaining in the Fixed account at the end of the program, our usual rules for the Fixed account will apply. . We do not currently charge for the first year transfer program or for transfers made under this program. 36 WITHDRAWALS, SURRENDERS AND LOANS Making a You can take out all or part of your policy's withdrawal, taking accumulated value while your policy is in force by out a loan or making withdrawals or surrendering your policy. You can surrendering your take out a loan from us using your policy as security. policy can change You can also use your policy's loan and withdrawal your policy's tax features to supplement your income, for example, during status, generate retirement. taxable income, or make your policy more susceptible to lapsing. Be sure to plan carefully before using these policy benefits. If you withdraw a larger amount than you've paid into your policy, your withdrawal may be considered taxable income. For more information, see Variable life insurance and your taxes. --------------------------------------------------------- Making withdrawals You can withdraw part of your policy's net cash surrender value starting on your policy's first You can choose to anniversary. Here's how it works: receive your withdrawal in a . You must send us a written request that's signed by lump sum or use it all owners. to buy an income . Each withdrawal must be at least $500, and the net benefit. Please see cash surrender value of your policy after the the discussion withdrawal must be at least $500. about income . If your policy has an outstanding loan amount, the benefits in General maximum withdrawal you can take is the amount, if information about any, by which the cash surrender value just before your policy. the withdrawal, exceeds the outstanding loan amount divided by 90%. We will not accept . We'll charge you $25 for each withdrawal you make. your request to . If you do not tell us which investment options to make a withdrawal take the withdrawal from, we'll deduct the withdrawal if it will cause and the withdrawal charge from all of your investment your policy to options in proportion to the accumulated value you become a modified have in each option. endowment contract, . The accumulated value, cash surrender value and net unless you've told cash surrender value of your policy will be reduced us in writing that by the amount of each withdrawal. you want your . If the last surviving person insured under the policy policy to become a dies after you've sent a withdrawal request to us, modified endowment but before we've made the withdrawal, we'll deduct contract. the amount of the withdrawal from any death benefit proceeds owing. How withdrawals affect your policy's death benefit Making a withdrawal will affect your policy's death benefit in the following ways: . if your policy's death benefit does not equal the guideline minimum death benefit, the death benefit will decrease by the amount of your withdrawal. . if your policy's death benefit equals the guideline minimum death benefit, the death benefit may decrease by more than the amount of your withdrawal. How withdrawals affect your policy's face amount If you've chosen death benefit Option B or Option C, making a withdrawal does not reduce your policy's face amount. If you've chosen death benefit Option A or Option D, a withdrawal may reduce your face amount. The face amount will be reduced by the amount if any, by which the face amount exceeds the death benefit immediately before the withdrawal, minus the amount of the withdrawal. 37 WITHDRAWALS, SURRENDERS AND LOANS --------------------------------------------------------- Taking out a loan You can borrow money from us any time while your policy is in force either by sending us a request in writing, The amount in the over the telephone or electronically. You'll find more loan account, plus information about requesting a loan by telephone or any interest you electronically in Pacific Select Estate Preserver - NY owe, is referred to basics. throughout this prospectus as your When you borrow money from us, we use your policy's outstanding loan accumulated value as security. You pay interest on the amount. Your policy amount you borrow. The accumulated value set aside to refers to this secure your loan also earns interest. Here's how it amount as policy works: debt. . To secure the loan, we transfer an amount equal to Taking out a loan the amount you're borrowing from your accumulated will affect the value in the investment options to the loan account. growth of your We'll transfer this amount from your investment policy's options in proportion to the accumulated value you accumulated value, have in each option, unless you tell us otherwise. and may affect the . Interest owing on the amount you've borrowed accrues death benefit. daily at an annual rate of 4.1%. . Interest that has accrued during the policy year is due on your policy anniversary. If you do not pay the interest when it's due, we'll add it to the amount of your loan and begin accruing interest on it from the day it was due. We'll also transfer an amount equal to the interest that was due, from your policy's accumulated value to the loan account. We'll transfer this amount from your investment options in proportion to the accumulated value you have in each option, unless you tell us otherwise. . The amount in the loan account earns interest daily at an annual rate of 3.0% during the first 10 policy years, 3.6% during policy years 11 through 20, and 3.85% during policy year 21 and thereafter. On your policy anniversary, we transfer the interest that's been credited to the loan account proportionately to your investment options according to your most recent allocation instructions. How much you can borrow The minimum amount you can borrow is $200. You can borrow up to the larger of the following amounts: An example . 100% of the accumulated value in the fixed options, For a policy in plus 90% of the accumulated value in the variable policy year 13 investment options, less any surrender charges that with: would apply if you surrendered your policy on the day . accumulated value you took out the loan. of $100,000 . a most recent . the result of a x (b / c) - d, where: monthly charge of $100 a = the accumulated value of your policy less any . an outstanding surrender charges that would have applied if you loan amount of surrendered your policy on the day you took out $50,000 the loan, and less 12 times the most recent monthly charge The maximum amount b = 1.03 during the first 10 policy years, 1.036 you can borrow is during policy years 11 through 20, and 1.0385 $48,325.46 during policy year 21 and thereafter. (($100,000 - c = 1.041 $1,200) X (1.036 / d = any outstanding loan amount. 1.041)- $50,000) Paying off your loan You can pay off all or part of the loan any time while your policy is in force. Unless you tell us otherwise, we'll transfer any loan payments you make proportionately to your investment options according to your most recent allocation instructions. While you have an outstanding loan, we'll treat any money you send us as a premium payment unless you tell us in writing that it's a loan repayment. 38 What happens if you do not pay off your loan If you do not pay off your loan, we'll deduct the Your outstanding amount in the loan account, including any interest you loan amount could owe, from one of the following: result in taxable income if you . the death benefit proceeds before we pay them to your surrender your beneficiary policy, if your . the cash surrender value if you surrender your policy policy lapses, or . the amount we refund if you exercise your right to if your policy is a cancel. modified endowment contract. You Taking out a loan, whether or not you repay it, will should talk to your have a permanent effect on the value of your policy. tax advisor before For example, while your policy's accumulated value is taking out a loan held in the loan account, it will miss out on the under your policy. potential earnings available through the variable For more investment options. The amount of interest you earn on information, please the loan account may be less than the amount of turn to Taking out interest you would have earned from the fixed options. a loan in Variable These could lower your policy's accumulated value, life insurance and which could reduce the amount of the death benefit. your taxes. When a loan is outstanding, the amount in the loan account is not available to help pay for any policy charges. If, after deducting your outstanding loan amount, there is not enough accumulated value in your policy to cover the policy charges, your policy could lapse. You may need to make additional premium payments or loan repayments to prevent your policy from lapsing. --------------------------------------------------------- Ways to use your You can use your policy's loan and withdrawal features policy's loan and to supplement your income, for example, during withdrawal features retirement. If you're Using your policy to supplement your income does not interested in using change your rights or our obligations under the policy. your life insurance The terms for loans and withdrawals described in this policy to prospectus remain the same. supplement your retirement income, Here are some things you should consider when setting please contact us up an income stream: for more information. . the rate of return you expect to earn on your investment options We can provide you . how long you would like to receive regular income with illustrations . the amount of accumulated value you want to maintain that give you in your policy. examples of how this could affect Understanding the risks the accumulated Setting up an income stream may not be suitable for all value, net cash policy owners. It's important to understand the risks surrender value and that are involved in using your policy's loan and death benefit of withdrawal features. your policy based on different You must always leave enough accumulated value in your hypothetical gross policy to help ensure your policy will continue to rates of return. We qualify as life insurance and will not lapse. Your will not use a policy will lapse if there is not enough accumulated higher rate than value, after subtracting any outstanding loan amount, 12%, and will to cover the monthly charge on the day we make the always compare it deduction and the grace period expires. If your policy with a rate of 0% lapses, we'll end your life insurance coverage. based on guaranteed insurance costs. There are also charges associated with reinstating a lapsed policy. The hypothetical rates of return are You should consult with your financial adviser and not illustrative of carefully consider how much you can withdraw and borrow past or future from your policy each year to set up your income results. Policy stream. values and benefits would be different Remember that the performance of your investment if: options also affects your policy's accumulated value. Poor performance can increase the danger of your policy . the gross annual lapsing. And as the cost of insurance generally rates of return increases with the ages of the persons insured by the are different policy, this can also reduce the accumulated value. from the hypothetical rates . premiums were not paid as illustrated . loan interest was paid when due. 39 WITHDRAWALS, SURRENDERS AND LOANS You can also ask In addition, you should carefully review the policy for accompanying statements we send you. Your statements will allow you charts and graphs to monitor your policy's accumulated value, less your that compare outstanding loan amount, to ensure your policy can results from continue to support the income stream you have chosen. various retirement strategies. If your policy lapses, or you surrender your policy after you have taken out a loan, you could face You can ask your significant income tax liability in the year of the registered lapse or surrender. Any outstanding loan amount will representative for automatically be repaid when your policy lapses or you illustrations surrender your policy. You could be taxed to the extent showing how policy that the net surrender value plus the outstanding loan charges may affect amount repaid exceeds the cost basis of your policy. existing accumulated value Interest on a loan is due to us on each policy and how future anniversary. If we do not receive the interest when withdrawals and due, we'll add it to the outstanding loan amount and loans may affect begin accruing interest from the day it was due. This the accumulated has a compounding effect and can add to your income tax value and death liability. benefit. If both persons insured by the policy die, we'll deduct Tax issues are any outstanding loan amount from the death benefit. described in detail This means the death benefit proceeds will be less than in Variable the death benefit and may be less than the face amount. insurance and your taxes. --------------------------------------------------------- Surrendering your You can surrender or cash in your policy at any time policy while either of the two people insured by the policy is still living. Your policy's cash surrender value is its You can choose to accumulated value less any surrender charge that receive your money applies. The net cash surrender value equals your in a lump sum or policy's cash surrender value after deducting any use it to buy an outstanding loan amount. income benefit. Please see the Here are some things you need to know about discussion about surrendering your policy: income benefits in General information . You must send us your policy and a written request. about your policy. . We'll send you the policy's net cash surrender value. If you surrender your policy during the first 10 policy years, we'll deduct a surrender charge that helps cover our costs for underwriting, issuing and distributing our policies. The box on the next page describes how we calculate the surrender charge. There's no surrender charge after 10 policy years. . We guarantee the surrender charge rates will not increase. We can reduce or waive the surrender charge on policies sold to our directors or employees, to any of our affiliates or to any trustees or employees or affiliates of the Pacific Select Fund. 40 --------------------------------------------------------- Joint equal age is How we calculate the surrender charge a calculation that combines the ages The surrender charge is assessed against your policy's and insurance risks accumulated value. It has two parts: an underwriting of the two people surrender charge and a sales surrender charge. Both insured by the charges are based on the joint equal age on the policy policy, and is date of the two people insured by the policy, and on explained in the initial face amount of your policy. Appendix A. The underwriting surrender charge is designed to help The underwriting cover our administrative expenses for underwriting and surrender charge issuing a policy, including the costs of processing and sales surrender applications, conducting medical examinations, target rate appear determining the insurability and underwriting classes in Appendix B. of the people insured, and establishing policy records. The amount of the charge does not change during the first policy year. Starting on the first policy anniversary, the charge decreases by 0.9259% each month until it reaches zero at the end of the 10th policy An example year. For a policy with: The sales surrender charge helps pay for our costs of . a joint equal age distributing policies. During the first policy year, of 50 this charge is equal to the smaller of the following . an initial face amounts: amount of $100,000. . 70% of the premium payments you've made, or . 70% of the sales surrender target, which is based on Here's the the joint equal age of the people insured by the surrender charge at policy for each $1,000 of the policy's initial face the end of the amount. first policy year: . Underwriting The sales surrender charge increases until the premiums surrender charge: you pay reach the sales surrender target. In the 13th $520 (5.20 X month you own your policy, we reduce the sales $100,000 / 1,000) surrender charge so that it is 99.0741% of the charge . Maximum sales as calculated above. After that, we reduce it by surrender charge: 0.9259% a month until it reaches zero at the end of 10 $865.20 (70% X policy years. 12.36 X $100,000 / 1,000). We will not increase the charge if your policy's face amount increases. If you decrease the face amount of your policy, we'll charge you a surrender charge that's At the end of the calculated based on the amount of the decrease. third policy year, the surrender charge is reduced --------------------------------------------------------- to: Calculating the surrender charge on a decrease in face amount . Underwriting surrender charge: Here's how we calculate the surrender charge on a $404.45 ($520 - decrease in face amount: ($520 X 0.9259% X 24 months)) . Step 1: we divide the amount of the decrease by your policy's face amount immediately before the decrease . Step 2: we multiply the amount we calculated in step . Maximum sales 1 by the total surrender charge that would apply if surrender charge: you surrendered your policy. $672.94 ($865.20 - ($865.20 X We deduct the amount we calculated in step 2 from your 0.9259% X 24 investment options in proportion to the accumulated months)). value you have in each option. We calculate any surrender charge after a decrease in face amount by dividing the new face amount by the old face amount, and multiplying the result by the surrender charge that would have applied before the decrease. 41 GENERAL INFORMATION ABOUT YOUR POLICY This section tells you some additional things you should know about your policy. --------------------------------------------------------- Income benefit If you surrender or make a withdrawal from your policy, you can use the money to buy an income benefit that provides a monthly income. Your policy's beneficiary can use death benefit proceeds to buy an income benefit. In addition to the income benefit described below, you can choose from other income benefits we may make available from time to time. The following is one income benefit available under the Pacific Select Estate Preserver - NY policy: . The income benefit is based on the life of the person receiving the income. If the policy owner is buying the income benefit, monthly income will be based on the owner's life. If the policy's beneficiary buys the income benefit, monthly income will be based on the beneficiary's life. . We'll pay a monthly income for at least 10 years regardless of whether the person receiving the income is still alive. . After 10 years, we'll only pay the monthly income for as long as the person receiving it is still alive. . The minimum monthly income benefit calculated must be at least $100. . For this income benefit, the amount you receive will always be at least as much as the amount guaranteed by your policy. --------------------------------------------------------- Reduced Paid-Up You may use the net cash surrender value of your policy Benefit to purchase guaranteed fixed paid-up insurance on the lives of the people insured by the policy, or the life of the person insured by the policy, if only one person is living at the time of conversion. You may choose to do this on any policy anniversary while the policy is in force. If you convert your policy, your policy and any riders attached to it will terminate and the net cash surrender value will be transferred to our general account. The net cash surrender value will be applied as a net single premium to purchase paid-up insurance. The amount of such insurance will be calculated based on 1980 CSO mortality, 3% interest and on the ages and risk classifications of the people insured by the policy or, if only one person is living at the time of conversion, the age and risk classification of the surviving person. --------------------------------------------------------- Paying the death If either person insured by the policy commits suicide benefit in the case within two years of the policy date, death benefit of suicide proceeds will be the total of all premiums you've paid, less any outstanding loan amount and any withdrawals you've made. --------------------------------------------------------- Replacement of life The term replacement has a special meaning in the life insurance or insurance industry. Before you make a decision to buy, annuities we want you to understand what impact a replacement may have on your existing insurance policy. A replacement occurs when you buy a new life insurance policy or annuity contract, and a policy or contract you already own has been or will be: . lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated . converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values 42 . amended to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid . reissued with any reduction in cash value, or . pledged as collateral or subject to borrowing, whether in a single loan or under a schedule of borrowing over a period of time. There are circumstances when replacing your existing life insurance policy or annuity contract can benefit you. As a general rule, however, replacement is not in your best interest. You should carefully compare the costs and benefits of your existing policy or contract with those of the new policy or contract to determine whether replacement is in your best interest. --------------------------------------------------------- Errors on your If the age of either person insured by your policy is application stated incorrectly on your application, the death benefit under your policy will be the greater of the following: . the amount of death benefit that would be purchased by the most recent cost of insurance charge for the correct age or . the guideline minimum death benefit for the correct age. We'll adjust the accumulated value by recalculating all previous cost of insurance charges and other monthly deductions based on the correct age. --------------------------------------------------------- Contesting the We have the right to contest the validity of your validity of your policy for two years from the policy date. Once your policy policy has been in force for two years from the policy date during the lifetime of the people insured by the policy, we generally lose the right to contest its validity. We also have the right to contest the validity of a policy that you reinstate for two years from the day that it was reinstated. Once your reinstated policy has been in force for two years from the reinstatement date during the lifetime of the people insured by the policy, we generally lose the right to contest its validity. During this period, we may contest your policy only if there is a material misrepresentation on your application for reinstatement. We have the right to contest the validity of an increase in the face amount of a policy for two years from the day the increase becomes effective. Once the increased face amount has been in force for two years during the lifetime of the person insured by the policy, we generally lose the right to contest its validity. Regardless of the above, we can contest the validity of your policy for failure to pay premiums at any time. The policy will terminate upon successful contest with respect to either person insured by the policy. 43 GENERAL INFORMATION ABOUT YOUR POLICY --------------------------------------------------------- Assigning your You can assign your policy as collateral to secure a policy as loan, mortgage, or other kind of debt. Here's how it collateral works: Assigning a policy . An assignment does not change the ownership of the that's a modified policy. endowment contract . After the policy has been assigned, your rights and may generate the rights of your beneficiary will be subject to the taxable income and assignment. The entire policy, including any income a 10% penalty tax. benefit, rider, benefit and endorsement, will also be subject to the assignment. . We're not responsible for the validity of any assignment. . We must receive a copy of the original assignment before we'll consider it binding. . Unless otherwise provided, the person or organization you assign your policy to may exercise the rights under the policy, except the right to change the policy owner or the beneficiary or the right to choose a monthly income benefit. --------------------------------------------------------- Non-participating This policy will not share in any of our surplus earnings. 44 VARIABLE LIFE INSURANCE AND YOUR TAXES This discussion about taxes is based on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (IRS). It's based on the Internal Revenue Code (the tax code) and does not cover any state or local tax laws. The tax This is not a complete discussion of all federal income consequences of tax questions that may arise under the policy. There owning a policy or are special rules that we do not include here that may receiving proceeds apply in certain situations. from it may vary by jurisdiction and We do not know whether the current treatment of life according to the insurance policies under current federal income tax or circumstances of estate or gift tax laws will continue. We also do not each owner or know whether the current interpretations of the laws by beneficiary. the IRS or the courts will remain the same. Future legislation may adversely change the tax treatment of Speak to a life insurance policies, other tax consequences qualified tax described in this discussion or tax consequences that adviser for relate directly or indirectly to life insurance complete policies. information about federal, state and We do not make any guarantees about the tax status of local taxes that your policy, and you should not consider the discussion may apply to you. that follows to be tax advice. Recently passed tax legislation provides, among other things, for reductions in federal estate tax rates, increases in the exemption amount, and a "repeal" of the federal estate tax in 2010. However, the legislation provides for full reinstatement of the federal estate tax in the year 2011. If you are considering the purchase of the policy to help pay federal estate taxes at death, consult with your tax advisor. --------------------------------------------------------- Tax treatment of Definition of life insurance life insurance We believe that the policy qualifies as life insurance. policies That means it will receive the same tax advantages as a conventional fixed life insurance policy. The two main In order to qualify tax advantages are: as a life insurance contract for . In general, your policy's beneficiary will not be federal income tax subject to federal income tax when he or she receives purposes, the the death benefit proceeds. This is true regardless policy must meet of whether the beneficiary is an individual, the statutory corporation, or other entity. definition of life . You'll generally not be taxed on your policy's insurance. accumulated value unless you receive a cash distribution by making a withdrawal, surrendering Death benefits may your policy, or in some instances, taking a loan from be excluded from your policy. income under Section 101(a) of The tax laws defining life insurance, however, do not the tax code. cover all policy features. Your policy may have features that could prevent it from qualifying as life We believe that insurance. For example, the tax laws have yet to last survivor address many issues concerning the treatment of policies meet the substandard risk policies, policies with term insurance statutory on the person insured by the policy or certain tax definition of life requirements relating to joint survivorship life insurance under insurance policies. We can make changes to your policy Section 7702 of the if we believe the changes are needed to ensure that tax code. However, your policy continues to qualify as a life insurance the area of tax law contract. relating to the definition of life The tax code and tax regulations impose limitations on insurance does not unreasonable mortality and expense charges for purposes explicitly address of determining whether a policy qualifies as life all relevant issues insurance for federal tax purposes. For life insurance relating to last policies entered into on or after October 21, 1988, survivor life these calculations must be based upon reasonable insurance policies. mortality charges and other charges reasonably expected We reserve the to be actually paid. right to make changes to the policy if we deem the changes appropriate to continue to qualify your policy as a life insurance contract. If a policy were determined not to qualify as life insurance, the policy would not provide the tax advantages normally provided by life insurance. This includes excluding the death benefit from the gross income of the beneficiary. 45 VARIABLE LIFE INSURANCE AND YOUR TAXES While the Treasury Department has issued proposed regulations about reasonable standards for mortality charges, the standards that apply to joint survivor life insurance policies are not entirely clear. While we believe that our mortality costs and other expenses used in calculating whether the policy qualifies as life insurance are reasonable under current laws, we cannot be sure that the IRS agrees with us. We can change our mortality charges if we believe the changes are needed to ensure that your policy qualifies as a life insurance contract. Section 817(h) of Diversification rules and ownership of the separate the tax code account describes the Your policy will not qualify for the tax benefit of a diversification life insurance contract unless the separate account rules. follows certain rules requiring diversification of investments underlying the policy. In addition, the IRS For more requires that the policyholder does not have control information about over the underlying assets. diversification rules, please see The Treasury Department has announced that the Managing the diversification rules "do not provide guidance Pacific Select Fund concerning the circumstances in which it will treat an in the accompanying investor, rather than the insurance company, as the Pacific Select Fund owner of the assets in a separate account." The IRS prospectus. treats a variable policy owner as the owner of separate account assets if he or she has the ability to exercise investment control over them. Owners of the assets are taxed on any income or gains the assets generate. Although the Treasury Department announced several years ago that it would provide further guidance on the issue, it had not done so when we wrote this prospectus. The ownership rights under your policy are similar to, but different in certain respects from, those described by the IRS in rulings in which it was determined that policyowners were not owners of separate account assets. Since you have greater flexibility in allocating premiums and policy values than was the case in those rulings, it is possible the IRS would treat you as the owner of your policy's proportionate share of the assets of the separate account. We do not know what will be in future Treasury Department regulations or other guidance. We cannot guarantee that the fund's portfolios will be able to operate as currently described in the prospectus, or that the fund will not have to change any portfolio's investment objective or policies. We can modify your policy if we believe it will prevent you from being considered the owner of your policy's proportionate share of the assets of the separate account. Policy exchanges Policy exchanges fall under Section If you exchange your policy for another one that 1035(a) of the tax insures the same person, it generally will be treated code. as a tax-free exchange and, if so, will not result in the recognition of gain or loss. If any of the people insured by the policy are changed, the exchange will be treated as a taxable exchange. Change of ownership You may have taxable income if you transfer ownership of your policy, sell your policy, or change the ownership of it in any way. There are special Corporate owners rules for There are special tax issues for corporate owners: corporate-owned policies. You . using your policy to fund deferred compensation should consult your arrangements for employees has special tax tax adviser. consequences . corporate ownership of a policy may affect your liability under the alternative minimum tax and the Section 59A of the environmental tax. tax code deals with the environmental tax. 46 --------------------------------------------------------- Conventional life The tax treatment of your policy will depend upon insurance policies whether it is a type of contract known as a modified endowment contract. We describe modified endowment Under Section 7702A contracts later in this section. If your policy is not of the tax code, a modified endowment contract, it will be treated as a policies that are conventional life insurance policy and will have the not classified as following tax treatment: modified endowment contracts are taxed Surrendering your policy as conventional When you surrender, or cash in, your policy, you'll life insurance generally be taxed on the difference, if any, between policies. the cash surrender value and the cost basis in your policy. The cost basis in your policy is Making a withdrawal generally the If you make a withdrawal after your policy has been in premiums you've force for 15 years, you'll only be taxed on the amount paid plus any you withdraw that exceeds the cost basis in the policy. taxable distributions less Special rules apply if you make a withdrawal within the any withdrawals or first 15 policy years and it's accompanied by a premiums previously reduction in benefits. In this case, there is a special recovered that were formula under which you may be taxed on all or a not taxable. portion of the withdrawal amount. Taking out a loan If you take out a loan, you will not pay tax on the loan amount unless your policy is surrendered or lapses and you have not repaid your outstanding loan amount. The interest you pay, or that's accrued, on a loan is generally nondeductible. Ask your tax adviser for more information. Loans and corporate-owned policies If you borrow money to buy or carry certain life insurance policies, tax law provisions may limit the deduction of interest payable on loan proceeds. If the taxpayer is an entity that's a direct or indirect beneficiary of certain life insurance, endowment or annuity contracts, a portion of the entity's deductions for loan interest may be disallowed, even though this interest may relate to debt that's completely unrelated to the contract. There may be a limited exception that applies to contracts issued on 20% owners, officers, directors or employees of the entity. For more information about this exception, you should consult your tax adviser. --------------------------------------------------------- Modified endowment A modified endowment contract is a special type of life contracts insurance policy. If your policy is a modified endowment contract, it will have the tax treatment Section 7702A of described below. Any distributions you receive during the tax code the life of the policy are treated differently than defines a class of under conventional life insurance policies. life insurance Withdrawals, loans, pledges, assignments and policies known as surrendering your policy are all considered modified endowment distributions and may be subject to tax on an income- contracts. Like first basis and a 10% penalty. other life insurance policies, When a policy becomes a modified endowment contract the death benefit A life insurance policy becomes a modified endowment proceeds paid to contract if, at any time during the first seven policy your beneficiary years, the sum of actual premiums paid exceeds the generally are not seven-pay limit. The seven-pay limit is the cumulative subject to federal total of the level annual premiums (or seven-pay income tax and your premiums) required to pay for the policy's future death policy's and endowment benefits. accumulated value grows on a tax- deferred basis until you receive a cash distribution. If there is a material change to your policy, like a change in the death benefit, we may have to retest your policy and restart the seven-pay premium period to determine whether the change has caused the policy to become a modified endowment contract. 47 VARIABLE LIFE INSURANCE AND YOUR TAXES For example, if the seven-pay premiums were $1,000 a year, the maximum premiums you could pay during the first seven years to avoid modified endowment treatment would be $1,000 in the first year, $2,000 through the first two years and $3,000 through the first three years, etc. Under this test, a Pacific Select Estate Preserver - NY policy may or may not be a modified endowment contract, depending on the amount of premiums paid during the policy's first seven contract years or after a material change has been made to the policy. Surrendering your policy If you surrender your policy, you're taxed on the amount by which the cash surrender value exceeds the cost basis in the policy. Making a withdrawal or taking out a loan If you make a withdrawal or take out a loan from a modified endowment contract, you're taxed on the amount of the withdrawal or loan that's considered income, including all previously non-taxed gains. Income is the difference between the cash surrender value and the cost basis in your policy. It's unclear whether interest paid, or accrued, on a loan is considered interest for federal income tax purposes. If you borrow money to buy or carry certain life insurance policies, tax law provisions may limit the deduction of interest payable on loan proceeds. You should consult your tax adviser. All modified endowment contracts we or our affiliates issue to you in a calendar year are treated as a single contract when we calculate whether a distribution amount is subject to tax. 10% penalty tax If any amount you receive from a modified endowment contract is taxable, you may also have to pay a penalty tax equal to 10% of the taxable amount. A taxpayer will not have to pay the penalty tax if any of the following exceptions apply: . you're at least 59 1/2 years old . you're receiving an amount because you've become disabled . you're receiving an amount that's part of a series of substantially equal periodic payments, paid out at least annually. These payments may be made for your life or life expectancy or for the joint lives or joint life expectancies of you and your beneficiaries. Distributions before a policy becomes a modified endowment contract If your policy fails the seven-pay test and becomes a modified endowment contract, any amount you receive or are deemed to have received during the two years before it became a modified endowment contract may be taxable. The distribution would be treated as having been made in anticipation of the policy's failing to meet the seven-pay test under Treasury Department regulations which are yet to be prescribed. --------------------------------------------------------- Policy riders Accelerated living benefits rider Amounts received under this rider should be generally Please see the excluded from taxable income under Section 101(g) of discussion of the tax code. optional riders in The death benefit. Benefits under the rider will be taxed, however, if they are paid to someone other than a person insured by Please consult with the policy, and either person insured by the policy: your tax adviser if you want to . is a director, officer or employee of the person exercise your receiving the benefit, or rights under either . has a financial interest in a business of the person of these riders. receiving the benefit. In some cases, there may be a question as to whether a life insurance policy that has an accelerated living benefit rider can meet technical aspects of the definition of "life insurance contract" under the tax code. We may reserve the right (but are not obligated) to modify the rider to conform under tax code requirements. Split policy option rider This rider allows a policy to be split into two individual policies. If the split is not treated as a nontaxable exchange, it could result in the recognition of taxable income up to any gain or income in the policy at the time of the split. 48 ABOUT PL&A Pacific Life & Annuity Company is a life insurance company based in Arizona. Our operations include life insurance, annuity and institutional products, group life and health insurance and various other insurance products and services. At the end of 2000, we had total admitted assets of $461.7 million. PL&A is authorized to conduct life insurance and annuity business in Arizona, New York and certain other states. Our principal office is located at 700 Newport Center Drive, Newport Beach, California 92660. --------------------------------------------------------- How we're organized PL&A was incorporated in 1982 under the name of Pacific Financial Life Insurance Company. We merged with Pacific Financial Life Insurance Company of Arizona and assumed the name PM Group Life Insurance Company in transferring domicile from California to Arizona, which was completed in 1990. On January 1, 1999, we changed our name to our current name, PL&A. --------------------------------------------------------- How policies are Pacific Life Insurance Company administers the policies administered sold under this prospectus. At the end of 2000, Pacific Life had over $124.6 billion of individual life insurance in force and total admitted assets of approximately $51.7 billion. It is ranked the 14th largest life insurance carrier in the U.S. in terms of 2000 admitted assets. The Pacific Life family of companies has total assets and funds under management of $335.9 billion. Pacific Life's principal office is at 700 Newport Center Drive, Newport Beach, CA 92660. --------------------------------------------------------- How policies are Pacific Select Distributors, Inc. (PSD), our affiliate, distributed is the distributor of our policies. PSD is located at 700 Newport Center Drive, Newport Beach, California 92660. PSD is registered as a broker-dealer with the SEC and is a member of the National Association of Securities Dealers (NASD). We pay PSD for its services as our distributor. The policies are sold by registered representatives of broker-dealers who have signed agreements with us and PSD. Registered representatives must be licensed to sell variable life insurance under the state insurance and securities regulations that apply. Broker-dealers must be registered with the SEC. How we pay broker-dealers We pay broker-dealers commission for promoting, marketing and selling our policies. Broker-dealers pay a portion of the commission to their registered representatives, under their own arrangements. Commissions are based on "target" premiums we A target premium is determine. The commission we pay will vary with the a hypothetical agreement, but the most common schedule of commissions premium that is we pay is: used only to calculate . 55% of premiums paid up to the first target premium commissions. It in the first policy year varies with the . 4% of premiums paid up to the first target premium death benefit after the first policy year option you choose, . 4% of the premiums paid under targets 2-10 the age of the . 2% of premiums paid in excess of the 10th target person insured by premium. the policy on the policy date, and the gender (unless unisex rates are required) and risk class of the person insured by the policy. 49 ABOUT PL&A We may pay broker-dealers an annual renewal commission of up to 0.20% of a policy's accumulated value less any A policy's target outstanding loan amount. We calculate the renewal premium will be amount monthly and it becomes payable on each policy less than the anniversary. policy's guideline level premiums. We may also pay override payments, expense and marketing allowances, bonuses, wholesaler fees and training allowances. Registered representatives who meet certain sales levels can qualify for sales incentives programs we sponsor. We may also pay them non-cash compensation like expense-paid trips, expense-paid educational seminars, and merchandise. They can choose to receive their compensation on a deferred basis. --------------------------------------------------------- How our accounts We own the assets in our general account and our work separate account. We allocate your net premiums to these accounts according to the investment options you've chosen. General account We can provide you Our general account includes all of our assets, except with reports of our for those held in our separate accounts. We guarantee ratings as an you an interest rate for up to one year on any amount insurance company allocated to the fixed options. The rate is reset and our ability to annually. The fixed options are part of our general pay claims with account, which we may invest as we wish, according to respect to our any laws that apply. We'll credit the guaranteed rate general account even if the investments we make earn less. Our ability assets. to pay these guarantees is backed by our strength as a company. You'll find the The fixed options are not securities, so they do not audited financial fall under any securities act. For this reason, the SEC statements for the has not reviewed the disclosure in this prospectus Pacific Select Exec about the fixed options. However, other federal separate account securities laws may apply to the accuracy and later in this completeness of the disclosure about the fixed options. section of the prospectus. Separate account This section of the Amounts allocated to the variable investment options prospectus also are held in our separate account. The assets in this includes the account are kept separate from the assets in our audited general account and our other separate accounts, and consolidated are protected from our general creditors. financial statements for PL&A The separate account was established on September 24, later in this 1998 under Arizona law under the authority of our Board section of the of Directors. It's registered with the SEC as a type of prospectus. We investment company called a unit investment trust. The include these SEC does not oversee the administration or investment financial practices or policies of the account. statements to show our strength as a The separate account is divided into variable accounts. company and our Each variable account invests in shares of a designated ability to meet our portfolio of the Pacific Select Fund. We may add obligations under variable accounts that invest in other portfolios of the policies. the fund or in other securities. The separate We're the legal owner of the assets in the separate account is not the account, and pay its operating expenses. The separate only investor in account is operated only for our variable life the Pacific Select insurance policies. We must keep enough money in the Fund. Investment in account to pay anticipated obligations under the the fund by other insurance policies funded by the account, but we can separate accounts transfer any amount that's more than these anticipated for variable obligations to our general account. Some of the money annuity contracts in the separate account may include charges we collect and variable life from the account and any investment results on those insurance contracts charges. could cause conflicts. For more We cannot charge the assets in the separate account information, please attributable to our reserves and other liabilities see the Statement under the policies funded by the account with any of Additional liabilities from our other business. Information for the Pacific Select Fund. 50 Similarly, the income, gains or losses, realized or unrealized, of the assets of any variable account belong to that variable account and are credited to or charged against the assets held in that variable account without regard to our other income, gains or losses. Making changes to the separate account We can add, change or remove any securities that the separate account or any variable account holds or buys, as long as we comply with the laws that apply. We can substitute shares of one Pacific Select Fund portfolio with shares of another portfolio or fund if: . any portfolio is no longer available for investment . our management believes that a portfolio is no longer appropriate in view of the purposes of the policy. We'll give you any required notice or receive any required approval from policy owners or the SEC before we substitute any shares. We'll comply with the filing or other procedures established by insurance regulators as required by law. We can add new variable accounts, which may include additional subaccounts of the separate account, to serve as investment options under the policies. These may be managed separate accounts or they may invest in a new portfolio of the fund, or in shares of another investment company or one of its portfolios, or in a suitable investment vehicle with a specified investment objective. We can add new variable accounts when we believe that it's warranted by marketing needs or investment conditions. We'll decide on what basis we'll make new accounts available to existing policy owners. We can also eliminate any of our variable accounts if we believe marketing, tax or investment conditions warrant it. We can terminate and liquidate any variable account. If we make any changes to variable accounts or substitution of securities, we can make appropriate changes to this policy or any of our other policies, by appropriate endorsement, to reflect the change or substitution. We will notify you if there is a material change in the investment policy of a Variable Account. The notice will inform you of your options, including your option to transfer from such Variable Account to the Fixed Account within 60 days after: . the effective date of the material change, or . the date you receive the notice, whichever is later. If we believe it's in the best interests of people holding voting rights under the policies and we meet any required regulatory approvals we can do the following: . operate the separate account as a management investment company, unit investment trust, or any other form permitted under securities or other laws . register or deregister the separate account under securities law . combine the separate account with one of our other separate accounts or our affiliates' separate accounts . combine one or more variable accounts . create a committee, board or other group to manage the separate account . change the classification of any variable account. 51 ABOUT PL&A Taxes we pay We may be charged for state and local taxes. Currently, we pay these taxes because they are small amounts with respect to the policy. If these taxes increase significantly, we may deduct them from the separate account. We may charge the separate account for any federal, state and local taxes that apply to the separate account or to our operations. This could happen if our tax status or the tax treatment of variable life insurance changes. --------------------------------------------------------- Voting rights We're the legal owner of the shares of the Pacific Select Fund that are held by the variable accounts. We may vote on any matter at shareholder meetings of the fund. However, we are required by law to vote as you instruct on the shares relating to your allocation in a variable investment option. This is called your voting interest. Your voting interest is calculated as of a day set by the Board of Trustees of the fund called the record date. Your voting interest equals the accumulated value in a variable investment option divided by the net asset value of a share of the corresponding portfolio. Fractional shares are included. If allowed by law, we may change how we calculate your voting interest. We'll send you documents from the fund called proxy materials. They include information about the items you'll be voting on and forms for you to give us your instructions. We'll vote shares held in the separate account for which we do not receive voting instructions in the same proportion as all other shares in the portfolio held by that separate account for which we've received timely instructions. If we do not receive any voting instructions for the shares in a separate account, we will vote the shares in that separate account in the same proportion as the total votes for all of our separate accounts for which we've received timely instructions. We'll vote shares of any portfolio we hold in our general account in the same proportion as the total votes for all of our separate accounts, including this separate account. If the law changes to allow it, we can vote as we wish on shares of the portfolios held in the separate account. When required by state insurance regulatory authorities, we may disregard voting instructions that: . would change a portfolio's investment objective or subclassification . would approve or disapprove an investment advisory contract. We may disregard voting instructions on a change initiated by policy owners that would change a portfolio's investment policy, investment adviser or portfolio manager if: . our disapproval is reasonable . we determine in good faith that the change would be against state law or otherwise be inappropriate, considering the portfolio's objectives and purpose, and considering what effect the change would have on us. If we disregard any voting instructions, we'll include a summary of the action we took and our reasons for it in the next report to policy owners. 52 --------------------------------------------------------- Illustrations We will provide you with illustrations based on different sets of assumptions upon your request. You If you ask us, can request such illustrations at any time. we'll provide you Illustrations may help you understand how your policy with different values would vary over time based on different kinds of assumptions. We have filed examples of such an illustrations. illustration as an exhibit to the registration statement that relates to the policy on file with the . Illustrations SEC. based on information you give us about the age of the person to be insured by the policy, their risk class, the face amount, the death benefit and premium payments. . Illustrations that show the allocation of premium payments to specified variable accounts. These will reflect the expenses of the portfolio of the Fund in which the variable account invests. . Illustrations that use a hypothetical gross rate of return that's greater than 12%. These are available only to certain large institutional investors. --------------------------------------------------------- State regulation We're subject to the laws of the state of Arizona governing insurance companies and to regulations issued by the Commissioner of Insurance of Arizona. In addition, we're subject to the insurance laws and regulations of the other states and jurisdictions in which we're licensed or may become licensed to operate. An annual statement in a prescribed form must be filed with the Commissioner of Insurance of Arizona and with regulatory authorities of other states on or before March 1st in each year. This statement covers our operations for the preceding year and our financial condition as of December 31st of that year. Our affairs are subject to review and examination at any time by the Commissioner of Insurance or his agents, and subject to full examination of our operations at periodic intervals. --------------------------------------------------------- Legal proceedings The separate account is not involved in any legal and legal matters proceedings that would have a material effect on policy owners. Legal matters concerning the issue and sale of the life insurance policies described in this prospectus, our organization and authority to issue the policies under Arizona law, and the validity of the forms of the policies under Arizona law, have been passed upon by our general counsel. Legal matters relating to federal securities laws and federal income tax laws have been passed upon by Dechert. --------------------------------------------------------- Registration We've filed a registration statement with the SEC for statement Pacific Select Estate Preserver - NY, under the Securities Act of 1933. The SEC's rules allow us to omit some of the information required by the registration statement from this prospectus. You can ask for it from the SEC's office in Washington, D.C. They may charge you a fee. --------------------------------------------------------- Management The following is a list of our directors and certain officers, along with some information about their business activities over the past five years. They do not receive any compensation from the separate account for services they provide to it nor do we pay any separately allocable compensation for these services. The business address of each of these people is c/o Pacific Life & Annuity Company, 700 Newport Center Drive, Newport Beach, California 92660. 53 ABOUT PL&A
NAME AND POSITION PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS William L. Ferris Director, President and Chief Executive Officer of PL&A; Director of: American Director, President Cancer Society of Orange County; the Health Insurance Association of America; and and Chief Executive former Director of California Health Decisions. Officer Thomas C. Sutton Director and Chairman of the Board of Pacific Life & Annuity Company; Director, Director and Chairman of the Board and Chief Executive Officer of Pacific Life Insurance Company; Chairman of the Director, Chairman of the Board and Chief Executive Officer of Pacific LifeCorp, Board August 1997 to present; Director, Chairman of the Board and Chief Executive Officer of Pacific Mutual Holding Company, August 1997 to present; Trustee and Chairman of the Board and Former President of Pacific Select Fund; former Management Board Member of PIMCO Advisors L.P.; Former Equity Board Member of PIMCO Advisors L.P.; Former Director of Pacific Corinthian Life Insurance Company; Director of Newhall Land & Farming; The Irvine Company; Edison International; and similar positions with other affiliated companies of Pacific Life Insurance Company. David R. Carmichael Director of PL&A; Senior Vice President and General Counsel of PL&A, July 1998 to Director, Senior present; Director (since August 1997), Senior Vice President and General Counsel of Vice President and Pacific Life Insurance Company; Senior Vice President and General Counsel of Pacific General Counsel LifeCorp, August 1997 to present; Senior Vice President and General Counsel of Pacific Mutual Holding Company, August 1997 to present; Director of Association of California Life and Health Insurance Companies; and former Director of Association of Life Insurance Counsel. Audrey L. Milfs Director, Vice President (since February 1999) and Secretary of PL&A; Director Director, Vice (since August 1997), Vice President and Corporate Secretary of Pacific Life President and Insurance Company; Vice President and Corporate Secretary of Pacific LifeCorp, Secretary August 1997 to present; Vice President and Corporate Secretary of Pacific Mutual Holding Company, August 1997 to present; Secretary of Pacific Select Fund; similar positions with other affiliated companies of Pacific Life Insurance Company. Glenn S. Schafer Director of PL&A; Director and President of Pacific Life Insurance Company; Director Executive Vice President and Chief Financial Officer of Pacific Life Insurance Company, April 1991 to January 1995; Director and President of Pacific LifeCorp, August 1997 to present; Director and President of Pacific Mutual Holding Company, August 1997 to present; President (since February 1999) and Former Trustee of Pacific Select Fund; former Management Board Member of PIMCO Advisors L.P.; Former Equity Board Member of PIMCO Advisors L.P.; Former Director of Pacific Corinthian Life Insurance Company; and similar positions with other affiliated companies of Pacific Life Insurance Company. Khanh T. Tran Executive Vice President (since April 2001) and Chief Financial Officer of PL&A; Executive Vice Senior Vice President of PL&A, February 1999 to April 2001; Director (since August President and Chief 1997), Executive Vice President (since April 2001) and Chief Financial Officer of Financial Officer Pacific Life Insurance Company, June 1996 to present; Senior Vice President of Pacific Life, June 1996 to April 2001; Vice President and Treasurer of Pacific Life, November 1991 to June 1996; Senior Vice President and Chief Financial Officer of Pacific LifeCorp, August 1997 to present; Senior Vice President and Chief Financial Officer of Pacific Mutual Holding Company, August 1997 to present; Senior Vice President and Chief Financial Officer of other affiliated companies of Pacific Life Insurance Company. Lynn C. Miller Executive Vice President of PL&A, July 1998 to present; Executive Vice President of Executive Vice Pacific Life Insurance Company. President Brian D. Klemens Vice President and Treasurer of PL&A, February 1999 to present; Vice President and Vice President and Treasurer of Pacific Life Insurance Company, December 1998 to present; Assistant Treasurer Vice President, Accounting and Assistant Controller of Pacific Life Insurance Company, April 1994 to December 1998; Vice President and Treasurer of Pacific LifeCorp, June 1999 to present; Vice President and Treasurer of Pacific Mutual Holding Company, June 1999 to present; Vice President and Treasurer of other affiliated companies of Pacific Life Insurance Company.
--------------------------------------------------------- Financial The next several pages contain the statements of net statements assets of Pacific Select Exec Separate Account as of December 31, 2000 and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000. These are followed by the financial statements- statutory basis for PL&A as of December 31, 2000 and 1999 and for each of the three years ended December 31, 2000, which are included in this prospectus so you can assess our ability to meet our obligations under the policies. --------------------------------------------------------- Experts The financial statements-statutory basis for PL&A as of December 31, 2000 and 1999 and for each of the two years in the period ended December 31, 2000 and the statement of net assets of Pacific Select Exec Separate Account as of December 31, 2000 and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000 included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein, which report on the financial statements of PL&A expresses an unqualified opinion with respect to the presentation of such financial statements-statutory basis in accordance with the accounting basis prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, and also states that such financial statements-statutory basis, are not presented fairly in accordance with accounting principles generally accepted in the United States of America, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. 54 INDEPENDENT AUDITORS' REPORT The Board of Directors Pacific Life & Annuity Company: We have audited the accompanying statement of assets and liabilities of Pacific Select Exec Separate Account (the "Separate Account") (comprised of the Aggressive Equity, Emerging Markets, Diversified Research, Small-Cap Equity, International Large-Cap, Equity, I-Net Tollkeeper, Multi-Strategy, Equity Income, Growth LT, Mid-Cap Value, Equity Index, Small-Cap Index, REIT, International Value, Government Securities, Managed Bond, Money Market, High Yield Bond, and Large-Cap Value Variable Accounts) as of December 31, 2000 and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of each of the respective Variable Accounts constituting Pacific Select Exec Separate Account as of December 31, 2000 and the results of their operations and the changes in their net assets for the periods from commencement of operations through December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Costa Mesa, California February 6, 2001 55 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2000
Aggressive Emerging Diversified Small-Cap International I-Net Multi- Equity Growth Equity Markets Research Equity Large-Cap Equity Tollkeeper Strategy Income LT Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account ------------------------------------------------------------------------------------------------------ ASSETS Investments: Aggressive Equity Portfolio....... $2,892 Emerging Markets Portfolio....... $1,631 Diversified Research Portfolio....... $894 Small-Cap Equity Portfolio....... $4,691 International Large-Cap Portfolio....... $6,676 Equity Portfolio....... $1,226 I-Net Tollkeeper Portfolio....... $8,479 Multi-Strategy Portfolio....... $9,751 Equity Income Portfolio....... $7,631 Growth LT Portfolio....... $18,880 Receivables: Due from Pacific Life & Annuity Company......... 187 187 234 ------------------------------------------------------------------------------------------------------ Total Assets..... 2,892 1,631 894 4,878 6,863 1,226 8,479 9,751 7,631 19,114 ------------------------------------------------------------------------------------------------------ LIABILITIES Payables: Fund shares purchased....... 187 187 234 ------------------------------------------------------------------------------------------------------ Total Liabilities...... 187 187 234 ------------------------------------------------------------------------------------------------------ NET ASSETS....... $2,892 $1,631 $894 $4,691 $6,676 $1,226 $8,479 $9,751 $7,631 $18,880 ====================================================================================================== Shares Owned in each Portfolio... 261 242 81 221 851 47 1,250 633 325 603 ====================================================================================================== Cost of Investments ..... $3,250 $1,741 $870 $5,020 $6,892 $1,340 $11,177 $10,036 $7,729 $22,221 ======================================================================================================
See Notes to Financial Statements 56 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES (Continued) DECEMBER 31, 2000
Mid-Cap Equity Small-Cap International Government Managed Money High Yield Large-Cap Value Index Index REIT Value Securities Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account ---------------------------------------------------------------------------------------------------- ASSETS Investments: Mid-Cap Value Portfolio........ $5,701 Equity Index Portfolio........ $16,708 Small-Cap Index Portfolio........ $3,270 REIT Portfolio... $691 International Value Portfolio.. $10,226 Government Securities Portfolio........ $11,748 Managed Bond Portfolio........ $7,080 Money Market Portfolio........ $105,137 High Yield Bond Portfolio........ $4,000 Large-Cap Value Portfolio........ $16,132 Receivables: Due from Pacific Life & Annuity Company.......... 94 140 94 ---------------------------------------------------------------------------------------------------- Total Assets...... 5,795 16,848 3,270 691 10,226 11,748 7,080 105,137 4,094 16,132 ---------------------------------------------------------------------------------------------------- LIABILITIES Payables: Fund shares purchased........ 94 140 94 ---------------------------------------------------------------------------------------------------- Total Liabilities....... 94 140 94 ---------------------------------------------------------------------------------------------------- NET ASSETS........ $5,701 $16,708 $3,270 $691 $10,226 $11,748 $7,080 $105,137 $4,000 $16,132 ==================================================================================================== Shares Owned in each Portfolio.... 442 490 294 56 645 1,101 655 10,420 520 1,281 ==================================================================================================== Cost of Investments....... $5,417 $17,552 $3,247 $674 $10,012 $11,611 $7,009 $105,252 $4,061 $15,711 ====================================================================================================
See Notes to Financial Statements 57 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2000
Aggressive Emerging Diversified Small-Cap International I-Net Multi- Equity Growth Equity Markets Research Equity Large-Cap Equity Tollkeeper Strategy Income LT Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account (1) Account Account Account Account Account Account -------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends (1)... $1 $13 $5 $47 $11 $40 -------------------------------------------------------------------------------------------------------- Net Investment Income........... 1 13 5 47 11 40 -------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions.... ($59) ($226) (72) (70) ($6) ($66) (6) (111) Net unrealized appreciation (depreciation) on investments.. (359) (109) 24 (330) (217) (114) (2,698) (285) (98) (3,342) -------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on investments...... (418) (335) 24 (402) (287) (120) (2,764) (291) (98) (3,453) -------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.. ($418) ($335) $25 ($389) ($282) ($120) ($2,764) ($244) ($87) ($3,413) ========================================================================================================
(1) Pacific Select Fund had declared dividends for the Aggressive Equity, Emerging Markets, and Equity Portfolios during 2000. The corresponding Variable Accounts did not own shares prior to the ex-dividend dates. See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 58 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS (Continued) FOR THE PERIODS ENDED DECEMBER 31, 2000
Mid-Cap Equity Small-Cap International Government Managed Money High Yield Large-Cap Value Index Index REIT Value Securities Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account --------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends........ $12 $29 $22 $9 $15 $105 $119 $2,106 $75 $80 --------------------------------------------------------------------------------------------------- Net Investment Income............ 12 29 22 9 15 105 119 2,106 75 80 --------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) from security transactions..... 7 (9) (73) (116) 2 9 (271) (6) (73) Net unrealized appreciation (depreciation) on investments... 284 (844) 25 18 214 137 71 (117) (61) 420 --------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on investments....... 291 (853) (48) 18 98 139 80 (388) (67) 347 --------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... $303 ($824) ($26) $27 $113 $244 $199 $1,718 $8 $427 ===================================================================================================
See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 59 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIODS ENDED DECEMBER 31, 2000
Aggressive Emerging Diversified Small-Cap International I-Net Multi- Equity Growth Equity Markets Research Equity Large-Cap Equity Tollkeeper Strategy Income LT Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account ------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............. $1 $13 $5 $47 $11 $40 Net realized loss from security transactions....... ($59) ($226) (72) (70) ($6) ($66) (6) (111) Net unrealized appreciation (depreciation) on investments..... (359) (109) 24 (330) (217) (114) (2,698) (285) (98) (3,342) ------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Net Assets Resulting from Operations..... (418) (335) 25 (389) (282) (120) (2,764) (244) (87) (3,413) ------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums........... 138 281 281 56 820 Transfers between variable accounts, net...... 3,675 2,049 885 5,112 7,166 1,482 11,501 10,124 7,938 22,441 Transfers-- policy charges and deductions..... (374) (241) (16) (342) (538) (137) (258) (184) (220) (902) Transfers--other... 9 20 29 49 1 (1) (66) ------------------------------------------------------------------------------------------------------ Net Increase in Net Assets Derived from Policy Transactions........ 3,310 1,966 869 5,080 6,958 1,346 11,243 9,995 7,718 22,293 ------------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS.......... 2,892 1,631 894 4,691 6,676 1,226 8,479 9,751 7,631 18,880 ------------------------------------------------------------------------------------------------------ NET ASSETS Beginning of Period............. ------------------------------------------------------------------------------------------------------ End of Period...... $2,892 $1,631 $894 $4,691 $6,676 $1,226 $8,479 $9,751 $7,631 $18,880 ======================================================================================================
See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 60 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS (Continued) FOR THE PERIODS ENDED DECEMBER 31, 2000
Mid-Cap Equity Small-Cap International Government Managed Money High-Yield Large-Cap Value Index Index REIT Value Securities Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account ------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............. $12 $29 $22 $9 $15 $105 $119 $2,106 $75 $80 Net realized gain (loss) from security transactions....... 7 (9) (73) (116) 2 9 (271) (6) (73) Net unrealized appreciation (depreciation) on investments..... 284 (844) 25 18 214 137 71 (117) (61) 420 ------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Net Assets Resulting from Operations..... 303 (824) (26) 27 113 244 199 1,718 8 427 ------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums........... 140 211 275 688 688 272,763 278 413 Transfers between variable accounts, net...... 5,713 17,658 3,255 736 10,033 11,821 6,429 (148,228) 3,875 16,334 Transfers--policy charges and deductions......... (430) (338) (168) (72) (639) (317) (235) (21,135) (159) (1,034) Transfers--other... (25) 1 (66) 31 (1) 19 (2) (8) ------------------------------------------------------------------------------------------------------ Net Increase in Net Assets Derived from Policy Transactions........ 5,398 17,532 3,296 664 10,113 11,504 6,881 103,419 3,992 15,705 ------------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS.......... 5,701 16,708 3,270 691 10,226 11,748 7,080 105,137 4,000 16,132 ------------------------------------------------------------------------------------------------------ NET ASSETS Beginning of Period............. ------------------------------------------------------------------------------------------------------ End of Period...... $5,701 $16,708 $3,270 $691 $10,226 $11,748 $7,080 $105,137 $4,000 $16,132 ======================================================================================================
See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 61 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES The Pacific Select Exec Separate Account (the "Separate Account") is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and is comprised of twenty-two subaccounts called Variable Accounts: the Aggressive Equity, Emerging Markets, Diversified Research, Small- Cap Equity, International Large-Cap, Equity, I-Net Tollkeeper, Multi-Strategy, Equity Income, Strategic Value, Growth LT, Focused 30, Mid-Cap Value, Equity Index, Small-Cap Index, REIT, International Value, Government Securities, Managed Bond, Money Market, High Yield Bond, and Large-Cap Value Variable Accounts as of December 31, 2000. The assets in each Variable Account are invested in shares of the corresponding portfolios of Pacific Select Fund (the "Fund"), each of which pursues different investment objectives and policies. The financial statements of the Fund, including the schedules of investments, are provided separately and should be read in conjunction with the Separate Account's financial statements. The Separate Account was established by Pacific Life & Annuity Company (PL&A), a wholly-owned subsidiary of Pacific Life Insurance Company (Pacific Life), on September 24, 1998 and commenced operations on August 15, 2000. The following Variable Accounts commenced operations in 2000: the Money Market Variable Account commenced operations on August 15, 2000; the Aggressive Equity, Emerging Markets, Small-Cap Equity, International Large-Cap, Growth LT, Mid-Cap Value, International Value and Large-Cap Value Variable Accounts commenced operations on September 8, 2000; the Equity Index and High Yield Bond Variable Accounts commenced operations on October 2, 2000; the Small-Cap Index and Managed Bond Variable Accounts commenced on October 20, 2000; the I-Net Tollkeeper and Multi-Strategy Variable Accounts commenced operations on November 3, 2000; the Equity and Government Securities Variable Accounts commenced operations on November 27, 2000; the Equity Income Variable Account commenced operations on November 28, 2000; the Diversified Research Variable Account commenced operations on November 30, 2000; and the REIT Variable Account commenced operations on December 6, 2000. There were no operational activities in the Strategic Value and Focused 30 Variable Accounts through December 31, 2000. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the other assets and liabilities of PL&A. The assets of the Separate Account will not be charged with any liabilities arising out of any other business conducted by PL&A, but the obligations of the Separate Account, including benefits related to variable life insurance, are obligations of PL&A. The Separate Account held by PL&A represents funds from individual flexible premium variable life policies. The assets of the Separate Account are carried at market value. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for investment companies which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. A. Valuation of Investments Investments in shares of the Fund are valued at the reported net asset values of the respective portfolios. Valuation of securities held by the Fund is discussed in the notes to its financial statements. B. Security Transactions and Investment Income Transactions are recorded on the trade date. Realized gains and losses on sales of investments are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date. C. Federal Income Taxes The operations of the Separate Account will be reported on the Federal income tax return of PL&A, which is taxed as a life insurance company under the provisions of the Tax Reform Act of 1986. Under current tax law, no Federal income taxes are expected to be paid by PL&A with respect to the operations of the Separate Account. 2. DIVIDENDS During 2000, the Fund declared dividends for each portfolio, except for the I- Net Tollkeeper Portfolio, invested by the Separate Account. The amounts accrued by the Separate Account for its share of the dividends were reinvested in additional full and fractional shares of the related portfolios. 3. CHARGES AND EXPENSES With respect to variable life insurance policies funded by the Separate Account, PL&A makes certain deductions from premiums for sales load and state premium taxes before amounts are allocated to the Separate Account. PL&A also makes certain deductions from the net assets of each Variable Account for the mortality and expense risks PL&A assumes, administrative expenses, cost of insurance, charges for optional benefits and any sales and underwriting surrender charges. The operating expenses of the Separate Account are paid by PL&A. 4. RELATED PARTY AGREEMENT Pacific Select Distributors, Inc. (formerly Pacific Mutual Distributors, Inc.), a wholly-owned subsidiary of Pacific Life, serves as principal underwriter of variable life insurance policies funded by interests in the Separate Account, without remuneration from the Separate Account. 62 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Continued) 5. SEPARATE ACCOUNT'S COST OF INVESTMENTS IN THE FUND SHARES The investment in the Fund shares are carried at identified cost, which represents the amount available for investment (including reinvested distributions of net investment income and realized gains). A reconciliation of total cost and market value of the Separate Account's investments in the Fund as of December 31, 2000 were as follows:
Variable Accounts (1) --------------------------------------------------------------------- Aggressive Emerging Diversified Small-Cap International Equity Markets Research Equity Large-Cap Equity --------------------------------------------------------------------- Total net proceeds from policy transactions $6,314 $4,669 $885 $7,998 $9,939 $1,375 Add: Reinvested net investment income distributions from the Fund 1 13 5 --------------------------------------------------------------------- Sub-Total 6,314 4,669 886 8,011 9,944 1,375 Less: Cost of investments disposed during the period 3,064 2,928 16 2,991 3,052 35 --------------------------------------------------------------------- Total cost of investments at end of period 3,250 1,741 870 5,020 6,892 1,340 Add: Unrealized appreciation (depreciation) (358) (110) 24 (329) (216) (114) --------------------------------------------------------------------- Total market value of investments at end of period $2,892 $1,631 $894 $4,691 $6,676 $1,226 ===================================================================== I-Net Multi- Equity Growth Mid-Cap Equity Tollkeeper Strategy Income LT Value Index --------------------------------------------------------------------- Total net proceeds from policy transactions $11,501 $10,179 $7,802 $25,528 $7,444 $17,687 Add: Reinvested net investment income distributions from the Fund 47 11 40 12 29 --------------------------------------------------------------------- Sub-Total 11,501 10,226 7,813 25,568 7,456 17,716 Less: Cost of investments disposed during the period 324 190 84 3,347 2,039 164 --------------------------------------------------------------------- Total cost of investments at end of period 11,177 10,036 7,729 22,221 5,417 17,552 Add: Unrealized appreciation (depreciation) (2,698) (285) (98) (3,341) 284 (844) --------------------------------------------------------------------- Total market value of investments at end of period $8,479 $9,751 $7,631 $18,880 $5,701 $16,708 ===================================================================== Small-Cap International Government Managed Money Index REIT Value Securities Bond Market --------------------------------------------------------------------- Total net proceeds from policy transactions $4,564 $678 $15,721 $11,821 $10,978 $222,997 Add: Reinvested net investment income distributions from the Fund 22 9 15 105 119 2,106 --------------------------------------------------------------------- Sub-Total 4,586 687 15,736 11,926 11,097 225,103 Less: Cost of investments disposed during the period 1,339 13 5,724 315 4,088 119,851 --------------------------------------------------------------------- Total cost of investments at end of period 3,247 674 10,012 11,611 7,009 105,252 Add: Unrealized appreciation (depreciation) 23 17 214 137 71 (115) --------------------------------------------------------------------- Total market value of investments at end of period $3,270 $691 $10,226 $11,748 $7,080 $105,137 ===================================================================== High Yield Large-Cap Bond Value --------------------- Total net proceeds from policy transactions $4,150 $22,390 Add: Reinvested net investment income distributions from the Fund 75 80 --------------------- Sub-Total 4,225 22,470 Less: Cost of investments disposed during the period 164 6,759 --------------------- Total cost of investments at end of period 4,061 15,711 Add: Unrealized appreciation (depreciation) (61) 421 --------------------- Total market value of investments at end of period $4,000 $16,132 =====================
- ------------- (1) Operations commenced during 2000 (See Note 1 to Financial Statements). 63 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Continued) 6. TRANSACTIONS IN SEPARATE ACCOUNT UNITS AND SELECTED ACCUMULATION UNIT ** INFORMATION Transactions in Separate Account units for the periods ended December 31, 2000 and the selected accumulation unit information as of December 31, 2000 were as follows:
Variable Accounts (1) --------------------------------------------------------------------------------- Aggressive Emerging Diversified Small-Cap International I-Net Equity Markets Research Equity Large-Cap Equity Tollkeeper --------------------------------------------------------------------------------- Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 15 34 29 (b) Transfers between variable accounts, net 388 212 86 582 747 150 1,181 (c) Transfers--policy charges and deductions (44) (28) (2) (41) (56) (14) (32) (d) Transfers--other (1) 5 --------------------------------------------------------------------------------- Total units outstanding at end of period 344 199 84 574 725 136 1,149 ================================================================================= Accumulation Unit Value: At beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 At end of period $8.41 $8.18 $10.63 $8.17 $9.21 $9.04 $7.38 Multi- Equity Growth Mid-Cap Equity Small-Cap Strategy Income LT Value Index Index REIT --------------------------------------------------------------------------------- Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 6 95 14 23 27 (b) Transfers between variable accounts, net 1,012 793 2,375 560 1,826 324 73 (c) Transfers--policy charges and deductions (18) (22) (106) (42) (36) (17) (7) (d) Transfers--other (1) (1) (6) --------------------------------------------------------------------------------- Total units outstanding at end of period 999 770 2,364 532 1,813 328 66 ================================================================================= Accumulation Unit Value: At beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 At end of period $9.76 $9.90 $7.99 $10.71 $9.22 $9.96 $10.43 International Government Managed Money High Yield Large-Cap Value Securities Bond Market Bond Value ----------------------------------------------------------------------- Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 72 69 27,083 29 41 (b) Transfers between variable accounts, net 1,049 1,177 642 (14,718) 404 1,652 (c) Transfers--policy charges and deductions (67) (31) (23) (2,099) (17) (105) (d) Transfers--other 1 2 (1) ----------------------------------------------------------------------- Total units outstanding at end of period 1,055 1,146 688 10,268 416 1,587 ======================================================================= Accumulation Unit Value: At beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 At end of period $9.70 $10.25 $10.30 $10.24 $9.61 $10.17
- ------ ** Accumulation Unit: unit of measure used to calculate the value of a Policy Owner's interest in a Variable Account during the accumulation period. (1) Operations commenced during 2000 (See Note 1 to Financial Statements). 64 PACIFIC LIFE & ANNUITY COMPANY Financial Statements - Statutory Basis as of and for the years ended December 31, 2000 and 1999 and Independent Auditors' Report 65 INDEPENDENT AUDITORS' REPORT ---------------------------- Pacific Life & Annuity Company: We have audited the accompanying statements of admitted assets, liabilities and capital and surplus- statutory basis of Pacific Life & Annuity Company (the Company) as of December 31, 2000 and 1999, and the related statements of operations-statutory basis, capital and surplus-statutory basis, and cash flows-statutory basis for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company has prepared these financial statements on the accounting basis prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on such financial statements of the differences between the statutory basis of accounting and accounting principles generally accepted in the United States of America are also described in Note 1. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of Pacific Life & Annuity Company as of December 31, 2000 and 1999, or the results of its operations or its cash flows for the years then ended. In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and capital and surplus of Pacific Life & Annuity Company as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended, on the basis of accounting described in Note 1. DELOITTE & TOUCHE LLP Costa Mesa, CA February 26, 2001 66 Pacific Life & Annuity Company STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS-STATUTORY BASIS
December 31, 2000 1999 - ------------------------------------------------------------------------------------- (In Thousands) ADMITTED ASSETS Bonds $258,266 $239,981 Preferred stocks 6,963 6,536 Common stocks 6,849 7,963 Mortgage loans 15,004 15,409 Cash and short-term investments 91,041 73,725 Other invested assets 56,832 29,453 Premiums due and unpaid 20,966 19,824 Other assets 5,527 10,421 Separate account assets 243 - ------------------------------------------------------------------------------------- TOTAL ADMITTED ASSETS $461,691 $403,312 ===================================================================================== LIABILITIES AND CAPITAL AND SURPLUS Liabilities: Policy reserves $116,331 $102,041 Policy benefits payable 58,096 50,738 Deposit funds 23,527 6,300 Accrued general expenses 8,169 9,433 Other liabilities 24,842 28,561 Asset valuation reserve 4,769 5,291 Separate account liabilities 243 - ------------------------------------------------------------------------------------- TOTAL LIABILITIES 235,977 202,364 - ------------------------------------------------------------------------------------- Capital and Surplus: Common stock - $1 par value; 5 million shares authorized; 2.9 million shares issued and outstanding 2,900 2,900 Paid-in surplus 134,607 134,607 Unassigned surplus 88,207 63,441 - ------------------------------------------------------------------------------------- TOTAL CAPITAL AND SURPLUS 225,714 200,948 - ------------------------------------------------------------------------------------- TOTAL LIABILITIES AND CAPITAL AND SURPLUS $461,691 $403,312 =====================================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 67 Pacific Life & Annuity Company STATEMENTS OF OPERATIONS-STATUTORY BASIS
Years Ended December 31, 2000 1999 - ---------------------------------------------------------------------------------------------- (In Thousands) REVENUES Premiums $434,580 $359,936 Net investment income 31,089 24,786 Other income 1,997 246 - ---------------------------------------------------------------------------------------------- TOTAL REVENUES 467,666 384,968 - ---------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES Current and future policy benefits 315,803 250,328 Operating expenses 102,581 87,013 - ---------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 418,384 337,341 - ---------------------------------------------------------------------------------------------- INCOME BEFORE FEDERAL INCOME TAXES 49,282 47,627 Federal income taxes 16,910 16,196 - ---------------------------------------------------------------------------------------------- NET GAIN FROM OPERATIONS 32,372 31,431 Net realized capital losses (4,201) (405) - ---------------------------------------------------------------------------------------------- NET INCOME $ 28,171 $ 31,026 ==============================================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 68 Pacific Life & Annuity Company STATEMENTS OF CAPITAL AND SURPLUS-STATUTORY BASIS
Common Stock ------------- Paid-in Unassigned Shares Amount Surplus Surplus Total - ----------------------------------------------------------------------- (In Thousands) BALANCES, JANUARY 1, 1999 2,900 $2,900 $ 37,607 $36,192 $ 76,699 Net income 31,026 31,026 Capital contribution 97,000 97,000 Other surplus transactions (3,777) (3,777) - ----------------------------------------------------------------------- BALANCES, DECEMBER 31, 1999 2,900 2,900 134,607 63,441 200,948 Net income 28,171 28,171 Other surplus transactions (3,405) (3,405) - ----------------------------------------------------------------------- BALANCES, DECEMBER 31, 2000 2,900 $2,900 $134,607 $88,207 $225,714 =======================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 69 Pacific Life & Annuity Company STATEMENTS OF CASH FLOWS-STATUTORY BASIS
Years Ended December 31, 2000 1999 - ------------------------------------------------------------------------------- (In Thousands) CASH FROM OPERATIONS Receipts Premiums $ 433,264 $ 366,624 Net investment income 27,997 22,917 Other, net 4,554 Payments Policy benefit payments (271,663) (301,317) Operating expenses (92,298) (92,375) Premium and other taxes (7,875) (10,817) Federal income taxes (25,858) (4,268) Other, net (415) - ------------------------------------------------------------------------------- NET CASH FROM OPERATIONS 63,152 (14,682) - ------------------------------------------------------------------------------- CASH FROM INVESTMENTS Proceeds Bonds 64,792 84,064 Stocks 5,391 5,918 Mortgage loans 12,654 7,017 Other 12,424 4,210 Payments for the purchase of Bonds (86,900) (108,883) Stocks (8,197) (3,550) Mortgage loans (12,000) (11,000) Other (35,568) (17,407) Net tax on capital (gains) losses 782 (2,561) - ------------------------------------------------------------------------------- NET CASH FROM INVESTMENTS (46,622) (42,192) - ------------------------------------------------------------------------------- CASH FROM FINANCING AND MISCELLANEOUS SOURCES Capital contribution 97,000 Other, net 786 (3,323) - ------------------------------------------------------------------------------- NET CASH FROM FINANCING AND MISCELLANEOUS SOURCES 786 93,677 - ------------------------------------------------------------------------------- Net change in cash and short-term investments 17,316 36,803 Cash and short-term investments, beginning of year 73,725 36,922 - ------------------------------------------------------------------------------- CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 91,041 $ 73,725 ===============================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 70 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND DESCRIPTION OF BUSINESS Pacific Life & Annuity Company (PL&A) is a stock life insurance company domiciled in the State of Arizona, and a wholly owned subsidiary of Pacific Life Insurance Company (Pacific Life). PL&A provides benefit programs to employers and other benefit plan sponsors throughout the United States and offers medical, dental, life, and other ancillary coverages to small and mid-size employers, as well as flexible funding arrangements for labor management and union trusts. In addition, stop loss products are sold through Pacific Life and companion group life insurance is sold through PL&A to self-funded plan sponsors. Also, PL&A began selling structured settlement annuities in 2000. In 1999, PL&A changed its name from PM Group Life Insurance Company and received approval from the State of New York Insurance Department to transact business in the State of New York. In connection with this approval, Pacific Life contributed $97 million of additional paid-in surplus in cash to PL&A in 1999. During 2000, PL&A began selling variable life insurance and institutional products and services and filed for variable annuity product approval in the State of New York. BASIS OF PRESENTATION These financial statements have been prepared in accordance with accounting practices prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America (GAAP). Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (NAIC), as well as state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. Accounting practices prescribed or permitted by the Insurance Department of the State of Arizona differ in certain respects, which in some cases are materially different from GAAP. GAAP stockholder's equity as of December 31, 2000 and 1999 was $255.5 million and $221.9 million, respectively, compared to statutory capital and surplus as included in these financial statements of $225.7 million and $200.9 million, respectively. GAAP net income for the years ended December 31, 2000 and 1999 was $30.9 million and $30.0 million, respectively, compared to statutory net income included in these financial statements of $28.2 million and $31.0 million, respectively. The significant differences are noted below: An interest maintenance reserve (IMR) is established to capture realized investment gains and losses, net of tax, on the sale of fixed income investments resulting from changes in the general level of interest rates, and is amortized into income over the remaining years to expected maturity of the assets sold under statutory accounting practices; no such reserve is allowed under GAAP. An asset valuation reserve (AVR), based upon a formula prescribed by the NAIC, is established as a liability to offset potential noninterest related investment losses, and changes in the AVR are charged or credited directly to surplus under statutory accounting practices; no such reserve is allowed under GAAP. Investments in bonds and preferred stocks are generally carried at amortized cost under statutory accounting practices; under GAAP, investments in bonds and preferred stocks, other than those classified as held to maturity, are carried at estimated fair value. Certain assets, principally deferred income taxes and furniture and equipment, are designated as non admitted and excluded from assets by a direct charge to surplus under statutory accounting practices; under GAAP, such assets are carried on the statement of financial condition with appropriate valuation allowances. 71 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) In 1998, the NAIC adopted the Codification of Statutory Accounting Principles (Codification). Codification, which is intended to standardize regulatory accounting and reporting to state insurance departments, is effective January 1, 2001. However, statutory accounting principles will continue to be established by individual state laws and permitted practices. The Insurance Department of the State of Arizona is requiring adoption of Codification for the preparation of statutory financial statements effective January 1, 2001. The impact of adopting Codification will be reported as an adjustment to statutory surplus on the effective date. PL&A has not yet finalized the effects of adopting Codification, but anticipates that there will not be any adverse effect on statutory surplus. PL&A's significant statutory accounting practices are described below. INVESTMENTS Bonds qualifying for amortization are carried at amortized cost; all other bonds are carried at prescribed values. Preferred stocks are principally stated at amortized cost. Common stocks are carried at market value. The cost of bonds, and preferred and common stocks is adjusted for impairments in value deemed to be other than temporary. Mortgage loans are stated at unpaid principal balances. Short-term investments are carried at amortized cost which approximates estimated fair value. Short-term investments generally consist of bonds, commercial paper and money market instruments whose maturities at the time of acquisition were one year or less. Other invested assets, which consist principally of joint venture and partnership interests, are primarily accounted for using the equity method. The AVR is computed in accordance with a prescribed formula and is designed to stabilize surplus against valuation and credit-related losses for certain invested assets. Changes to the AVR are reported as direct additions to, or deductions from, unassigned surplus. The IMR results in the deferral of after-tax realized capital gains and losses attributable to interest rate fluctuations on fixed income investments. These capital gains and losses are amortized into net investment income over the remaining life of the investment sold. The IMR of $1.8 million and $1.2 million as of December 31, 2000 and 1999, respectively, is included in other liabilities. Net realized capital gains and losses are determined on the specific identification method and are presented net of Federal capital gains tax and transfers to the IMR. Derivatives that qualify for hedge accounting are valued consistently with the hedged items. Realized hedged gains and losses on fixed income contracts are deferred and amortized over the average life of the related hedged assets or insurance liabilities. Derivatives that do not qualify for hedge accounting are valued at market value through surplus while still held and when realized through income. POLICY RESERVES AND DEPOSIT FUNDS Medical expense claim reserves are based on PL&A's actual loss experience. Group life insurance reserves, including premium waivers, are based on various tabular methods and actual loss experience. Disabled life reserves are determined using various tabular reserve methods. Reserves for variable life insurance and individual annuities are maintained principally on the Commissioners' Reserve Valuation Method. 72 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) The liability for deposit funds, including guaranteed interest contracts, is based primarily upon, and is not less than, the policyholders' equity in their deposit accounts, including credited interest. REVENUES, BENEFITS AND EXPENSES Premiums are recognized as revenue over the premium paying period. Deposits made in connection with annuity contracts are recognized as revenue when received. Investment income is recorded as earned. Expenses, including policy acquisition costs and Federal income taxes, are charged to operations as incurred. FEDERAL INCOME TAXES PL&A's operations are included in the consolidated Federal income tax return of Pacific Mutual Holding Company, PL&A's ultimate parent. PL&A is allocated an income tax expense based on the effect of including its operations in the consolidated return. Deferred taxes are provided for as permitted by the Insurance Department of the State of Arizona. The net deferred tax asset is non admitted. This practice has no effect on total surplus. OTHER SURPLUS TRANSACTIONS Other surplus transactions primarily consist of unrealized capital gains and losses, changes in non admitted assets and change in the AVR. SEPARATE ACCOUNTS Separate account assets are recorded at market value and the related liabilities represent segregated contract owner funds maintained in accounts with individual investment objectives. The operating results of separate account assets pass through to separate account policyholders and contract owners. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair value of financial instruments disclosed in Notes 2 and 3 has been determined using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented may not be indicative of the amounts PL&A could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. RISK-BASED CAPITAL Risk-based capital is a method developed by the NAIC to measure the minimum amount of capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. The adequacy of a company's actual capital is measured by the risk-based capital results as determined by the formulas. Companies below minimum risk-based capital requirements are classified within certain levels, each of which requires specified corrective action. As of December 31, 2000 and 1999, PL&A exceeded the minimum risk-based capital requirements. BUSINESS RISKS PL&A operates in a business environment which is subject to various risks and uncertainties. PL&A's group health insurance is subject to varying levels of regulation. The United States Congress has, from time to time, considered various health care proposals and several states have enacted health care reform legislation. Although 73 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) it is not possible to predict what changes may be adopted at the state or Federal level, certain changes could have a negative impact upon the group health business of PL&A. USE OF ESTIMATES The preparation of financial statements in conformity with accounting practices prescribed or permitted by regulatory authorities requires management to make estimates and assumptions that affect the reported amounts of admitted assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the 2000 financial statement presentation. 2. INVESTMENTS IN DEBT AND EQUITY SECURITIES The amortized cost, gross unrealized gains and losses, and estimated fair value of debt and equity securities are shown below. Debt securities include bonds, redeemable preferred stocks and short-term investments. Equity securities include perpetual preferred stocks and common stocks. The estimated fair value of publicly traded securities is based on quoted market prices. For securities not actively traded, estimated fair values were provided by independent pricing services specializing in matrix pricing and modeling techniques. PL&A also estimates certain fair values based on interest rates, credit quality and average maturity, or from securities with comparable trading characteristics.
Gross Unrealized Amortized ---------------- Estimated Cost Gains Losses Fair Value -------------------------------------- (In Thousands) December 31, 2000: ------------------ U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 7,976 $ 78 $ 2 $ 8,052 Obligations of states and political subdivisions 9,456 147 13 9,590 Foreign governments 3,058 162 3,220 Corporate securities 281,495 3,750 2,514 282,731 Mortgage-backed and asset-backed securities 50,645 850 335 51,160 Redeemable preferred stock 2,276 2 2,274 ------------------------------------- Total debt securities $354,906 $ 4,987 $ 2,866 $357,027 ===================================== Total equity securities $ 12,443 $ 1,607 $ 2,503 $ 11,547 ===================================== December 31, 1999: ------------------ U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 6,029 $ 7 $ 22 $ 6,014 Obligations of states and political subdivisions 8,290 141 40 8,391 Foreign governments 1,000 37 1,037 Corporate securities 231,786 1,241 2,624 230,403 Mortgage-backed and asset-backed securities 68,657 28 1,602 67,083 Redeemable preferred stock 6,111 22 6 6,127 ------------------------------------- Total debt securities $321,873 $ 1,476 $ 4,294 $319,055 ===================================== Total equity securities $ 5,999 $ 3,843 $ 1,454 $ 8,388 =====================================
74 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 2. INVESTMENTS IN DEBT AND EQUITY SECURITIES (Continued) The amortized cost and estimated fair value of debt securities as of December 31, 2000, by contractual repayment date of principal, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized Estimated Cost Fair Value -------------------- (In Thousands) Due in one year or less $ 83,464 $ 83,426 Due after one year through five years 162,152 162,702 Due after five years through ten years 21,085 21,487 Due after ten years 37,560 38,252 ------------------- 304,261 305,867 Mortgage-backed and asset-backed securities 50,645 51,160 ------------------- Total $354,906 $357,027 ===================
Proceeds from sales of investments in debt securities were $13.1 million and $23.3 million for the years ended December 31, 2000 and 1999, respectively. Gross gains of $1.1 million and $0.1 million and gross losses of $0.1 million and $0.9 million were realized on those sales for the years ended December 31, 2000 and 1999, respectively. 3. FINANCIAL INSTRUMENTS The estimated fair values of PL&A's financial instruments, including debt and equity securities (Note 2), are as follows:
December 31, 2000 December 31, 1999 ----------------- ----------------- Statement Estimated Statement Estimated Value Fair Value Value Fair Value ------------------------------------------ (In Thousands) Assets: Debt securities $354,379 $357,027 $321,873 $319,055 Equity securities 11,536 11,547 8,388 8,388 Mortgage loans 15,004 16,152 15,409 17,131 Financial futures contracts (1,110) Foreign currency derivatives (129) 7 Liabilities: Guaranteed interest contracts 20,314 20,314 Deposit liabilities 3,213 3,213 6,300 6,300
The following methods and assumptions were used to estimate the fair value of these financial instruments as of December 31, 2000 and 1999: MORTGAGE LOANS The estimated fair value of the mortgage loan portfolio is determined by discounting the estimated future cash flows, using a year-end market rate which is applicable to the yield, credit quality and average maturity of the composite portfolio. 75 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 3. FINANCIAL INSTRUMENTS (Continued) GUARANTEED INTEREST CONTRACTS AND DEPOSIT LIABILITIES The estimated fair value of fixed maturity guaranteed interest contracts is estimated using the rates currently offered for deposits of similar remaining maturities. The estimated fair value of deposit liabilities with no defined maturities is the amount payable on demand. FINANCIAL FUTURES CONTRACTS PL&A uses exchange-traded financial futures contracts to hedge cash flow timing differences between assets and liabilities and overall portfolio duration. Assets and liabilities are rarely acquired or sold at the same time, which creates a need to hedge their change in value during the unmatched period. In addition, foreign currency futures may be used to hedge foreign currency risk on non-U.S. dollar denominated securities. Financial futures contracts obligate the holder to buy or sell the underlying financial instrument at a specified future date for a set price and may be settled in cash or by delivery of the financial instrument. Price changes on futures are settled daily through the required margin cash flows. The notional amounts of the contracts do not represent future cash requirements, as PL&A intends to close out open positions prior to expiration. FOREIGN CURRENCY DERIVATIVES PL&A enters into foreign exchange forward contracts to hedge against fluctuations in foreign currency exposure. Foreign currency derivatives involve the exchange of foreign currency denominated payments for U.S. dollar denominated payments. Gains and losses on foreign exchange forward contracts offset losses and gains, respectively, on the related foreign currency denominated assets. Foreign currency derivatives expire during the year 2001. 4. LIABILITY FOR GROUP HEALTH UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES Activity in the liability for group health unpaid claims and claim adjustment expenses, which is included in both policy reserves and policy benefits payable, is summarized as follows:
Years Ended December 31, 2000 1999 ------------------ (In Thousands) Balance at January 1 $ 91,583 $137,181 Less reinsurance recoverables 107 119 ------------------ Net balance at January 1 91,476 137,062 ------------------ Incurred related to: Current year 301,160 279,002 Prior years (27,823) (33,283) ------------------ Total incurred 273,337 245,719 ------------------ Paid related to: Current year 221,370 213,682 Prior years 45,078 77,623 ------------------ Total paid 266,448 291,305 ------------------ Net balance at December 31 98,365 91,476 Plus reinsurance recoverables 49 107 ------------------ Balance at December 31 $ 98,414 $ 91,583 ==================
76 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 4. LIABILITY FOR GROUP HEALTH UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES (Continued) As a result of favorable settlement of prior years' estimated claims, the provision for claims and claim adjustment expenses decreased by $27.8 million and $33.3 million for the years ended December 31, 2000 and 1999, respectively. 5. RELATED PARTY TRANSACTIONS Pacific Life provides services of certain management and other personnel, and other support services to PL&A. Services provided include employee participation in certain benefit plans provided by Pacific Life (Note 6). Charges for these services amounted to $12.9 million and $11.9 million for the years ended December 31, 2000 and 1999, respectively, and are included in operating expenses. Under a reinsurance and service agreement, which terminated on January 1, 1999, PL&A assumed substantially all of Pacific Life's group life and health insurance. Premiums of ($0.6) million and $0.4 million and benefits of $1.4 million and ($0.7) million were assumed for the years ended December 31, 2000 and 1999, respectively. Amounts payable under this agreement were $0.4 million and $1.3 million as of December 31, 2000 and 1999, respectively. Effective January 1, 1999, PL&A began to provide underwriting and administrative services for this business under an administrative services agreement. Fees earned amounted to $10.7 million and $10.2 million for the years ended December 31, 2000 and 1999, respectively, and are included as an offset to operating expenses. 6. EMPLOYEE BENEFIT PLANS PL&A permits eligible employees to participate in a retirement plan provided by Pacific Life. PL&A permits certain employees to defer a portion of cash compensation under a deferred compensation plan provided by Pacific Life. Interest accrued to this plan amounted to $0.4 million for the years ended December 31, 2000 and 1999. PL&A participates in a defined benefit health care plan and a defined benefit life insurance plan (the Plans) provided by Pacific Life. The Plans provide postretirement benefits for all eligible retirees and their dependents. Generally, qualified employees may become eligible for these benefits if they reach normal retirement age, have been covered under Pacific Life's policy as an active employee for a minimum continuous period prior to the date retired, and have an employment date before January 1, 1990. The Plans contain cost-sharing features such as deductibles and coinsurance, and require retirees to make contributions which can be adjusted annually. Pacific Life's commitment to qualified employees who retire after April 1, 1994 is limited to specific dollar amounts. Pacific Life reserves the right to modify or terminate the Plans at any time. Pacific Life and PL&A utilize the accrual method of accounting for the costs of the Plans as prescribed by the Insurance Departments of the States of California and Arizona, respectively. PL&A has elected to amortize the transition obligation, which was allocated from Pacific Life, of $3.7 million over 20 years. The transition obligation amortization amounted to $0.2 million for each of the years ended December 31, 2000 and 1999. The postretirement obligation included in other liabilities reflects the amortized balance less reductions due to payouts under the Plans. The balance as of December 31, 2000 and 1999 is $1.1 million and $1.0 million, respectively. 7. DIVIDEND RESTRICTIONS Dividend payments by PL&A to its parent cannot exceed the lesser of 10% of surplus as of the preceding year-end, as regards to policyholders, or the statutory net gain from operations for the previous calendar year, without prior approval from the Insurance Commissioner of the State of Arizona. No dividends were paid during 2000 and 1999. During 2001, PL&A can pay dividends amounting to approximately $22.3 million without prior approval from the Insurance Commissioner of the State of Arizona. 77 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 8. COMMITMENTS AND CONTINGENCIES PL&A has outstanding commitments to make investments in bonds, mortgage loans and other invested assets as follows (In Thousands):
Year Ending December 31: ------------------------ 2001 $ 9,620 2002 through 2005 25,679 2006 and thereafter 17,324 ------- Total $52,623 =======
PL&A leases office facilities under various noncancelable operating leases. Rent expense in connection with these leases was $2.6 million and $2.4 million for the years ended December 31, 2000 and 1999, respectively. Aggregate minimum future commitments are as follows (In Thousands):
Year Ending December 31: ------------------------ 2001 $3,415 2002 3,321 2003 1,106 2004 1,102 2005 and thereafter 685 ------ Total $9,629 ======
PL&A is a respondent in a number of legal proceedings, some of which involve extra-contractual damages. In the opinion of management, the outcome of these proceedings is not likely to have a material adverse effect on the financial position or results of operations of PL&A. - -------------------------------------------------------------------------------- 78 APPENDIX A - JOINT EQUAL AGE --------------------------------------------------------- An example Joint equal age is a calculation that combines the ages This example and insurance risks of two people insured by a policy. assumes a male It changes many possible combinations of ages, risk smoker who is age classes, and genders for the two people insured by the 65 and a female policy into a two life status. With joint equal age, we nonsmoker who is assume that both people have the same age, gender (both age 55. always male), and risk class (both smoker or both nonsmoker). Here's how we calculate the joint How we use joint equal age equal age. Using the joint equal age of the two people insured by the policy eliminates many of the tables needed when Step 1 age rates are used. We use the joint equal age for calculating the following: Subtract 0 from the male age of 65. For . certain policy charges. We use joint equal age to the female, determine the rates per $1000 of initial face amount subtract 5 from age for the sales surrender target, underwriting 55. surrender charge. . the death benefit under Option D. Adjusted ages after Step 1: How we calculate joint equal age .Male 65 Here are the five steps we use to calculate joint equal .Female 50 age. We start with the actual ages of the two people insured by the policy on the policy date. Step 2 Step 1 Adjust ages for gender Subtract 50 from 65. The difference We subtract years from the adjusted age we calculated is 15. The add-on in Step 1, based on gender. The table below shows how factor for 15 is 6 we make the adjustment. in the table. --------------------------------------------------------- Step 3 Gender Subtract from adjusted age (years) --------------------------------------------------------- Add 6, the add-on Female 5 factor to 50, the Male 0 younger adjusted Unisex 1 age. --------------------------------------------------------- The joint equal age Step 2 Determine the add-on factor is 56. We subtract the younger adjusted age from the older adjusted age. We find the difference between the two in the table below and go across the row to determine the add-on factor. ---------------------- ---------------------- Difference in Add-on Difference in Add-on adjusted age factor adjusted age factor (years) (years) (years) (years) ---------------------- ---------------------- 0 0 40-44 12 1-2 1 45-47 13 3-4 2 48-50 14 5-6 3 51-53 15 7-9 4 54-56 16 10-12 5 57-60 17 13-15 6 61-64 18 16-18 7 65-69 19 19-23 8 70-75 20 24-28 9 76-82 21 29-34 10 83-91 22 35-39 11 92-100 23 ---------------------- ---------------------- Step 3 Calculate joint equal age We add the add-on factor to the younger adjusted age (from Step 1). The sum is the joint equal age. 79 APPENDIX B--RATES PER $1,000 OF INITIAL FACE AMOUNT
- ---------------------------------------------- ---------------------------------------------- Face amount Face amount Joint Sales Underwriting component Joint Sales Underwriting component of equal surrender surrender of M & E equal surrender surrender M & E age target/1/ charge risk charge/2/ age target/1/ charge risk charge/2/ - ---------------------------------------------- ---------------------------------------------- 15 3.98 2.0 0.098 51 13.20 5.3 0.159 16 4.05 2.1 0.098 52 13.98 5.4 0.163 17 4.13 2.1 0.099 53 14.82 5.5 0.167 18 4.30 2.2 0.100 54 16.00 5.8 0.172 19 4.27 2.3 0.100 55 17.07 6.1 0.176 20 4.34 2.3 0.101 56 18.42 6.4 0.182 21 4.52 2.4 0.102 57 19.77 6.7 0.187 22 4.60 2.4 0.103 58 21.33 7.0 0.193 23 4.68 2.5 0.104 59 22.92 7.3 0.200 24 4.76 2.6 0.105 60 24.60 7.6 0.207 25 4.84 2.7 0.106 61 26.29 7.9 0.214 26 4.93 2.8 0.107 62 28.18 8.2 0.222 27 5.02 2.9 0.108 63 30.17 8.5 0.231 28 5.11 3.0 0.109 64 32.83 8.9 0.240 29 5.18 3.1 0.110 65 35.66 9.3 0.250 30 5.26 3.2 0.111 66 38.42 9.7 0.261 31 5.34 3.3 0.112 67 41.48 10.1 0.273 32 5.42 3.4 0.114 68 44.75 10.5 0.286 33 5.51 3.5 0.115 69 48.08 10.9 0.300 34 5.84 3.6 0.117 70 50.94 11.3 0.316 35 5.98 3.7 0.118 71 54.60 11.7 0.332 36 6.33 3.8 0.120 72 56.78 12.1 0.350 37 6.60 3.9 0.122 73 60.34 12.5 0.370 38 6.78 4.0 0.123 74 65.37 12.9 0.391 39 7.17 4.1 0.125 75 68.95 13.3 0.414 40 7.58 4.2 0.127 76 70.86 13.7 0.440 41 8.02 4.3 0.129 77 72.68 14.1 0.467 42 8.58 4.4 0.132 78 74.86 14.5 0.498 43 9.08 4.5 0.134 79 77.34 14.9 0.531 44 9.52 4.6 0.137 80 79.33 15.3 0.567 45 9.77 4.7 0.139 81 76.61 15.7 0.553 46 10.14 4.8 0.142 82 78.74 16.1 0.584 47 10.62 4.9 0.145 83 77.90 16.5 0.599 48 11.02 5.0 0.148 84 80.62 16.9 0.614 49 11.57 5.1 0.151 85 82.10 17.3 0.640 50 12.36 5.2 0.155 - ---------------------------------------------- --------------------------------------------
/1/ Maximum sales surrender target for the joint equal age. The sales surrender target charged may be less and will depend upon the individual ages and the sex of the insureds. /2/ Maximum face amount component of the M&E risk charge for the joint equal age. The face amount component of the M&E risk charge may be less and will depend upon the individual ages and the sex of the insureds. 80 APPENDIX C - DEATH BENEFIT PERCENTAGES
- ---------------- --------------- --------------- ----------------------------- Age Percentage Age Percentage Age Percentage Age Percentage - ---------------- --------------- --------------- ----------------------------- 0-40 250 50 185 60 130 70 115 41 243 51 178 61 128 71 113 42 236 52 171 62 126 72 111 43 229 53 164 63 124 73 109 44 222 54 157 64 122 74 107 45 215 55 150 65 120 75-90 105 46 209 56 146 66 119 91 104 47 203 57 142 67 118 92 103 48 197 58 138 68 117 93 102 49 191 59 134 69 116 (greater than) 93 101 - ---------------- -------------- --------------- -----------------------------
81 APPENDIX D - DEATH BENEFIT FACTOR TABLE
- ------------------------------------------------------------------------------------------------ Rate per $1.00 of Face Amount - ------------------------------------------------------------------------------------------------ Joint equal age Policy years* - ------------------------------------------------------------------------------------------------ 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75+ - ------------------------------------------------------------------------------------------------ 15 1.000 1.000 1.000 1.001 1.002 1.005 1.010 1.022 1.048 1.102 1.210 1.415 1.702 1.957 2.000 20 1.000 1.000 1.001 1.002 1.004 1.009 1.021 1.046 1.100 1.207 1.411 1.700 1.957 2.000 2.000 25 1.000 1.000 1.001 1.003 1.008 1.019 1.044 1.097 1.204 1.408 1.697 1.956 2.000 2.000 2.000 30 1.000 1.001 1.003 1.007 1.018 1.042 1.094 1.200 1.404 1.694 1.955 2.000 2.000 2.000 2.000 35 1.000 1.002 1.006 1.016 1.039 1.091 1.197 1.400 1.692 1.954 2.000 2.000 2.000 2.000 2.000 40 1.001 1.005 1.014 1.036 1.087 1.192 1.395 1.688 1.953 2.000 2.000 2.000 2.000 2.000 2.000 45 1.002 1.011 1.032 1.081 1.185 1.388 1.682 1.952 2.000 2.000 2.000 2.000 2.000 2.000 2.000 50 1.006 1.025 1.072 1.174 1.376 1.674 1.949 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 55 1.015 1.058 1.157 1.358 1.660 1.945 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 60 1.035 1.128 1.327 1.636 1.936 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 65 1.079 1.274 1.595 1.920 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 70 1.175 1.519 1.891 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 75 1.357 1.822 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 80 1.620 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 85 1.894 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 90 1.969 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 95 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 99 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 - ------------------------------------------------------------------------------------------------
* Factors are portrayed for both joint equal ages and policy anniversaries, at five year intervals. See your policy for one year increments in death benefit factors. 82 PACIFIC SELECT ESTATE PRESERVER - NY WHERE TO GO FOR MORE INFORMATION The Pacific Select For more information about Pacific Select Estate Estate Preserver - Preserver - NY, please call or write to us at the NY variable life address below. You should also use this address to send insurance policy is us any notices, forms or requests about your policy. underwritten by Pacific Life & Annuity Company. --------------------------------------------------------- How to contact us Pacific Life & Annuity Company Client Services Department 700 Newport Center Drive P.O. Box 6530 Newport Beach, California 92658-7500 1-888-595-6997 7 a.m. through 5 p.m. Pacific time --------------------------------------------------------- How to contact the You can also find reports and other information about SEC the policy and separate account from the SEC. The SEC may charge you a fee for this information. Public Reference Section of the SEC Washington, D.C. 20549-6009 1-800-SEC-0330 Internet: www.sec.gov PACIFIC SELECT EXEC SEPARATE ACCOUNT PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS Contents of Registration Statement This Registration Statement on Form S-6 comprises the following papers and documents: The facing sheet. The cross-reference table. The Prospectus consisting of 82 pages. The undertaking to file reports. Representation pursuant to Section 26(e) of the Investment Company Act of 1940. Rule 484 undertaking. The Signatures. Written consent of the following person (included in the exhibits shown below): Deloitte & Touche LLP, independent auditors Dechert Price & Rhoads The following exhibits: 1. (1) (a) Minutes of Action of Board of Directors of PM Group Life Insurance Company (PL&A) dated July 1, 1998 (b) Memorandum Establishing Separate Account (2) Inapplicable (3) (a) Form of Distribution Agreement Between PL&A and Pacific Select Distributors, Inc. (b) Form of Selling Agreement Between Pacific Select Distributors, Inc. and Various Broker-Dealers (4) Inapplicable (5) (a) Flexible Premium Variable Life Insurance Policy (Form P0156-NY) (b) Last Survivor Added Protection Benefit Rider (Form R01LST-NY) (c) Individual Annual Renewable Term Rider (Form R01IRT-NY) (d) Policy Split Option Rider (Form R94PSO-NY) (e) Accelerated Living Benefit Rider (Form R92ALB-NY) (f) Estate Tax Repeal Rider (Form R01ETR-NY) (6) (a) Bylaws of PL&A (b) Articles of Incorporation of PM Group Life Insurance Company (c) Amended & Restated Articles of Incorporation for PM Group Life Insurance Company (7) Inapplicable (8) Inapplicable (9) (a) Form of Participation Agreement between PL&A and Pacific Select Fund (b) Administrative Agreement Between PL&A and Pacific Life Insurance Company (Pacific Life) (10) Application for Flexible Premium Variable Life Insurance Policy & General Questionnaire 2. Form of Opinion and consent of legal officer of PL&A as to legality of Policies being registered 3. Inapplicable 4. Inapplicable 5. Inapplicable 6. (a) Consent of Deloitte & Touche LLP (b) Consent of Dechert 7. (a) Opinion of Actuary (to be filed) (b) Form of Illustration of Policy Benefits (to be filed) 8. Memorandum Describing Issuance, Transfer and Redemption Procedures 9. Powers of Attorney 10. Inapplicable 11. Inapplicable 12. Inapplicable 13. Inapplicable 14. Inapplicable 15. Inapplicable 16. Inapplicable 17. Inapplicable UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940 Pacific Life & Annuity Company, the sponsoring insurance company of the Registrant, represents that the fees and charges to be deducted under the variable Life Insurance Policy ("Policy") described in the prospectus contained in this registration statement are, in the aggregate, reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed in connection with the Policy. RULE 6e-3(T) REPRESENTATION This filing is made pursuant to Rule 6e-3(T) and Rule 6c-3 under the Investment Company Act of 1940. RULE 484 UNDERTAKING Pacific Life & Annuity Company's Articles of Incorporation provide in Article IX for indemnification of directors, officers and employees of the Company. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant, Pacific Select Exec Separate Account of Pacific Life & Annuity Company, certifies that it has caused this Registration Statement on Form S-6 to be signed on its behalf by the undersigned thereunto duly authorized in the City of Newport Beach, and State of California, on this 6th day of June, 2001. PACIFIC SELECT EXEC SEPARATE ACCOUNT (Registrant) BY: PACIFIC LIFE & ANNUITY COMPANY (Depositor) BY: _____________________________________ William L. Ferris* President and Chief Executive Officer *BY: /s/ DAVID R. CARMICHAEL David R. Carmichael as attorney-in-fact (Powers of Attorney are contained as Exhibit 9 in this Registration Statement on Form S-6 for the Pacific Select Exec Separate Account.) SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Pacific Life & Annuity Company certifies that it has duly caused this Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized all in the City of Newport Beach, and State of California, on this 6th day of June, 2001. BY: PACIFIC LIFE & ANNUITY COMPANY (Registrant) BY: _________________________________ William L. Ferris * President and Chief Executive Officer *BY: /s/ DAVID R. CARMICHAEL David R. Carmichael as attorney-in-fact (Powers of Attorney are contained as Exhibit 9 in this Registration Statement on Form S-6 for the Pacific Select Exec Separate Account.) SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated: Signature Title Date ____________________ Director, President and Chief ___________ , 2001 William L. Ferris* Executive Officer ____________________ Director and Chairman of the Board ___________ , 2001 Thomas C. Sutton* ____________________ Director, Senior Vice President and ___________ , 2001 David R. Carmichael* General Counsel ____________________ Director and Secretary ___________ , 2001 Audrey L. Milfs* ____________________ Director ___________ , 2001 Glenn S. Schafer* ____________________ Chief Financial Officer and ___________ , 2001 Khanh T. Tran* Treasurer ____________________ Executive Vice President ___________ , 2001 Lynn C. Miller* ____________________ Senior Vice President ___________ , 2001 William J. Doomey* ____________________ Vice President ___________ , 2001 Gary L. Falde* *By: /s/ DAVID R. CARMICHAEL June 6, 2001 ------------------------------ David R. Carmichael as attorney-in-fact
(Powers of Attorney are contained as Exhibit 9 in this Registration Statement on Form S-6 of Pacific Select Exec Separate Account.) EX-99.1.(1)(A) 2 dex9911a.txt MINUTES OF ACTION OF BOARD OF DIRECTORS JULY 1, 98 EXHIBIT 1.(1)(A) MINUTES OF ACTION OF BOARD OF DIRECTORS OF PM GROUP LIFE INSURANCE COMPANY TAKEN BY UNANIMOUS WRITTEN CONSENT WITHOUT A MEETING The undersigned, and each of them, constituting all of the directors of PM Group Life Insurance Company, an Arizona corporation, acting by unanimous written consent without a meeting pursuant to Section 10-044 of the Arizona Revised Statutes and Article III, Section 12 of the bylaws of this corporation, take the following actions: Authority to Establish Fixed or Variable Dollar Separate Accounts, or Both, --------------------------------------------------------------------------- and to Issue Variable Life Insurance Policies and Variable Annuity Contracts. - ---------------------------------------------------------------------------- The following resolution is adopted: RESOLVED, that the Board of Directors of this corporation hereby authorizes this corporation to obtain approval from the appropriate regulatory authorities of an amendment to its Certificate of Authority to issue variable life insurance policies and variable annuity contracts and any derivative thereof being herein collectively referred to as "Variable Contracts"; and RESOLVED FURTHER, that the Board of Directors of this corporation hereby authorizes and directs the establishment of Separate Accounts ("Separate Accounts") to which the amounts received by this corporation in connection with the sale of Variable Contracts or contracts payable in fixed dollar amounts, or both, may be allocated; and RESOLVED FURTHER, that within the Separate Accounts payable in variable dollar amounts there may be a number of variable accounts with different investment policies and objectives into which a policyowner may direct their interests in the Separate Accounts; and RESOLVED FURTHER, that the Separate Accounts are to be established and maintained in accordance with the provisions of Section 20-651 of the Arizona Insurance Code and the regulations promulgated under that Section; and RESOLVED FURTHER, that any officer of this corporation is authorized and directed to take whatever action may be necessary or advisable to obtain the appropriate regulatory authority to amend the Certificate of Authority to issue Variable Contracts and to establish and maintain fixed or variable Separate Accounts, or both, and to register, file or qualify the Variable Contracts for sale, including, but not limited to, determining the states or other jurisdictions in which action shall be taken to qualify, file, or register the Variable Contracts for sale, performing any and all acts as such officer deems necessary or advisable to comply with the applicable laws of any such state or jurisdiction including making any required filings with the Arizona Insurance Department or any other regulatory authority in Arizona or any other regulatory authority in any state or jurisdiction having jurisdiction over the insurance activities of this corporation or over the Variable Contracts; performing any and all acts as such officer deems necessary or advisable to comply with the applicable laws of the United States including, but not limited to, preparing and filing registration statements with the Securities and Exchange Commission to register any Variable Contracts or interests therein under the Securities Act of 1933 and the Investment Company Act of 1940 and to register any Separate Account, the benefits of which are payable in variable dollar amounts, or interests therein under the Investment Company Act of 1940, and to file any exemptive application if necessary or advisable under the Investment Company Act of 1940 and to make such other filings or seek any interpretations that are necessary or advisable from the Securities and Exchange Commission or any other agency of the United States Government; or making any filings, seek any interpretations, or make other submissions that such officer deems necessary or advisable with other regulatory authorities having jurisdiction over the offer and sale of the Variable Contracts and to execute and file all requisite papers and documents, including, but not limited to, applications, reports, surety bonds, irrevocable consents, powers of attorneys, and appointments of agents for service of process, and the paying of all necessary fees and expenses as in such officer's judgment may be necessary or advisable. RESOLVED FURTHER, that actions taken by officers of this corporation prior to the adoption of these resolutions, which are within the authority conferred hereby had these resolutions predated such action, are hereby ratified, confirmed and approved. Dated: July 1, 1998 ------------ /s/ DAVID R. CARMICHAEL /s/ WILLIAM L. FERRIS - -------------------------- -------------------------- David R. Carmichael William L. Ferris /s/ AUDREY L. MILFS /s/ GLENN S. SCHAFER - -------------------------- -------------------------- Audrey L. Milfs Glenn S. Schafer /s/ TC SUTTON - -------------------------- Thomas C. Sutton EX-99.1.(1)(B) 3 dex9911b.txt MEMORANDUM ESTABLISHING SEPARATE ACCOUNT EXHIBIT 1. (1)(B) INTEROFFICE MEMO [--] [Logo of PM Group] DATE: September 24, 1998 TO: William L. Ferris FROM: Jane M. Guon SUBJECT: PM GROUP SEPARATE ACCOUNT FOR REGISTERED VARIABLE LIFE PRODUCTS ______________________________________________________________________________ RECOMMENDATION: - -------------- That you authorize the establishment of the Pacific Select Exec Separate Account. WHY RECOMMENDATION IS SUBMITTED AT THIS TIME: - -------------------------------------------- Documentation of this authorization must accompany registered variable life product registration filings made with the Securities and Exchange Commission. BACKGROUND: - ---------- Management has approved the development of registered variable life products, for sale in the State of New York. Amounts received by PM Group in connection with the sale of the new products will be allocated to the Pacific Select Exec Separate Account and among the subaccounts, at the policyowners' direction. On July 1, 1998, the Board of Directors of PM Group Life Insurance Company adopted resolutions authorizing any Officer of the Corporation to take whatever action necessary to establish and maintain Separate Accounts, which may be, required in connection with registered variable life products. Outside counsel for our variable life products recommends that authorization for new Separate Accounts be obtained from the Chief Executive Officer. OTHERS CONSULTED: - ---------------- Diane Ledger and Sharon Cheever concur in this recommendation. AUTHORIZATION: - ------------- On behalf of PM Group Life Insurance Company, the establishment of the Pacific Select Exec Separate Account is hereby authorized to be used in connection with registered variable life products develop ed and established by PM Group. /s/WILLIAM L. FERRIS - ----------------------------- William L. Ferris President and Chief Executive Officer EX-99.1.(3)(A) 4 dex9913a.txt FORM OF DISTRIBUTION AGREEMENT EXHIBIT 1.(3)(A) DISTRIBUTION AGREEMENT This Agreement ("Agreement") is made as of April 28, 2000 by and among PACIFIC LIFE & ANNUITY COMPANY ("PL&A"), on its own behalf and on behalf of the segregated asset accounts of PL&A listed on Exhibit A to this Agreement (the "Separate Accounts"), and 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"). WHEREAS, PL&A has established and maintains the Separate Accounts, a separate investment account, for the purpose of selling variable life contracts ("Contracts") to commence after the effectiveness of the Registration Statement relating thereto filed with the Securities and Exchange Commission on form S-6, or any successor form thereto, pursuant to the Securities Act of 1933, as amended ("1933 Act"), through Distributor, acting as general agent of PL&A; WHEREAS, the Separate Accounts are registered as a unit investment trust under the Investment Company Act of 1940 ("1940 Act"); WHEREAS, PL&A desires to retain Pacific Select Distributors as the Distributor and Principal Underwriter to provide for the sale and distribution to the public of the Contracts issued by PL&A and funded by interests in the General Account of PL&A and in the Separate Accounts and Distributor is willing to render such services; NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties agree as follows: 1. Principal Underwriter. PL&A hereby appoints Distributor, during the term of --------------------- this Agreement, subject to the registration requirements of the 1933 Act and the 1940 Act and the provisions of the Securities Exchange Act, to be the Distributor and Principal Underwriter for the sale of Contracts to the public in each state and other jurisdictions in which the Contracts may be lawfully sold. PL&A also appoints Distributor as its independent General Agent for sale of its Contracts (including any riders which PL&A may make available in connection therewith or any contracts for which the Contracts may be exchanged or converted) and for sale of such other insurance contracts or annuity contracts as PL&A may, from time to time, authorize in writing by amendment thereto. Distributor shall offer the Contracts for sale and distribution at premium rates set by PL&A. 2. Selling Agreements. Distributor is hereby authorized to enter into separate ------------------ written agreements, on such terms and conditions as Distributor determines are not inconsistent with this Agreement, with such organizations which agree to participate as a general agent and/or broker-dealer in the distribution of the Contracts and to use their best efforts to solicit applications for Contracts. Any such broker-dealer (hereinafter "Broker") shall be both registered as a broker-dealer under the Securities Exchange Act and a member of the NASD. Distributor shall be responsible for ensuring that Broker and its agents or representatives and general agent and its sub- agents soliciting applications for Contracts shall be duly and appropriately licensed, registered and otherwise qualified for the sale of the Contracts (and the riders and other contracts offered in connection therewith) under the insurance laws and any applicable blue sky laws of each state or other jurisdiction in which such policies may be lawfully sold and in which PL&A is licensed to sell such Contracts. PL&A shall undertake to appoint Broker's qualified agents or representatives and general agent's sub-agents as life insurance agents of PL&A, provided that PL&A reserves the right to refuse to appoint any proposed representative, agent, or sub-agent or once appointed, to terminate such appointment. Distributor shall be responsible for ensuring that Broker and general agent supervise its agents, representatives, or sub- agents. Distributor is also authorized to enter into separate written agreements, on such terms and conditions as Distributor determines are not inconsistent with this Agreement, with such organizations ("Wholesalers") that agree to participate in the distribution of the Contracts and to use their best efforts to solicit Brokers and general agents that, in turn, will solicit applications of the Contracts. 3. Life Insurance Agents. PL&A shall be responsible for ensuring that Broker --------------------- and its agents or representatives and general agent and its sub-agents meet all qualifications and hold any licenses or authorizations that may be required for the solicitation or sale of the Contracts under the insurance laws of the applicable jurisdictions. 4. Suitability. PL&A desires to ensure that Contracts will be sold to ----------- purchasers for whom the Contract will be suitable. Distributor shall take reasonable steps to ensure that the various representatives of Broker and sub-agents of general agents shall not make recommendations to an applicant to purchase a Contract in the absence of reasonable grounds to believe the purchase of the Contract is suitable for such applicant. While not limited to the following, a determination of suitability shall be based on information furnished to a representative or sub-agent after reasonable inquiry of such applicant concerning the applicant's other security holdings, insurance and investment objectives, financial situation and needs, and the likelihood that the applicant will continue to make any premium payments contemplated by the Contracts and will keep the Policy in force for a sufficient period of time so that PL&A's acquisition costs are amortized over a reasonable period of time. 5. Conformity with Registration Statement and Approved Sales Materials. In ------------------------------------------------------------------- performing its duties as Distributor, Distributor will act in conformity with the Prospectus and with the instructions and directions of PL&A, the requirements of the 1933 Act, the 1940 Act, the Securities Exchange Act, and all other applicable federal and state laws and regulations. Distributor shall not give any information nor make any representations, concerning any aspect of the Contract or of PL&A's operations to any persons or entity unless such information or representations are contained in the Registration Statement and the pertinent prospectus filed with the Securities and Exchange Commission, or are contained in sales or promotional literature approved by PL&A. Distributor will not use and will take reasonable steps to ensure Broker will not use any sales promotion material and advertising that has not been previously approved by PL&A. - -------------------------------------------------------------------------------- Page 2 of 8 04/28/00 6. Expenses. During the term of this Agreement, Distributor will bear all of -------- its expenses in complying with this Agreement, including the following expenses: (a) costs of sales presentations, mailings, sales promotion materials, advertising, and any other marketing efforts by Distributor in connection with the distribution or sale of the Contracts; and (b) any compensation paid to employees of Distributor and to wholesalers, Brokers, and general agents in connection with the distribution or sale of the Contracts. Notwithstanding any other provision of this Agreement, it is understood and agreed that PL&A shall at all times retain the ultimate responsibility for and control of all functions performed pursuant to this Agreement, and for marketing the Contract, and reserves the right to direct, approve or disapprove any action hereunder taken on its behalf by Distributor. 7. Applications. Completed applications for Contracts solicited by such Broker ------------ through its agents or representatives or by general agent through its sub- agents shall be transmitted directly to PL&A. All payments under the Contracts shall be made by check to PL&A or by other method acceptable to PL&A, and if received by Distributor, shall be held at all times in a fiduciary capacity and remitted promptly to PL&A. All such payments will be the property of PL&A. PL&A has the sole authority to approve or reject such applications or payments and maintains ultimate responsibility for underwriting. Anything in this Agreement to the contrary notwithstanding, PL&A retains the ultimate right to control the sale of the Contracts and to appoint and discharge life insurance agents of PL&A. 8. Standard of Care. Distributor shall be responsible for exercising ---------------- reasonable care in carrying out the provisions of this Agreement. 9. Reports. Distributor shall be responsible for maintaining the records of ------- Broker and general agent and their agents, representatives or sub-agents who are licensed, registered and otherwise qualified to sell the Contracts; calculating and furnishing the fees payable to Brokers or general agents; and for furnishing periodic reports to PL&A as to the sale of Contracts made pursuant to this Agreement. 10. Records. Distributor shall maintain and preserve such records as are ------- required of it by applicable laws and regulations. The books, accounts, and records of PL&A, the Separate Accounts, and Distributor shall be maintained to clearly and accurately disclose the nature and details of the transactions, including such accounting information as necessary to support the reasonableness of the amounts to be paid by PL&A hereunder. 11. Compensation. For the services rendered and product development in the ------------ initial sales efforts and continuing obligations under this Agreement, PL&A shall pay Distributor in the amounts set forth in Schedule A, which schedule is incorporated herein. PL&A shall arrange for the payment of commissions, through Distributor, to those Brokers and general agents that sell Contracts under agreements entered into pursuant to Section 2, hereof, and to wholesalers that solicit brokers and - -------------------------------------------------------------------------------- Page 3 of 8 04/28/00 general agents to sell Contracts under agreements entered into pursuant to Section 2, hereof, in amounts as may be agreed to by PL&A and Distributor specified in such written agreements. 12. Investigation and proceedings. Distributor and PL&A agree to cooperate ----------------------------- fully in any insurance regulatory investigation or proceeding or judicial proceeding arising in connection with the Contracts distributed under this Agreement. Distributor further agrees to furnish regulatory authorities with any information or reports in connection with such services that may be requested in order to ascertain whether the operations of PL&A and the Separate Accounts are being conducted in a manner consistent with applicable laws and regulations. Distributor and PL&A further agree to cooperate fully in any securities regulatory investigation or proceeding with respect to PL&A, Distributor, their affiliates and their agents or representatives to the extent that such investigation or proceeding is in connection with Contracts distributed under this Agreement. Without limiting the foregoing: (a) Distributor will be notified promptly of any customer complaint or notice of any regulatory investigation or proceeding or judicial proceeding received by PL&A with respect to Distributor or any agent, representative, or sub-agent of a Broker or general agent or which may affect PL&A's issuance of any Contract sold under this Agreement; and (b) Distributor will promptly notify PL&A of any customer complaint or notice of any regulatory investigation or proceeding received by Distributor or its affiliates with respect to Distributor or any agent, representative, or sub-agent of a Broker or general agent in connection with any Contract distributed under this Agreement or any activity in connection with any such Contract. In the case of a meritorious customer complaint, Distributor and PL&A will cooperate in investigating such complaint and any response will be sent to the other party to this Agreement for approval not less than five business days prior to its being sent to the customer or regulatory authority, except that if a more prompt response is required, the proposed response shall be communicated by telephone or telegraph. 13. Indemnification. PL&A hereby agrees to indemnify and hold harmless --------------- Distributor and its officers and directors, and employees for any expenses (including legal expenses), losses, claims, damages, or liabilities incurred by reason of any untrue or alleged untrue statement or representation of a material fact or any omission or alleged omission to state a material fact required to be stated to make other statements not misleading, if made in reliance on any prospectus, registration statement, post-effective amendment thereof, or sales materials supplied or approved by PL&A or the Separate Accounts. PL&A shall reimburse each such person for any legal or other expenses reasonably incurred in connection with investigating or defending any such loss, liability, damage, or claim. However, in no case shall PL&A be required to indemnify for any expenses, losses, claims, damages, or liabilities that have resulted from the willful misfeasance, bad faith, negligence, misconduct, or wrongful act of Distributor. Distributor hereby agrees to indemnify and hold harmless PL&A, its officers, directors, and employees, and the Separate Accounts for any expenses, losses, claims, damages, or liabilities - -------------------------------------------------------------------------------- Page 4 of 8 04/28/00 arising out of or based upon any of the following in connection with the offer or sale of the contracts: 1) except for such statements made in reliance on any prospectus, registration statement or sales material supplied or approved by PL&A or the Separate Accounts, any untrue or alleged untrue statement of representation made; 2) any failure to deliver a currently effective prospectus; 3) the use of any unauthorized sales literature by any officer, employee, agent, or sub-agent of Distributor, Broker or general agent; or 4) any willful misfeasance, bad faith, negligence, misconduct or wrongful act. Distributor shall reimburse each such person for any legal or other expenses reasonably incurred in connection with investigating or defending any such loss, liability, damage, or claim. Promptly after receipt by a party entitled to indemnification ("Indemnified Party") of notice of the commencement of any action, if a claim for indemnification in respect thereof is to be made against PL&A or Distributor ("Indemnifying Party") such Indemnified Party will notify Indemnifying Party in writing of the commencement thereof, but failure to notify the Indemnifying Party of any claim shall not relieve it from any liability which it may have to the person against whom such action is brought otherwise than on account of this agreement contained in this Section 13. The Indemnifying Party will be entitled to participate in the defense of the Indemnified Party and such participation will not relieve such Indemnifying Party of the obligation to reimburse the Indemnified Party for reasonable legal and other expenses incurred by such Indemnified Party in defending himself. 14. Agent of Pacific Life & Annuity Company or Separate Accounts. Any person, ------------------------------------------------------------ even though also an officer, director, employee, or agent of Distributor, who may be or become an officer, director, employee, or agent of PL&A or the Separate Accounts shall be deemed when rendering services to PL&A or the Separate Accounts or acting in any business of PL&A or the Separate Accounts, to be rendering such services to or acting solely for PL&A or the Separate Accounts and not as an officer, director, employee, or agent or one under the control or direction of Distributor even thought paid by Distributor. Likewise, any person even though also an officer, director, employee, or agent of PL&A or the Separate Accounts, who may be or become an officer, director, employee, or agent of Distributor shall be deemed, when rendering services to Distributor or acting in any business of Distributor, to be rendering such services to or acting solely for Distributor and not as an officer, director, employee, or agent or one under the control or direction of PL&A or the Separate Accounts even though paid by PL&A or the Separate Accounts. 15. Books and Records. It is expressly understood and agreed that all ----------------- documents, reports, records, books, files and other materials relating to this Agreement and the services to be performed hereunder shall be the sole property of PL&A and the Separate Accounts and that such property shall be held by Distributor as agent, during the effective term of this Agreement. Distributor shall deliver this material to PL&A upon the termination of this Agreement free from any claim or retention of rights. During the term of this Agreement and for a period of three years from the date of termination of this Agreement, Distributor will not disclose or use any records or information and will regard and preserve as confidential all information related to the business of PL&A or the Separate Accounts that may be obtained by Distributor from any source as a result of this Agreement and will disclose such information only if PL&A or the Separate Accounts has authorized such disclosure, or if such disclosure is expressly required by applicable federal or state - -------------------------------------------------------------------------------- Page 5 of 8 04/28/00 regulatory authorities. Distributor further acknowledges and agrees that, in the event of a breach or threatened breach by it of the provisions of this article, PL&A will have no adequate remedy in moneys or damages and, accordingly, PL&A shall be entitled in its discretion to seek an injunction against such breach. However, no specification in this Agreement of a specific legal or equitable remedy shall be construed as a waiver or prohibition against any other legal or equitable remedy in the event of a breach of a provision of this Agreement. 16. Employees. Distributor will not employ, except with the prior written --------- approval of the Commissioner of Insurance of the state of Arizona, in any material connection with the handling of the Separate Accounts' assets any person who, to the knowledge of Distributor: (a) in the last 10 years has been convicted of any felony or misdemeanor arising out of conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving violations of Sections 1341, 1342, or 1343 of Title 18, United States Code; or (b) within the last 10 years has been found by any state regulatory authority to have violated or has acknowledged violation of any provision of any state insurance law involving fraud, deceit, or knowing misrepresentation; or (c) within the last 10 years has been found by any federal or state regulatory authorities to have violated or have acknowledged violation of any provision of federal or state securities laws involving fraud, deceit, or knowing misrepresentation. 17. Termination. This Agreement shall terminate automatically upon its ----------- assignment without the prior written consent of both parties. This Agreement may be terminated at any time, for any reason, by either party on 60 days' written notice to the other party, without the payment of any penalty. Upon termination of this Agreement, all authorizations, rights, and obligations shall cease except the obligation to settle accounts hereunder, including commissions on premiums subsequently received for Contracts in effect at time of termination, and the agreements contained in Sections 12 and 13 hereof. 18. Regulations. This Agreement shall be subject to the provisions of the 1940 ----------- Act and the Securities Exchange Act and the rules, regulations and rulings thereunder, and of the applicable rules and regulations of the NASD, and applicable state insurance law and other applicable law, from time to time in effect, and the terms hereof shall be interpreted and construed in accordance therewith. 19. Independent Contractor. Distributor shall act as an independent contractor ---------------------- and nothing herein contained shall constitute Distributor or its agents, officers or employees as agents, officers, or employees of PL&A in connection with the sale of the Contracts. 20. Notices. Any notice required or otherwise given pursuant to this Agreement ------- shall be in writing and shall be duly given if mailed, first class postage prepaid, or delivered. The current address for mailing purposes of this Agreement shall be set forth on the signature page. - -------------------------------------------------------------------------------- Page 6 of 8 04/28/00 21. Severability. If any provisions of this Agreement shall be held or made ------------ invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 22. Governing Law. This Agreement shall be construed and enforced in ------------- accordance with and governed by the laws of the State of Arizona. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. Pacific Life & Annuity Company Pacific Select Distributors, Inc. 700 Newport Center Drive 700 Newport Center Drive Newport Beach, CA 92669 Newport Beach, CA 92660 By: /s/ LYNN C. MILLER By: /s/ ADRIAN GRIGGS ------------------------------- ----------------------------- Name: Lynn C. Miller Name: Adrian Griggs ------------------------------- ----------------------------- Title: Executive Vice President Title: Vice President ------------------------------- ----------------------------- Date: April 28, 2000 Date: April 28, 2000 ------------------------------- ----------------------------- By: /s/ DIANE N. LEDGER By: /s/ AUDREY L. MILFS ------------------------------- ----------------------------- Name: Diane N. Ledger Name: Audrey L. Milfs ------------------------------- ----------------------------- Title: Vice President Title: Secretary ------------------------------- ----------------------------- Date: April 28, 2000 Date: April 28, 2000 ------------------------------- ----------------------------- - -------------------------------------------------------------------------------- Page 7 of 8 04/28/00 EXHIBIT A PACIFIC SELECT EXEC SEPARATE ACCOUNT SEPARATE ACCOUNT A IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to be executed by their Officers designated below on this 28th day of April, 2000. Pacific Life & Annuity Company Pacific Select Distributors, Inc. 700 Newport Center Drive 700 Newport Center Drive Newport Beach, CA 92669 Newport Beach, CA 92660 By: /s/ DIANE N. LEDGER By: /s/ AUDREY L. MILFS ------------------------------- ------------------------------ Name: Diane N. Ledger Name: Audrey L. Milfs ------------------------------- ------------------------------ Title: Vice President Title: Secretary ------------------------------- ------------------------------ - -------------------------------------------------------------------------------- Page 8 of 8 04/28/00 EX-99.1.(3)(B) 5 dex9913b.txt FORM OF SELLING AGREEMENT EXHIBIT 1.(3)(B) PACIFIC LIFE & ANNUITY COMPANY VARIABLE CONTRACT SELLING AGREEMENT This Agreement ("Agreement") is made as of _______________________, 19__ by and among PACIFIC LIFE & ANNUITY COMPANY ("PL&A"), 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 Schedule A hereto and of any successor additional SEC registered insurance products (as discussed in Paragraph [3] of this Agreement) issued by PL&A and distributed by Distributor through representatives who are both (a) state insurance licensed and appointed agents of PL&A 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 Schedule A hereto, as such Schedule 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, PL&A 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 PL&A 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 Schedule B hereto as such Schedule B may be amended from time to time by PL&A in its sole discretion, where the Contracts specified in such Schedule B have been approved for sale. From time to time, PL&A will provide Selling Entities with information regarding the jurisdictions in which PL&A 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 must remit such premiums to PL&A in the manner set forth in the applicable Compensation Schedule set forth in one of the Schedule Ds. Contract applications shall be taken only on preprinted, state-appropriate application forms supplied by PL&A. All completed applications, supporting documents and payments are the sole property of PL&A and must be promptly delivered to PL&A. All applications are subject to acceptance by PL&A at its sole discretion. 3. NEW PRODUCTS Distributor may propose and PL&A 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 PL&A 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 applicable Schedule D, or as 1 a new Schedule D hereto, and (b) to the amendment of Schedules 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 PL&A shall have the right in its sole discretion to terminate the appointment of any Subagent upon notice from PL&A 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 Schedule C hereto; and agree, upon reasonable request by PL&A, to furnish proof of such fulfillment as PL&A 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 PL&A or Distributor, and (b) use material, the use of which PL&A or Distributor has specifically approved, in writing, prior to such use. In order for PL&A or Distributor to review and approve materials not produced by PL&A in accordance with clause (b) above, Broker/Dealer must provide PL&A 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 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 PL&A or Distributor at such times as PL&A 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 PL&A 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. PL&A and Distributor shall furnish Selling Entities, at no cost to Selling Entities, reasonable quantities of prospectuses and such other material as PL&A 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 PL&A 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; 2 (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 representatives be appropriately securities registered, insurance licensed and appointed by PL&A, 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 PL&A; (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 PL&A 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 PL&A 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 PL&A, and will establish rules and procedures necessary to supervise diligently the activities of licensed and appointed agents of PL&A associated with Agency. Upon request by PL&A or Distributor, Agency will furnish such appropriate records as are necessary to document such diligent supervision. 10. PL&A REPRESENTATIONS PL&A 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 PL&A, through Distributor, will remit to Broker/Dealer or Agency compensation as set forth in the applicable Schedule D hereto, which payments or termination thereof shall be governed by the administrative rules established by PL&A in its sole discretion. Selling Entities shall pay all Subagents. PL&A 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 PL&A. 11.2 PL&A 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 PL&A, Distributor, Broker/Dealer and Agency agree to cooperate fully in any insurance or securities regulatory investigation or proceeding or judicial proceeding with respect to PL&A, 3 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 PL&A 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 PL&A and Distributor of same. Selling Entities shall provide PL&A 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 PL&A 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 PL&A 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 PL&A and Distributor. 13.2 Selling Entities agree to, jointly and severally, hold harmless and indemnify PL&A 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 PL&A or Distributor, and (ii) any use of any sales material that either has not been specifically approved in writing by PL&A or Distributor or that, although previously approved in writing by PL&A 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 PL&A 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 PL&A may require evidence that such coverage is in force, and Broker/Dealer or Agency shall promptly give notice to PL&A of any notice of cancellation or change of coverage. 4 Selling Entities each assign any proceeds received from the fidelity bond company, error and omissions or other liability coverage, to PL&A to the extent of PL&A's loss due to activities covered by the bond. If there is any deficiency, Selling Entities will promptly pay PL&A the amount of such deficiency on demand. Selling Entities each shall indemnify and hold harmless PL&A from any such deficiency and from the cost of collection. 15. LIMITATIONS OF AUTHORITY The Contract forms are the sole property of PL&A. No person other than PL&A has the right or authority to: (i) make, alter or discharge any policy, Contract, certificate, supplemental contract or form issued by PL&A; (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 PL&A or the Contracts; (v) extend the time for payment of any premiums, bind PL&A 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 PL&A; or (vii) institute or file any response to any legal proceeding in connection with any matter pertaining to the Contracts on behalf of PL&A without the prior written consent of PL&A (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 PL&A). 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 PL&A 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 PL&A or Distributor for tax or any other purposes. Neither PL&A 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 PL&A. 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 Schedules hereto may be amended by PL&A 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 5 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 Schedule D hereto. 16.8 Survival All representations and warranties made in or pursuant to this Agreement and the provisions of Paragraphs 11, 12 and 14.10 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. 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) PL&A or Distributor has authorized such disclosure in writing or (b) if such disclosure is expressly required by state or federal regulatory authorities and PL&A 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 PL&A. 16.11 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. PACIFIC LIFE & ANNUITY COMPANY 700 Newport Center Drive Newport Beach, CA 92660 By:______________________________________ Title:___________________________________ PACIFIC SELECT DISTRIBUTORS, INC. 700 Newport Center Drive Newport Beach, CA 92660 By:______________________________________ Title:___________________________________ 6 BROKER/DEALER:___________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ 7 AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ 8 AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ 9 AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ AGENCY:__________________________________ Address__________________________________ __________________________________ __________________________________ By:______________________________________ Title:___________________________________ 10 SCHEDULE A PACIFIC LIFE & ANNUITY COMPANY CONTRACTS COVERED BY THIS AGREEMENT Contract Name Contract Number - ------------- --------------- Pacific Portfolios-NY Pacific Select Exec II-NY Pacific Select Estate Preserver-NY Date:_____________________ 11 SCHEDULE B JURISDICTIONS IN WHICH PACIFIC LIFE & ANNUITY COMPANY IS APPROVED FOR SALE OF CONTRACTS COVERED BY THIS AGREEMENT CONTRACT JURISDICTIONS - -------- ------------- Pacific Portfolios-NY New York Pacific Select Exec II-NY New York Pacific Select Estate Preserver-NY New York Date:____________________ 12 SCHEDULE C GENERAL LETTER OF RECOMMENDATION Selling Entities hereby certify to PL&A 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 PL&A 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 PL&A, and to hold himself out in good faith to the general public. We vouch for each applicant. 2. We have on file a B-300, B-301 or U-4 form which was completed by each applicant. We have fulfilled all the necessary investigative requirements for the registration of each applicant as a registered representative through our NASD member firm, and each applicant is presently registered as an NASD registered representative. The above information in our files indicates no fact or condition which would disqualify the applicant from receiving a license, and all the findings of all investigative information is favorable. 3. We certify that all educational requirements have been met for the specific state in which each applicant is requesting a license, and that all such persons have fulfilled the appropriate examination, education and training requirements. 4. If the applicant is required to submit his or her picture, signature, and securities registration in the state in which he or she is applying for a license, we certify that those items forwarded to PL&A 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 PL&A 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. 13 SCHEDULE D-1 COMPENSATION SCHEDULE FOR PACIFIC PORTFOLIOS-NY - INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ACCUMULATION DEFERRED ANNUITY SCHEDULE D-2 COMPENSATION SCHEDULE FOR PACIFIC SELECT EXEC II-NY - INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY SCHEDULE D-3 COMPENSATION SCHEDULE FOR PACIFIC SELECT ESTATE PRESERVER-NY - INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY EX-99.1.(5)(A) 6 dex9915a.txt FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY EXHIBIT 1.(5)(A) [LOGO OF PACIFIC LIFE APPEARS HERE] PACIFIC LIFE & ANNUITY COMPANY Mailing Address: 700 Newport Center Drive . Newport Beach, CA 92660 ================================================================================ JOINT AND READ YOUR POLICY CAREFULLY. This is a legal contract LAST SURVIVOR between you, the Owner, and us, Pacific Life & Annuity FLEXIBLE Company, a stock insurance company. We agree to pay the PREMIUM benefits of this policy according to its provisions. The VARIABLE LIFE consideration for this policy is the application for it, INSURANCE a copy of which is attached, and payment of the premiums. . Death Benefit Premiums are flexible, subject to minimums required to Payable When keep the policy in force. Variable Account Values may Both Insureds increase or decrease depending upon Variable Account Have Died While investment experience. There is no guaranteed Variable the Policy is Account Value. Policy loan value is less than one in Force hundred percent (100%) of the policy's cash surrender value. . Net Cash Surrender Value Payable upon The method for determining the death benefit is Surrender While the described in the Death Benefit section of this policy. Policy is in Force The amount of the death benefit may be fixed or variable according to the Death Benefit Option selected and may . Adjustable Face increase or decrease. The duration this policy remains Amount in force may vary, depending on the premiums paid and the investment experience of the Variable Accounts. . Benefits May Vary Based on Investment Free Look Right - You may return this policy within 10 Experience days after you receive it. To do so, deliver or mail it to us or to our agent. This policy will then be deemed . Non-Participating void from the beginning and we will refund the premiums paid. P0156-NY Signed for Pacific Life & Annuity Company, /s/ DAVID W. GARTLEY /s/ AUDREY L. MILFS --------------------- ------------------- President and Chief Secretary Executive Officer POLICY NUMBER: 1234567-0 INSURED #1: LELAND STANFORD POLICY DATE: JAN. 1, 2001 RISK CLASSIFICATION: MALE/NONSMOKER INITIAL FACE AMOUNT: $150,000 AGE ON POLICY DATE: 35 INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE/NONSMOKER AGE ON POLICY DATE: 35 NOTE: IT IS POSSIBLE THAT THE POLICY MAY NOT CONTINUE IN FORCE (THAT IS, IT MAY LAPSE BEFORE THE DEATH OF THE SURVIVOR) EVEN IF PLANNED PREMIUMS ARE PAID DUE TO CHANGE IN THE CURRENT INTEREST RATE BEING CREDITED ON THE FIXED OPTIONS, THE INVESTMENT PERFORMANCE OF THE FUNDS IN THE SEPARATE ACCOUNT, CHANGES IN EXPENSE LOADS OR COST OF INSURANCE RATES, LOANS AND WITHDRAWALS OR CHANGES IN THE DEATH BENEFIT OPTION. P0156-NY (P) GUIDE TO POLICY PROVISIONS SECTION PAGE POLICY SPECIFICATIONS.................................................... 3 DEFINITIONS.............................................................. 5 OWNER AND BENEFICIARY.................................................... 6 PREMIUMS................................................................. 6 DEATH BENEFIT............................................................ 7 ACCUMULATED VALUE........................................................ 9 TRANSFERS................................................................ 13 SURRENDER AND WITHDRAWAL OF VALUES....................................... 14 TIMING OF PAYMENTS AND TRANSFERS......................................... 16 INCOME BENEFITS.......................................................... 16 POLICY LOANS............................................................. 17 SEPARATE ACCOUNT PROVISIONS.............................................. 17 GENERAL PROVISIONS....................................................... 18 INDEX.................................................................... 22 POLICY NUMBER: VP999999990 POLICY SPECIFICATIONS BASIC POLICY: FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE PREMIUMS: PLANNED [ANNUAL] PREMIUM = $ 1,354.97 GUIDELINE SINGLE PREMIUM = $ 15,569.00 GUIDELINE LEVEL PREMIUM = $ 1,354.97 DEATH BENEFIT OPTION: A ACCOUNT ALLOCATIONS AVAILABLE: SEE NEXT PAGE INTEREST ON THE FIXED OPTIONS AND ON THE LOAN ACCOUNT IS GUARANTEED TO BE NOT LESS THAN 3.00% ANNUALLY FOR THE FIRST 10 POLICY YEARS, 3.30% FOR YEARS 11- 20, AND 3.85% THEREAFTER. ANY EXCESS INTEREST RATE DECLARED BY US AT THE BEGINNING OF EACH POLICY YEAR WILL BE GUARANTEED UNTIL THE END OF THAT YEAR. BEFORE SUCH DECLARATION, EXCESS AMOUNTS ARE NOT GUARANTEED. THERE IS NO EXCESS INTEREST PAID ON THE LOAN ACCOUNT. SUBJECT TO POLICY GUARANTEES, WE HAVE THE RIGHT TO CHANGE THE INTEREST CREDITED TO THE FIXED OPTIONS AND THE COST OF INSURANCE AND OTHER CHARGES DEDUCTED, WHICH MAY REQUIRE MORE PREMIUM TO BE PAID THAN WAS ILLUSTRATED OR THE ACCUMULATED VALUE TO BE LESS THAN WAS ILLUSTRATED. PREMIUM LOAD: FOR EACH PREMIUM PAID THERE IS A PREMIUM LOAD THAT CONSISTS OF A SALES LOAD OF 0% DURING POLICY YEARS 1-10 AND 3% THEREAFTER, PLUS A CHARGE OF 2.35% FOR CERTAIN STATE AND LOCAL TAXES AND A CHARGE OF 1.50% FOR CERTAIN FEDERAL TAXES. ADMINISTRATIVE CHARGE: $7.50 PER MONTH UNTIL THE YOUNGER INSURED'S AGE 100; $0 THEREAFTER. WITHDRAWAL FEE: $25 UNDERWRITING SURRENDER CHARGE: $350.00 REMAINS LEVEL FOR THE FIRST POLICY YEAR; AND THEN DECREASES BY $3.24 PER MONTH TO ZERO AT THE END OF THE 12OTH MONTH. SALES SURRENDER TARGET: $388.00 REMAINS LEVEL FOR THE FIRST POLICY YEAR; AND THEN DECREASES BY $3.59 PER MONTH TO ZERO AT THE END OF THE 120TH MONTH. M&E RISK FACE AMOUNT CHARGE: $5.55 PER MONTH FOR POLICY YEARS 1 TO 10; $0 THEREAFTER. REFER TO M&E RISK CHARGE PROVISION FOR DETAILS. MORTALITY AND EXPENSE RISK CHARGE RATE: A MONTHLY CHARGE WHICH IS A PERCENTAGE OF THE UNLOANED ACCUMULATED VALUE. THE PERCENTAGE IS 0.075% FOR POLICY YEARS 1-10, 0.025% FOR POLICY YEARS 11-20, AND 0.0042% THEREAFTER. POLICY NUMBER: 1234567-0 INSURED #1: LELAND STANFORD POLICY DATE: JAN. 1, 2001 RISK CLASSIFICATION: MALE/NONSMOKER INITIAL FACE AMOUNT: $150,000 AGE ON POLICY DATE: 35 INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE/NONSMOKER AGE ON POLICY DATE: 35 NOTE: IT IS POSSIBLE THAT THE POLICY MAY NOT CONTINUE IN FORCE (THAT IS, IT MAY LAPSE BEFORE THE DEATH OF THE SURVIVOR) EVEN IF PLANNED PREMIUMS ARE PAID DUE TO CHANGE IN THE CURRENT INTEREST RATE BEING CREDITED ON THE FIXED OPTIONS, THE INVESTMENT PERFORMANCE OF THE FUNDS IN THE SEPARATE ACCOUNT, CHANGES IN EXPENSE LOADS OR COST OF INSURANCE RATES, LOANS AND WITHDRAWALS OR CHANGES IN THE DEATH BENEFIT OPTION. P0156-NY Page 3.0 POLCIY NUMBER: VP999999990 ACCOUNT ALLOCATIONS AVAILABLE: [BLUE CHIP] [TECHNOLOGY] [GLOBAL GROWTH] [AGGRESSIVE GROWTH] [TELECOMMUNICATIONS] [EQUITY INDEX] [AGGRESSIVE EQUITY] [MULTI-STRATEGY] [SMALL-CAP INDEX] [EMERGING MARKETS] [EQUITY INCOME] [REIT] [DIVERSIFIED RESEARCH] [STRATEGIC VALUE] [INFLATION MANAGED] [SMALL CAP EQUITY] [GROWTH LT] [MANAGED BOND] [INTERNATIONAL LARGE-CAP] [FOCUSED 30] [MONEY MARKET] [EQUITY] [MID-CAP VALUE] [HIGH YIELD BOND] [I-NET TOLLKEEPER] [INTERNATIONAL VALUE] [LARGE-CAP VALUE] [FINANCIAL SERVICES] [CAPITAL OPPORTUNITIES] FIXED [HEALTH SCIENCES] [MID-CAP GROWTH] FIXED LT P0156-NY Page 3.01 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE P0156-NY: BASIC COVERAGE FACE AMOUNT: $100,000 AGE AT ISSUE: 35 RISK CLASSIFICATION: MALE SELECT NONSMOKER PERSON COVERED: LELAND STANFORD ________________________________________________________________________________ R01LST-NY: LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER INITIAL FACE AMOUNT: $50,000 (VARYING) INSURED #1: LELAND STANFORD RISK CLASSIFICATION: MALE/NONSMOKER INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE/NONSMOKER ________________________________________________________________________________ R01IRT-NY: INDIVIDUAL ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER INITIAL FACE AMOUNT: $50,000 (VARYING) AGE AT ISSUE: 35 RISK CLASSIFICATION: MALE SELECT NONSMOKER PERSON COVERED: LELAND STANFORD ________________________________________________________________________________ P0156-NY Page 3.1 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER VARYING SCHEDULE INSURED #1: LELAND STANFORD RISK CLASSIFICATION: MALE/NONSMOKER INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE/NONSMOKER
POLICY FACE POLICY FACE POLICY FACE YEAR AMOUNT YEAR AMOUNT YEAR AMOUNT - -------------------------------------------------------------------------------- 1 $ 50,000 36 $100,000 2 50,000 37 100,000 3 50,000 38 100,000 4 50,000 39 100,000 5 50,000 40 100,000 6 100,000 41 100,000 7 100,000 42 100,000 8 100,000 43 100,000 9 100,000 44 100,000 10 100,000 45 100,000 11 100,000 12 100,000 13 100,000 14 100,000 15 100,000 16 100,000 17 100,000 18 100,000 19 100,000 20 100,000 21 100,000 22 100,000 23 100,000 24 100,000 25 100,000 26 100,000 27 100,000 28 100,000 29 100,000 30 100,000 31 100,000 32 100,000 33 100,000 34 100,000 35 100,000
P0156-NY Page 3.2 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE INDIVIDUAL ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER VARYING SCHEDULE AGE AT ISSUE: 35 RISK CLASSIFICATION: MALE SELECT NONSMOKER PERSON COVERED: LELAND STANFORD
ATTAINED FACE ATTAINED FACE ATTAINED FACE AGE AMOUNT AGE AMOUNT AGE AMOUNT - -------------------------------------------------------------------------------- 35 $ 50,000 70 $100,000 36 50,000 71 100,000 37 50,000 72 100,000 38 50,000 73 100,000 39 50,000 74 100,000 40 100,000 75 100,000 41 100,000 76 100,000 42 100,000 77 100,000 43 100,000 78 100,000 44 100,000 79 100,000 45 100,000 80 100,000 46 100,000 47 100,000 48 100,000 49 100,000 50 100,000 51 100,000 52 100,000 53 100,000 54 100,000 55 100,000 56 100,000 57 100,000 58 100,000 59 100,000 60 100,000 61 100,000 62 100,000 63 100,000 64 100,000 65 100,000 66 100,000 67 100,000 68 100,000 69 100,000
P0156-NY Page 3.3 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS TABLE OF SURRENDER CHARGES
POLICY SURRENDER POLICY SURRENDER POLICY SURRENDER MONTH CHARGE MONTH CHARGE MONTH CHARGE - -------------------------------------------------------------------------------- 1 $621.60 41 $454.85 81 $224.85 2 621.60 42 449.10 82 219.10 3 621.60 43 443.35 83 213.35 4 621.60 44 437.60 84 207.60 5 621.60 45 431.85 85 201.85 6 621.60 46 426.10 86 196.10 7 621.60 47 420.35 87 190.35 8 621.60 48 414.60 88 184.60 9 621.60 49 408.85 89 178.85 10 621.60 50 403.10 90 173.10 11 621.60 51 397.35 91 167.35 12 621.60 52 391.60 92 161.60 13 615.85 53 385.85 93 155.85 14 610.10 54 380.10 94 150.10 15 604.35 55 374.35 95 144.35 16 598.60 56 368.60 96 138.60 17 592.85 57 362.85 97 132.85 18 587.10 58 357.10 98 127.10 19 581.35 59 351.35 99 121.35 20 575.60 60 345.60 100 115.60 21 569.85 61 339.85 101 109.85 22 564.10 62 334.10 102 104.10 23 558.35 63 328.35 103 98.35 24 552.60 64 322.60 104 92.60 25 546.85 65 316.85 105 86.85 26 541.10 66 311.10 106 81.10 27 535.35 67 305.35 107 75.35 28 529.60 68 299.60 108 69.60 29 523.85 69 293.85 109 63.85 30 518.10 70 288.10 110 58.10 31 512.35 71 282.35 111 52.35 32 506.60 72 276.60 112 46.60 33 500.85 73 270.85 113 40.85 34 495.10 74 265.10 114 35.10 35 489.35 75 259.35 115 29.35 36 483.60 76 253.60 116 23.60 37 477.85 77 247.85 117 17.85 38 472.10 78 242.10 118 12.10 39 466.35 79 236.35 119 6.35 40 460.60 80 230.60 120+ 0.00
P0156-NY Page 3.4 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS TABLE OF COST OF INSURANCE RATES GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO BASE POLICY COVERING BOTH LIVES.
POLICY MONTHLY POLICY MONTHLY YEAR RATE YEAR RATE - ----------------------------------------------------------------- 1 0.00000034 40 0.00272574 2 0.00000110 41 0.00316382 3 0.00000202 42 0.00365153 4 0.00000314 43 0.00418390 5 0.00000453 44 0.00475803 6 0.00000621 45 0.00538454 7 0.00000830 46 0.00608321 8 0.00001077 47 0.00687252 9 0.00001380 48 0.00777866 10 0.00001728 49 0.00881636 11 0.00002155 50 0.00997178 12 0.00002652 51 0.01123552 13 0.00003232 52 0.01258046 14 0.00003898 53 0.01400628 15 0.00004700 54 0.01550169 16 0.00005634 55 0.01707599 17 0.00006758 56 0.01874260 18 0.00008094 57 0.02053380 19 0.00009711 58 0.02252334 20 0.00011647 59 0.02479447 21 0.00013904 60 0.02772013 22 0.00016552 61 0.03193731 23 0.00019554 62 0.03896514 24 0.00022989 63 0.05252282 25 0.00026937 64 0.08333333 26 0.00031563 65 0.08333333 27 0.00036979 66+ 0.00000000 28 0.00043440 29 0.00051177 30 0.00060312 31 0.00070920 32 0.00082980 33 0.00096668 34 0.00111942 35 0.00129324 36 0.00149371 37 0.00172931 38 0.00200861 39 0.00233989
P0156-NY Page 4.0 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS TABLE OF COST OF INSURANCE RATES GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO LAST SURVIVOR ADDED PROTECTION BENEFIT COVERING BOTH LIVES.
POLICY MONTHLY POLICY MONTHLY YEAR RATE YEAR RATE - ---------------------------------------------------------------- 1 0.00000034 26 0.00031563 2 0.00000110 27 0.00036979 3 0.00000202 28 0.00043440 4 0.00000314 29 0.00051177 5 0.00000453 30 0.00060312 6 0.00000621 31 0.00070920 7 0.00000830 32 0.00082980 8 0.00001077 33 0.00096668 9 0.00001380 34 0.00111942 10 0.00001728 35 0.00129324 11 0.00002155 36 0.00149371 12 0.00002652 37 0.00172931 13 0.00003232 38 0.00200861 14 0.00003898 39 0.00233989 15 0.00004700 40 0.00272574 16 0.00005634 41 0.00316382 17 0.00006758 42 0.00365153 18 0.00008094 43 0.00418390 19 0.00009711 44 0.00475803 20 0.00011647 45 0.00538454 21 0.00013904 22 0.00016552 23 0.00019554 24 0.00022989 25 0.00026937
P0156-NY Page 4.1 POLICY NUMBER VP99999990 POLICY SPECIFICATIONS TABLE OF COST OF INSURANCE RATES GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO INDIVIDUAL RENEWABLE TERM INSURANCE RIDER COVERING LELAND STANFORD. POLICY POLICY YEAR MONTHLY RATE YEAR MONTHLY RATE -------------------------------------------------------- 1 0.00017600 26 0.00134998 2 0.00018686 27 0.00147355 3 0.00020022 28 0.00161341 4 0.00021526 29 0.00177217 5 0.00023280 30 0.00194909 6 0.00025202 31 0.00214342 7 0.00027458 32 0.00235100 8 0.00029715 33 0.00257276 9 0.00032307 34 0.00280882 10 0.00034984 35 0.00306532 11 0.00037996 36 0.00335367 12 0.00041093 37 0.00368199 13 0.00044442 38 0.00406029 14 0.00047960 39 0.00449620 15 0.00051898 40 0.00498352 16 0.00056089 41 0.00551331 17 0.00061038 42 0.00607653 18 0.00066577 43 0.00666569 19 0.00072875 44 0.00727588 20 0.00080018 45 0.00792387 21 0.00087672 22 0.00096005 23 0.00104684 24 0.00113962 25 0.00123925 P0156-NY Page 4.2 POLICY NUMBER VP99999990 POLICY SPECIFICATIONS TABLE OF GUARANTEED MAXIMUM M&E RISK FACE AMOUNT CHARGES LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER M&E RISK FACE AMOUNT CHARGE APPLICABLE TO THE LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER: MONTHLY CHARGE EQUAL TO THE AMOUNTS SHOWN BELOW. REFER TO THE RIDER FOR DETAILS. POLICY M&E RISK POLICY M&E RISK POLICY M&E RISK YEAR CHARGE YEAR CHARGE YEAR CHARGE - ------------------------------------------------------------------------------- 1 $11.45 26 11.45 2 11.45 27 11.45 3 11.45 28 11.45 4 11.45 29 11.45 5 11.45 30 11.45 6 11.45 31 11.45 7 11.45 32 11.45 8 11.45 33 11.45 9 11.45 34 11.45 10 11.45 35 11.45 11 11.45 36 11.45 12 11.45 37 11.45 13 11.45 38 11.45 14 11.45 39 11.45 15 11.45 40 11.45 16 11.45 41 11.45 17 11.45 42 11.45 18 11.45 43 11.45 19 11.45 44 11.45 20 11.45 45 11.45 21 11.45 22 11.45 23 11.45 24 11.45 25 11.45 P0156-NY Page 4.3 POLICY NUMBER VP99999990 POLICY SPECIFICATIONS TABLE OF MONTHLY M&E RISK ASSET CHARGE PERCENTAGES M&E RISK ASSET CHARGE IS A PERCENTAGE OF THE VARIABLE ACCUMULATED VALUE (AV), AS SHOWN BELOW, AND IS DEDUCTED MONTHLY. ALSO EXPLAINED IN THE M&E RISK CHARGE PROVISION. POLICY POLICY YEAR % OF AV YEAR % OF AV ----------------------------------------------------- 1 0.075 36 0.0042 2 0.075 37 0.0042 3 0.075 38 0.0042 4 0.075 39 0.0042 5 0.075 40 0.0042 6 0.075 41 0.0042 7 0.075 42 0.0042 8 0.075 43 0.0042 9 0.075 44 0.0042 10 0.075 45 0.0042 11 0.050 46 0.0042 12 0.050 47 0.0042 13 0.050 48 0.0042 14 0.050 49 0.0042 15 0.050 50 0.0042 16 0.050 51 0.0042 17 0.050 52 0.0042 18 0.050 53 0.0042 19 0.050 54 0.0042 20 0.050 55 0.0042 21 0.0042 56 0.0042 22 0.0042 57 0.0042 23 0.0042 58 0.0042 24 0.0042 59 0.0042 25 0.0042 60 0.0042 26 0.0042 61 0.0042 27 0.0042 62 0.0042 28 0.0042 63 0.0042 29 0.0042 64 0.0042 30 0.0042 65 0.0042 31 0.0042 66+ 0 32 0.0042 33 0.0042 34 0.0042 35 0.0042 P0156-NY Page 4.4 DEFINITIONS In this section, we define certain terms used throughout this policy. Other terms may be defined in other parts of the policy. Defined terms are usually capitalized to provide emphasis. Age - means the Insured's Age to the nearest birthday as of the Policy Date, increased by the number of complete policy years elapsed. Code - is the U.S. Internal Revenue Code, and the rules and regulations issued thereunder. Evidence of Insurability - is information, including medical information, satisfactory to us that is used to determine insurability and the Insured's risk classification. Face Amount - is used in determining the death benefit under this policy. The Face Amount as of the Policy Date is shown in the Policy Specifications. The Face Amount may be decreased, as provided for in the Death Benefit section. Fixed Options - consist of the Fixed Account and the Fixed LT Account. Free Look Transfer Date - is 10 days after the policy is issued, or if later, the date all requirements necessary to place the policy in force are delivered to the Home Office. Home Office - means our office for receiving mail, located at 700 Newport Center Drive, Newport Beach, CA 92660. Insureds - are the two persons insured under this policy. The Insureds are shown in the Policy Specifications. Investment Options - consist of the Variable Accounts and the Fixed Options. Monthly Payment Date - is the day each month on which certain policy charges are deducted from the Accumulated Value. The first Monthly Payment Date is the Policy Date. Later Monthly Payment Dates occur each month after the Policy Date on the same day of the month as the Policy Date. NAR - stands for the Net Amount at Risk. The NAR is equal to the death benefit as of the most recent Monthly Payment Date divided by 1.002466, then reduced by the Accumulated Value at the beginning of the policy month before the Monthly Deduction is due. Also, the Accumulated Value section describes how the NAR is used to calculate the Cost of Insurance charge. Net Premium - is the premium we receive reduced by any Premium Load. PL&A, we, our, ours, us and the Company - refers to Pacific Life & Annuity Company. Policy Date - is shown on page 3. Policy months, quarters, years and anniversaries are measured from this date. Policy Debt - is the sum of outstanding policy loans plus accrued Loan Interest. Separate Account - is the Pacific Select Exec Separate Account, which is a separate account of ours that consists of subaccounts, also called Variable Accounts. Each Variable Account may invest its assets in a separate class of shares of a designated investment company or companies. Survivor - is the Insured remaining alive after the first death of the two Insureds that occurs while this policy is in force. Valuation Date - is each day required by applicable law and currently includes each day the New York Stock Exchange is open for trading and our Home Office is open. P0156-NY Page 5 (P) Valuation Period - is the period of time between successive Valuation Dates. Variable Account - is a subaccount of a separate account of ours in which assets are segregated from assets in our general account and from assets in other subaccounts. Premiums and Accumulated Value (AV) under this policy may be allocated to a Variable Account for variable accumulation. Written Request - is a request in writing, signed by you, and received by us at our Home Office. You, your or Owner - refers to the Owner of this policy. OWNER AND BENEFICIARY Owner - The Owner of this policy is as shown in the Policy Specifications or in a later Written Request. If you change the owner, the change is effective on the date the Written Request is signed, subject to our receipt of it. If there are two or more Owners, they will own this contract as joint tenants with right of survivorship. Assignment - You may assign this policy by Written Request. An assignment will take place only when recorded at our Home Office. When received, the assignment will take effect as of the date the Written Request was signed. Any rights created by the assignment will be subject to any payments made or actions taken by us before the change is recorded. We will not be responsible for the validity of any assignment. Beneficiary - The beneficiary is named by you in the application to receive the death benefit proceeds. The beneficiary may be one or more persons. If the beneficiary is more than one person, they will share the death benefit proceeds equally or as otherwise specified by you in a Written Request. The interest of any beneficiary will be subject to any assignment. If you have named a contingent beneficiary, that person becomes the beneficiary if the beneficiary dies before the Survivor. A beneficiary may not, at or after the Survivor's death, assign, transfer or encumber any benefit payable. To the extent allowed by law, policy benefits will not be subject to the claims of any creditor of any beneficiary. You may make a change of beneficiary by Written Request on a form provided by us while at least one Insured is living. The change will take place as of the date the request is signed, subject to our receipt of the request. Any rights created by the change will be subject to any payments made or actions taken by us before the Written Request is received. You may designate a permanent beneficiary whose rights under the policy cannot be changed without his or her written consent. The interest of a beneficiary who does not survive to receive payment will pass to the surviving beneficiaries in proportion to their share in the proceeds, unless otherwise provided. If no beneficiaries survive to receive payment, the death proceeds will pass to the Owner, or the Owner's estate if the Owner does not survive to receive payment. PREMIUMS Premiums - This policy will not be in force until the initial premium is paid. The initial premium is payable either at our Home Office or to our agent. Additional premiums, if any, are payable in advance at our Home Office. At your request, a premium receipt signed by one of our officers will be given to you. No premium may be less than $50. Premiums may be paid at any time, subject to the premium limitations below. The Planned Premium is the amount identified in the application, or later changed by Written Request, which you plan to pay. Payment of the Planned Premium does not guarantee that the policy will continue in force. The amount of Planned Premium at policy issue is shown on Page 3.0. Premium Allocation Before the Free Look Transfer Date - Any Net Premium received before the Free Look Transfer Date will be allocated to the Money Market Variable Account on the issue date or, if later, P0156-NY Page 6 (P) the date the premium is received and accepted by us. On the Free Look Transfer Date, the Accumulated Value in the Money Market Variable Account will be allocated to the Investment Options according to the premium allocation specified in the application or your most recent instructions received by us, if any. Premium Allocation On or After the Free Look Transfer Date - Any Net Premium received by us on or after the Free Look Transfer Date will be allocated to the Investment Options according to the premium allocation specified in the application or your most recent instructions received by us, if any. Upon Written Request, you may change the premium allocation. Subsequently, Net Premiums will be allocated to the Investment Options according to your most recent instructions. Premium Limitation - We reserve the right to require Evidence of Insurability, satisfactory to us, for any premium payment that would result in an immediate increase in the difference between the death benefit and the Accumulated Value. Guideline Premium Limitation - For this policy to be treated as life insurance under the Code, the sum of premiums paid less a portion of any withdrawals, as defined in the Code, may not exceed the greater of: . The Guideline Single Premium; or . The sum of the Guideline Level Premiums to date. The amounts of the Guideline Premiums are shown on the Policy Specification pages. The Guideline Premiums may change whenever there is a change to the policy or riders. In such case, the new Guideline Premium will be shown in the supplemental schedule of benefits and premiums we will send to you at the time of the change. See the Tax Qualification as Life Insurance subsection of the General Provisions section for details. Also, see the Tax Qualification as Life Insurance and MEC Status subsections of the General Provisions section to see how premium payments can affect the federal tax treatment of your policy. DEATH BENEFIT Death Benefit - This policy provides a death benefit on the death of the Survivor as long as the policy continues in force. The death benefit, Death Benefit Option and the Guideline Premium Test are described in this section. Before the younger Insured reaches Age 100 (or would have attained Age 100 had the younger Insured survived), the death benefit is calculated as the larger of: . The Minimum Death Benefit calculated under the Guideline Premium Test; or . The death benefit as calculated under the Death Benefit Option in effect. Beginning on the younger Insured's Age 100 (or would have attained Age 100 had the younger Insured survived), the death benefit is equal to the Accumulated Value. Guideline Premium Test - The Minimum Death Benefit at any time is the Accumulated Value multiplied by the death benefit percentage shown in the following table, based on the Age of the younger Insured:
Death Benefit Death Benefit Death Benefit Death Benefit Age Percentage Age Percentage Age Percentage Age Percentage 0-40 250% 50 185% 60 130% 70 115% 41 243 51 178 61 128 71 113 42 236 52 171 62 126 72 111 43 229 53 164 63 124 73 109 44 222 54 157 64 122 74 107 45 215 55 150 65 120 75-90 105 46 209 56 146 66 119 91 104 47 203 57 142 67 118 92 103 48 197 58 138 68 117 93 102 49 191 59 134 69 116 Over 93 101
P0156-NY Page 7 (P) Death Benefit Options - You have elected the Death Benefit Option in the application. The Death Benefit Option for this policy appears in the Policy Specifications. The Death Benefit Options are explained below. . Option A - The death benefit equals the Face Amount. . Option B - The death benefit equals the Face Amount plus the Accumulated Value at death. . Option C - The death benefit is the Face Amount plus the sum of the premiums paid minus the sum of any withdrawals taken and any other distribution of the Accumulated Value to the date of death. If the sum of the withdrawals is greater than the sum of the premiums paid, then the death benefit will be less than the Face Amount. . Option D - The death benefit equals the Face Amount times the death benefit factor for the current policy year. If you have elected Option D, the death benefit factors are shown on the Policy Specifications pages. The Death Benefit Option may be changed to Option A or B upon Written Request a maximum of once per year. Changes to Option C or D are not permitted. After any such change, the Face Amount will be that which results in the death benefit after the change being equal to the death benefit before the change. For this purpose, death benefit is the amount calculated under the Death Benefit Options, disregarding the Minimum Death Benefit. The change will be effective on the Monthly Payment Date on or next following the day we receive your Written Request at our Home Office. Death Benefit Proceeds - The death benefit proceeds are the actual amount payable if the Survivor dies while this policy is in force. The death benefit proceeds are equal to the death benefit, as of the date of the Survivor's death, less any Policy Debt and less any due and unpaid monthly deductions occurring during a grace period. We will pay the death benefit proceeds to the beneficiary after we receive, at our Home Office, due proof of the Insureds deaths (certified copies of the death certificates or, if unavailable, other legal documentation which we accept) and information sufficient to identify the beneficiary. The death benefit proceeds paid are subject to the conditions and adjustments defined in other policy provisions, such as General Provisions, Withdrawals and Policy Loans. We will pay interest on death benefit proceeds as described in the Timing of Payments and Transfers section. Face Amount Decrease - The Face Amount may not be increased. However, subject to our approval, you may decrease the Face Amount a maximum of one time in any policy year after the first policy year. The effective date of the decreased Face Amount will be the first Monthly Payment Date on or following the date we receive the Written Request. We recommend you consult your tax advisor before requesting a decrease in policy Face Amount. A supplemental schedule of benefits and premiums will be issued. This schedule will include the following information: . the effective date of the decreased Face Amount; . the amount of the decrease and the decreased Face Amount; and . the new Guideline Premiums. The request for a decrease in the face amount will be subject to the Guideline Premiums Limitation as defined in the Internal Revenue Code. This may result in a refund of premiums and/or the distribution of Accumulated Value in order to maintain compliance with such limitations. Such request will not be allowed if the resulting Guideline Premiums could cause an amount in excess of the Net Cash Surrender Value to be distributed from the policy. The Face Amount of this policy may not be decreased to less than our minimum issue limit in effect on the date of the request. Paid-Up Insurance - On each policy anniversary you have the option to use the Net Cash Surrender Value to purchase guaranteed fixed paid-up insurance on the life of the Survivor of the Insureds. At the time of conversion, the Net Cash Surrender Value will be transferred to our general account. The entire Net Cash Surrender Value will be applied as a net single premium to purchase paid-up insurance. The amount of such insurance will be calculated based on 1980 CSO mortality, 3% interest and on the Ages P0156-NY Page 8 (P) and Risk Classifications of the Insureds (or if only the Survivor is alive at the time of the conversion, then on the Age and Risk Classification of the Survivor). If the amount of paid-up insurance so determined would exceed the death benefit of the policy immediately prior to purchase of the paid-up insurance, we will apply only a portion of the Net Cash Surrender Value to purchase paid-up insurance, and the remainder will be paid to you. In this case, we will determine the amount of paid-up insurance so that the paid-up insurance plus the Net Cash Surrender Value paid to you will equal the policy's death benefit immediately prior to the purchase of the paid-up insurance. This policy and any riders attached to it will terminate at the time of conversion. Such paid-up insurance may be surrendered at any time, with the cash surrender value being determined on the same basis. Change in Benefits - Under the Guideline Premium Test, any change in policy or rider benefits will require an adjustment to the guideline premium limitation. See the Tax Qualification as Life Insurance subsection of the General Provisions section for details. ACCUMULATED VALUE Accumulated Value (AV) - is the sum of the Fixed Accumulated Value plus the Variable Accumulated Value plus the Loan Account and any interest credited to it. Fixed Accumulated Value - The Fixed Accumulated Value is the sum of the Accumulated Value in each Fixed Option as of the last Valuation Period. This subsection describes how we calculate the Accumulated Value in each Fixed Option. We credit interest on a daily basis using a 365-day year and at a rate not less than an annual effective rate of 3% in the first 10 policy years, 3.60% in policy years 11-20, and 3.85% thereafter. At our discretion, we may credit a higher rate of interest. The interest rate in effect at the beginning of the policy year will be effective for the duration of that year. Once credited, interest is nonforfeitable, except indirectly due to any applicable Surrender Charge. The Accumulated Value for each Fixed Option on any date is the following, including interest on each: . the Accumulated Value for the Fixed Option on the prior Monthly Payment Date; . plus the amount of any Net Premium received and allocated to the Fixed Option since the last Monthly Payment Date; . plus the amount of any transfer to the Fixed Option, including transfers from the Loan Account, since the last Monthly Payment Date; . minus the monthly deduction and other deductions due, if any, and assessed against the Fixed Option; and . minus the amount of any withdrawals, or transfers from the Fixed Option, including transfers to the Loan Account, since the last Monthly Payment Date. Variable Accumulated Value - The Variable Accumulated Value is the sum of your policy's Accumulated Value in each Variable Account. This subsection describes how we calculate your policy's Accumulated Value in each Variable Account. Assets in each Variable Account are divided into Accumulation Units, which are a measure of value used for bookkeeping purposes. We credit your policy with Accumulation Units in each Variable Account as a result of: . the amount of any Net Premium received and allocated to the Variable Account; and . transfers of Accumulated Value to the Variable Account, including transfers from the Loan Account. We debit Accumulation Units in each Variable Account as a result of: . transfers from the Variable Account, including transfers to the Loan Account; . Surrenders and withdrawals from the Variable Account; and . the monthly deduction and other deductions due, if any, and assessed against the Variable Account. P0156-NY Page 9 (P) To determine the number of Accumulation Units debited or credited for a transaction, we divide the dollar amount of the transaction by the Unit Value of the affected Variable Account. To determine your policy's Accumulated Value in each Variable Account, we multiply the number of Accumulation Units in the Variable Account by the Unit Value of the Variable Account. The number of Accumulation Units in each Variable Account will not change because of subsequent changes in Unit Value. At the inception of each Variable Account the Unit Value was $10. The Unit Value of each Variable Account is adjusted on each Valuation Date. To calculate the Unit Value of a Variable Account on any Valuation Date, we multiply the Unit Value from the previous Valuation Date by the Net Investment Factor. The Net Investment Factor for a Variable Account on any Valuation Date is (a) minus (b), divided by (c), where: (a) is the Net Asset Value of the Variable Account as of the close of the business day, excluding the impact of any policy transactions since the prior Valuation Date; (b) is the value of charges assessed by us since the prior Valuation Date for taxes attributable to the operation of the Variable Account; and (c) is the Net Asset Value of the Variable Account as of the close of the previous Valuation Date. The Net Asset Value of a Variable Account on any Valuation Date is the Net Asset Value per share for the Variable Account on the Valuation Date multiplied by the number of shares in the Variable Account on the Valuation Date. For each Variable Account, the Net Asset Value per share and the number of shares outstanding are reported to us each Valuation Date by the investment company in whose shares the Variable Account is invested. Loan Account - The Loan Account is the amount set aside to secure Policy Debt. The amount in the Loan Account on any date is the following, including interest on each: . the amount in the Loan Account on the prior anniversary; . plus any loan taken since the prior anniversary; and . minus any loan amount repaid since the prior anniversary. We will credit interest to the Loan Account on a daily basis using a 365-day year and at a rate equivalent to an annual effective rate of 3.00% in the first 10 policy years, 3.60% in policy years 11-20, and 3.85% thereafter. On each policy anniversary, any interest earned and held in the Loan Account will be transferred to the Investment Options in accordance with your most recent premium allocation instructions. Monthly Deduction - A Monthly Deduction for a policy month is due on each Monthly Payment Date and is equal to the sum of the following items: . the monthly Cost of Insurance Charge; . the M&E Risk Charge; . the Administrative Charge, if any; and . rider charges, if any. Unless you have made a Written Request to the contrary, the Monthly Deduction will be charged proportionately to the Accumulated Value in each Variable Account and each Fixed Option on the Monthly Payment Date. Cost of Insurance Charge - Beginning on the Policy Date and monthly thereafter, there will be a monthly Cost of Insurance Charge for the death benefit payable under this policy equal to (1) multiplied by (2), where: (1) is the applicable monthly Cost of Insurance Rate; and (2) is the Net Amount at Risk. P0156-NY Page 10 (P) Cost of Insurance Rates - The Cost of Insurance Rates are based on a number of factors, including the Insureds' Ages, Risk Classifications, and the policy duration. Part of the cost is intended to recover acquisition expenses at issue. Such expense recoveries are greater in the early policy years. The current monthly Cost of Insurance Rates will be determined by us. These rates will not exceed the Guaranteed Maximum Monthly Cost of Insurance Rates shown in the Policy Specifications. Guaranteed Maximum Cost of Insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table. Change in Policy Cost Factors - Any change in policy cost factors, including credited interest on the Fixed Options, cost of insurance rates, risk and expense charges and loads, will be by class and based on changes in our expectations of future investment earnings, mortality, persistency and expenses. Class is determined by a number of factors, including the two Insureds' Ages, Risk Classifications, Policy Date, and policy duration. Any such change will be determined in accordance with procedures and standards on file with the Insurance Department of the state of New York. Cost of insurance rates and other expense factors will be reviewed no more frequently than annually and no less frequently than once every five years to determine whether an adjustment is necessary. Interest to be credited to the Fixed Options will be reviewed at least annually to determine whether an adjustment is necessary. M&E Risk Charge - The Mortality and Expense Risk Charge (M&E Risk Charge) is to compensate us for the risk we assume that mortality, expenses and other costs of providing your policy will be greater than estimated. Beginning on the Policy Date and monthly thereafter, the M&E Risk Charge will be the sum of the M&E Risk Asset Charge and the M&E Risk Face Amount Charge. The M&E Risk Asset Charge is a percentage of the Variable Accumulated Value. In the first 10 policy years, the charge is 0.075% (0.90% annually). During policy years 11 through 20, the charge is 0.025% (0.30% annually). For policy years after the 20th, the charge is .0042% (0.05% annually). The percentages are also shown in the Policy Specifications. The M&E Risk Face Amount Charge is the amount shown in the Policy Specifications, and is based on the Face Amount at policy issue. Administrative Charge - Beginning on the Policy Date and monthly thereafter, there will be an Administrative Charge against the Accumulated Value. The amount of this charge will equal the amount shown in the Policy Specifications. Premium Load - A Premium Load will be charged each time that a premium is paid to cover certain local, state and federal tax and certain sales and distribution costs. The Premium Load will equal the premium paid multiplied by the Premium Load rate shown in the Policy Specifications. The Premium Load associated with each premium will be immediately deducted from the premium paid. We reserve the right to increase the Premium Load with respect to the charge for local, state and federal tax. We will only increase the Premium Load if the effective tax paid by us increases and only if any such increase is first approved by the Insurance Department of the state of New York. We will notify you of any such change. Other Taxes - In addition to the charges imposed under Premium Load and elsewhere, we reserve the right to make a charge for federal, state or local taxes that may be attributable to the Variable Accounts or to our operations with respect to this policy if we incur any such taxes, but only if any such charge is first approved by the Insurance Department of the state of New York. Grace Period and Lapse - If the Accumulated Value less Policy Debt on a Monthly Payment Date is not sufficient to cover the current monthly deduction, a grace period of 61 days will be allowed for the payment of sufficient premium to keep your policy in force. The grace period begins on the Monthly Payment Date on which the insufficiency occurred and ends 61 days thereafter. At the start of the grace period, we will send notice to you at your last known address and to any assignee of record. The notice will state the due date and the amount of premium required for P0156-NY Page 11 (P) your policy to remain in force. A minimum of three times the monthly deduction due when the insufficiency occurred, plus Premium Load, must be paid. Premiums we receive during the grace period P0156-NY Page 12 (P) will be applied to your policy according to your most recent premium allocation instructions. There is no penalty for paying a premium during the grace period. Your policy will remain in force during the grace period. If sufficient premium is not paid by the end of the grace period, a lapse will occur. Thirty-one days prior to lapse, we will send you and any assignee of record a notice containing the lapse date and the required premium to keep your policy in force. If the Survivor dies during the grace period, the death benefit proceeds will be reduced by any overdue charges. Upon lapse, the policy will terminate with no value. Reinstatement - If it has not been surrendered, this policy may be reinstated not more than five years after the end of the grace period. To reinstate this policy you must provide us with the following: . a written application; . Evidence of Insurability satisfactory to us for each Insured who was alive on the date of lapse; . payment of sufficient premium to cover all monthly deductions that were due and unpaid during the grace period; plus . payment of sufficient premium to keep the policy in force for three months after the date of reinstatement. The effective date of the reinstated policy will be the first Monthly Payment Date on or following the date we approve your reinstatement application. When this policy is reinstated, the Accumulated Value will be equal to the Accumulated Value on the date of lapse subject to the following. If the policy is reinstated after the first Monthly Payment Date following lapse, the Accumulated Value will be reduced by the amount of any Policy Debt on the date of lapse and the Policy Debt will be extinguished. If the policy is reinstated on the first Monthly Payment Date following lapse, any Policy Debt on the date of lapse will also be reinstated. At reinstatement, the surrender charge will be that in effect at the beginning of the grace period, and will then decrease each policy month thereafter according to the successive month-by-month surrender charges shown in the Policy Specifications pages. TRANSFERS Transfers - After your initial Net Premium has been allocated according to your instructions and while your policy is in force, you may, upon Written Request, transfer your Accumulated Value, or a part of it, among the Investment Options as provided in this section. No transfer may be made if the policy is in a grace period and the required premium has not been paid. Transfers from the Fixed Account: One transfer from the Fixed Account may be made in any twelve-month period. Each transfer from the Fixed Account will be limited to the greater of $5,000 or 25% of the Accumulated Value in the Fixed Account. Transfers from the Fixed LT Account: One transfer from the Fixed LT Account may be made in any twelve month period. Each transfer from the Fixed LT Account will be limited to the greater of $5,000 or 10% of the Accumulated Value in the Fixed LT Account. Transfers into the Fixed Account: If you have transferred out of either Fixed Option within the last 90 days, you cannot transfer into the Fixed Account, except that during the first 18 policy months transfers into the Fixed Account are unlimited (see below), Transfers into the Fixed LT Account: Transfers into the Fixed LT Account can be made only during the policy month prior to a policy anniversary. Allocations into the Fixed LT Account: We reserve the right to limit the amount allocated to the Fixed LT Account to $1,000,000 during the most recent 12 months for all policies owned by you. Allocations include Net Premium payments, transfers and loan repayments. Any excess over $1,000,000 will be transferred to your other Investment Options relative to your most recent instructions. We may increase the $1,000,000 limit at any time at our sole discretion. You may contact us to find out if a higher limit is in effect. P0156-NY Page 13 (P) Transfer into the Fixed Account Unlimited Under Special Circumstances: You may transfer from any Variable Account to the Fixed Account with no limitation under the following circumstances: . For a period of time, as described below, after a material change in the investment policy of that Variable Account; and . During the first 18 policy months. We will notify you if there is a material change in the investment policy of a Variable Account. The notice will inform you of your options, including your option to transfer from such Variable Account to the Fixed Account within 60 days after (i) the effective date of the material change or (ii) the date you receive the notice, whichever is later. No charges are currently imposed for transfers. We reserve the right: . to limit the size of transfers so that each transfer is at least $500; . to limit the frequency of transfers (however, at least one transfer per quarter will be allowed); . to disallow a transfer from any account if the balance would be a non-zero amount less than $500; . to assess a $25 charge for each transfer exceeding 12 per policy year. Automatic Transfer Programs - Dollar Cost Averaging, the First Year Transfer Program and Automatic Portfolio Rebalancing, as described below, are optional programs available under this policy. No more than one of these may be in effect at any one time. Transfers pursuant to these programs will occur on Monthly Payment Dates or the next succeeding business day if the Monthly Payment Date falls on a non-business day. Automatic transfers will not take place before the end of the Free Look Period or during the Grace Period. We must receive your Written Request in order for these programs to begin. Except as noted below, these programs may be elected at any time. These programs neither guarantee investment gains nor protection from investment losses. Transfers under these programs do not count toward the limitations on the number of transfers, nor of free transfers, allowed per policy year. We reserve the right to modify the terms and conditions of these programs, upon 30 days advance notice to you. Dollar Cost Averaging - Under this program, automatic transfers from any one Variable Account of a percentage or a fixed dollar amount will be made to any combination of other Variable Accounts on a monthly, quarterly, semi-annual, or annual basis. You may elect Dollar Cost Averaging at any time by sending us a Written Request. Your policy's Accumulated Value in the Variable Account from which the transfer is made must be at least $5,000 at the time the first transfer is to be made. Automatic transfers will continue until you give us a Written Request to stop, or until your policy's Accumulated Value in the Variable Account from which the transfers are made has been depleted. First Year Transfer Program - This program is identical to Dollar Cost Averaging, with the differences described in this subsection. Transfers are made from the Fixed Account and occur in the 12 policy months following the policy month when the Free Look Period ends. Transfers may be made to the Fixed LT Account as well as to the Variable Accounts. Transfers are for the dollar amount in your Written Request. For this program, we waive the limitation that no more than the greater of $5,000 or 25% of the Fixed Account can be transferred out of the Fixed Account in a policy year. Automatic Portfolio Rebalancing - Under this program, we automatically transfer on a quarterly, semi-annual, or annual basis, your policy's Accumulated Value among the Variable Accounts to re-establish the portfolio allocation that you specify in your Written Request. With your Written Request, you may change the portfolio balance that will be used for the rebalancing. Automatic Portfolio Rebalancing will continue until you make a Written Request to cancel the program. If you cancel the program, you must wait 30 days to begin it again. SURRENDER AND WITHDRAWAL OF VALUES Surrender - Upon Written Request while either Insured is living you may surrender this policy for its Net Cash Surrender Value. The policy will terminate on the date the request is received. P0156-NY Page 14 (P) Net Cash Surrender Value - The Net Cash Surrender Value is the Cash Surrender Value less any Policy Debt. Cash Surrender Value - The Cash Surrender Value is the Accumulated Value less any Surrender Charge. Surrender Charge - If you surrender your policy, a Surrender Charge will be deducted from the AV. The Surrender Charge is needed to help pay for costs such as underwriting, policy issue and sales and distribution costs. The total Surrender Charge is equal to the sum of the Underwriting Surrender Charge and the Sales Surrender Charge. The Underwriting Surrender Charge is shown on the Policy Specifications. It remains level for the first policy year and then decreases by 0.9259% per month to zero at the 120th month. The Sales Surrender Charge is equal to 70% of the premiums paid up to the Sales Surrender Target. The Sales Surrender Target is shown on the Policy Specifications. The Sales Surrender Charge increases as premiums are paid until the Sales Surrender Target is reached. After the first policy year, the Sales Surrender Charge, as calculated above, is adjusted by multiplying by a reduction factor. This reduction factor is equal to 99.0741% in the 13th month and reduces by .9259% per month to zero at the 120th month. Surrender Charge on Face Amount Decrease - If you request to decrease the Face Amount, a Surrender Charge will be deducted from the AV. The Surrender Charge in such case will equal the Surrender Charge that would be imposed if you were to surrender your policy at the time of the Withdrawal multiplied by the ratio of the Face Amount after the Withdrawal divided by the Face Amount before the Withdrawal. Withdrawals - Upon Written Request on or after the first policy anniversary while either Insured is living, you may withdraw a portion of the Net Cash Surrender Value of this policy. We will deduct a withdrawal fee of $25 from the Accumulated Value for each withdrawal. The withdrawal fee will be deducted from the Investment Options in the same proportion as the withdrawal. There is no Surrender Charge imposed for a Withdrawal, even if the Face Amount is reduced as a result of the Withdrawal. Withdrawals will be subject to the following conditions: The amount of each withdrawal must be at least $500 and the Net Cash Surrender Value remaining after each withdrawal must be at least $500. Also, if there is any Policy Debt at the time of each withdrawal, the amount of the withdrawal is limited to the excess, if any, of the Cash Surrender Value immediately prior to the withdrawal over the result of the Policy Debt divided by 90%. The amount of each withdrawal will be allocated proportionately to the Accumulated Value in the Investment Options unless you request otherwise. If the Survivor dies after the request for a withdrawal is sent to us and prior to the withdrawal being effected, the amount of the withdrawal will be deducted from the death benefit proceeds, which will be determined without taking the withdrawal into account. A withdrawal will affect the death benefit, depending on the Death Benefit Option you have chosen. If your policy's death benefit is greater than the Minimum Death Benefit, then the withdrawal will reduce the death benefit by the amount of the withdrawal. However, if your policy's death benefit is equal to the Minimum Death Benefit, the withdrawal may cause the death benefit to decrease by an amount greater than the amount of the withdrawal. For Death Benefit Option C, if the sum of the withdrawals and other distributions from the policy is greater than the premiums, the death benefit will be less than the Face Amount. Withdrawals may also affect the Face Amount. A withdrawal will reduce the Face Amount, but only for policies having Death Benefit Option A or D. In such case, a withdrawal in excess of the difference between the Minimum Death Benefit and the Face Amount will reduce the Face Amount by the amount of the excess. A withdrawal will never increase the NAR. P0156-NY Page 15 (P) TIMING OF PAYMENTS AND TRANSFERS Variable Accounts - With respect to allocations made to the Variable Accounts, we will pay death benefit proceeds, withdrawals and Net Cash Surrender Value on surrender and withdrawals and will effect a transfer between Variable Accounts or from a Variable Account to a Fixed Option within seven days after we receive all the information needed to process the payment. However, we may postpone the calculation, payment or transfer of any amounts that are based on the investment performance of the Variable Accounts, if: . the New York Stock Exchange is closed on other than normal weekend and holiday closings; or . an emergency exists, as determined by the SEC, as a result of which it is not reasonably practicable to determine the value of the Account assets or to dispose of Account securities. Fixed Options - With respect to payments or transfers to be made from the Fixed Options (or from the policy, if this policy is continued under a fixed non- forfeiture benefit), we may defer such payment or transfer for up to six months after we receive your Written Request. If deferred more than 10 days after we receive such request, we will pay interest at the rate which is the current rate payable on the interest settlement option for income benefits. Policy Loans - We reserve the right to defer any policy loan payment, except for loans used to pay premiums to us, for up to six months after we receive your loan application. Interest on Death Proceeds - We will pay interest on death proceeds from the date of death to the date of payment, at the rate which is the current rate payable on the Interest Settlement Option described under Income Benefits. INCOME BENEFITS Income Benefits - Surrender or withdrawal benefits may be used to buy a lifetime monthly income for either Insured as long as the monthly income is at least $100. Death benefits may be used to buy a monthly income for the lifetime of the beneficiary. The monthly income will automatically be guaranteed to continue for at least ten years, unless another form of payment is requested. Under the automatic form of payment, if the income recipient dies before the end of the ten-year period, payments will continue to the end of the ten-year period to a person designated by the income recipient in writing. The purchase rates for the monthly income will be set periodically by the Company. However, under the automatic form, the monthly income bought by each $1,000 of benefit amount will always be at least as large as that shown below.
Monthly Income Monthly Income Monthly Income Age Male Female Age Male Female Age Male Female 0-30 $3.20 $3.09 46 $3.81 $3.61 62 $5.10 $4.73 32 3.25 3.14 48 3.92 3.71 64 5.35 4.95 34 3.31 3.19 50 4.05 3.81 66 5.62 5.20 36 3.38 3.24 52 4.18 3.93 68 5.92 5.47 38 3.45 3.30 54 4.33 4.06 70 6.23 5.78 40 3.53 3.37 56 4.49 4.20 72 6.56 6.11 42 3.62 3.44 58 4.68 4.36 74 6.90 6.48 44 3.71 3.52 60 4.88 4.54 75+ 7.08 6.67
Monthly income amount for ages not shown are halfway between the two amounts for the nearest two ages that are shown. Amounts shown are based on the Annuity 2000 table with interest at 3.00%. This benefit is not available if the income would be less than $100 a month. We may require evidence of survival for incomes that last more than ten years. P0156-NY Page 16 (P) Other Income Options - Surrender, withdrawal or death benefits may be used under any other payment plans that we make available at that time. We will make an Interest Settlement Option available under which we will credit interest monthly. Amounts left on deposit under this plan, and credited interest, will be accumulated until you request a withdrawal. POLICY LOANS Policy Loans - You may obtain loans by Written Request after the Free Look Period, on the sole security of the Loan Account of this policy. We recommend you consult your tax advisor before requesting a policy loan. Loan Amount Available - The amount available for a loan is equal to 90% of Accumulated Value, less any Policy Debt and also less any Surrender Charges that would be imposed if the policy were surrendered on the date the loan is taken or, if greater, the result of (a x b/c)-d, where: a = the Accumulated Value less 12 times the most recent monthly deduction less any Surrender Charge on the date of the loan; b = 1 + rate of loan interest credited at the time of the loan; c = 1.041; and d = any existing Policy Debt. The amount of a loan must be at least $200. Loan Interest - Interest will accrue daily and is payable in arrears at the annual rate of 4.10%. Interest not paid when due will be added to the loan principal and bear interest at the same rate of interest. Loan Account - When a loan is taken, an amount equal to the loan is transferred out of the Accumulated Value in the Investment Options into the Loan Account to secure the loan. Unless you request otherwise, loan amounts will be deducted from the Variable Accounts and the Fixed Options on a pro rata basis, up to the amount available. We will credit interest to the Loan Account as described in the Accumulated Value section. On each policy anniversary, if the amount in the Loan Account exceeds Policy Debt, the excess will be transferred from the Loan Account to the Investment Options according to your most recent instructions. If Policy Debt exceeds the amount in the Loan Account, an amount equal to such excess will be transferred from the Investment Options on a proportionate basis to the Loan Account. Loan Repayment - Loans may be repaid at any time prior to lapse of this policy. An amount equal to the portion of any loan repaid, but not more than the amount in the Loan Account, will be transferred from the Loan Account to the Investment Options according to your most recent instructions. We reserve the right to first transfer repayments from the Loan Account to each Fixed Option up to the amount that was originally borrowed. Any excess over such amount will be transferred to the Variable Accounts relative to your most recent instructions. Any payment we receive from you while you have a loan will be first considered a loan repayment, unless you tell us in writing it is a premium payment. SEPARATE ACCOUNT PROVISIONS Separate Account - This policy uses the Pacific Select Exec Separate Account owned by Pacific Life & Annuity Company, herein called the "Separate Account". The assets of the Separate Account shall be valued at least as often as any policy benefits vary, but at least monthly. We established the Separate Account and maintain it under the laws and regulations of Arizona and New York. The Separate Account is divided into subaccounts, called Variable Accounts. Income and realized and unrealized gains and losses from the assets of each Variable Account are credited or charged against it without regard to our other income, gains or losses. Assets may be put in our Separate Account to support this policy and P0156-NY Page 17 (P) other variable life policies. Assets may be put in our Separate Account for other purposes, but not to support contracts or policies other than variable life contracts or policies. The assets of our Separate Account are our property. The portion of its assets equal to the reserves and other policy liabilities with respect to our Separate Account will not be chargeable with liabilities arising out of any other business we conduct. We may transfer assets of a Variable Account in excess of the reserves and other liabilities with respect to that Variable Account to another Variable Account or to our general account. All obligations arising under the policy are general corporate obligations of ours. We do not hold ourselves out to be trustees of the Separate Account assets. Variable Accounts - Each Variable Account may invest its assets in a separate class of shares of a designated investment company or companies. The Variable Accounts of our Separate Account that were available for your initial allocations are shown in the Policy Specifications. From time to time, we may make other Variable Accounts available to you. We will provide you with written notice of all material details including investment objectives and all charges. We reserve the right, subject to compliance with the law then in effect, to: . change or add designated investment companies; . add, remove or combine Variable Accounts; . add, delete or make substitutions for the securities that are held or purchased by the Separate Account or any Variable Account; . register or deregister any Variable Account under the Investment Company Act of 1940; . change the classification of any Variable Account; . operate any Variable Account as a managed investment company or as a unit investment trust; . combine the assets of any Variable Account with other separate accounts or subaccounts of ours or our affiliates; . transfer the assets of any Variable Account to other separate accounts or subaccounts of ours or our affiliates; . run any Variable Account under the direction of a committee, board, or other group; . restrict or eliminate any voting rights of policy Owners with respect to any Variable Account, or other persons who have voting rights as to any Variable Account; . change the allocations permitted under the policy; . terminate and liquidate any Variable Account; and . make any other change needed to comply with law. In spite of the above, we will not transfer any investment, or asset held for investment, between separate accounts or between separate and other accounts, provided that the superintendent of the New York Insurance Department may authorize transfers in circumstances where such transfers would not be inequitable. If any of these changes result in a material change in the underlying investment of a Variable Account of our Separate Account, we will notify you of such change. Unless required by law or regulation, an investment policy may not be changed without our consent. We will not change the investment policy of the Separate Account without the approval of the Insurance Commissioner of the state of Arizona, our state of domicile, and without the approval of the Insurance Department of the state of New York. The process for such approval is on file. GENERAL PROVISIONS Entire Contract - This policy is a contract between you and us. This policy, any attached endorsements, benefits and riders and the attached copy of the initial application are the entire contract, except as follows. Any written application for a change in policy terms allowed by the policy after issue or written notice of exercise of policy options made after the policy has been issued will also become part of the contract upon our acceptance of such application or notice and our mailing of same to your address last known to us. Only our president, chief executive officer or secretary is authorized to change this contract or extend the time for paying premiums. Any such change must be in writing. P0156-NY Page 18 (P) All statements in the application shall be deemed representations and not warranties. We will not use any statement to contest this policy or defend a claim on grounds of misrepresentation unless the statement is in an application. Non-Participating - This policy will not share in any of our surplus earnings. Incontestability - We will not contest this policy unless there was a material misrepresentation in an application, including any reinstatement application. Except for failure to pay premiums, this policy cannot be contested after the expiration of the following time periods: . If this policy has not been reinstated, we cannot contest this policy after it has been in force during the lifetime of at least one of the Insureds for two years from the Policy Date; . Following a reinstatement, we cannot contest this policy after it has been in force during the lifetime of at least one of the Insureds for two years from the reinstatement date; and . If this policy was issued under a term insurance conversion option, we cannot contest the converted amount after the policy has been in force during the lifetime of at least one of the Insureds for two years from the later of the issue of the term policy or any reinstatement date of the term policy or of this policy. Suicide Exclusion - If the death of both Insureds, or the Survivor, is the result of suicide, within two years of the policy date, no death benefit proceeds will be paid. Instead, we will pay to the beneficiary the sum of the gross premiums charged on the policy less dividends paid in cash or used in the payment of premiums thereon and less any indebtedness to us on the policy, including interest due or accrued. If only one of the two Insureds under this policy dies by suicide, within two years of the policy date, we will automatically, without Evidence of Insurability, reform and reissue the policy as of the original policy date as a single life policy on the Survivor, which shall be substantially the same as the coverage provided under this policy. In order to effect such reformation and reissuance, you must provide proof of death by suicide within 90 days of such death. Any suicide and incontestability provisions of the reformed and reissued single life policy will be effective as of the policy date of the original policy. Within 30 days after receiving notification of death, we will provide you with information regarding any payments required for the single life policy. If a payment is required to keep the single life policy in force, you will have 60 days after such notice to pay the amount required. If the Survivor dies prior to expiration of such 60-day period without having made payment, we will pay a death benefit based on the full Face Amount of the original policy net of any payments which remain due and payable on the single life policy. Misstatement - If the either Insured's age has been misstated, the death benefit will be adjusted so that the NAR after adjustment is the NAR before the adjustment multiplied by the ratio of the incorrect Cost of Insurance (COI) rate to the correct COI rate. If the Minimum Death Benefit after adjustment is larger, the death benefit will be this larger amount. Evidence of Insurability - We reserve the right to require Evidence of Insurability for any policy change or any premium payment which would result in an increase in NAR. Maturity - This policy does not mature, but will continue in force so long as at least one Insured is alive and there is sufficient Accumulated Value to provide for the Monthly Deduction due. After Age 100 of the younger Insured, no Monthly Deduction is due. Reports - A report will be mailed to you at the end of each policy quarter to your last known address. This report will include the following information for the policy quarter: . the Accumulated Value; . the Cash Surrender Value; . the current death benefit; . any Surrender Charges; P0156-NY Page 19 (P) . any existing Policy Debt; . transactions that occurred during the policy quarter; . changes in the Guideline Premiums, if applicable; and . any information required by law. In addition to the above reports, an annual report will also be mailed to you. The report will contain financial statements for the Separate Account and the designated investment company or companies in which the Separate Account invests, the latter of which will include a list of the portfolio securities of the investment company, as required by the Investment Company Act of 1940. We will also send any other reports as required by federal securities law and applicable law and regulation of the state of New York. Policy Illustrations - Upon request we will give you an illustration of the future benefits under this policy based upon both guaranteed and current cost factor assumptions. However, if you ask us to do this more than once in any policy year, we reserve the right to charge you a fee not to exceed $25 per request for this service. Illustrated benefits that are not guaranteed, such as benefits based on the current cost factor assumptions, will vary depending upon a number of factors, including but not limited to, changes in future investment performance. Basis of Values - A detailed statement showing how values are determined has been filed with the Insurance Department of the state of New York. All values are at least equal to the minimums required by the law of the state in which this policy is delivered, based on the Commissioner's 1980 Standard Ordinary Mortality Table and interest at the rate of 3%. Such values do not change upon the first death of the Insureds, nor do the cost of insurance rates; that is, the values and rates are based on the Frasier rate structure. Ownership of Assets - We have the exclusive and absolute control of our assets, including all assets in the Separate Account. Tax Qualification as Life Insurance - This policy is intended to qualify as a life insurance contract for federal tax purposes, and the death benefit under this policy is intended to qualify for federal income tax exclusion. The policy, including any other rider, benefit or endorsement, shall be interpreted to ensure and maintain such tax qualification, despite any other provision to the contrary. We will not accept a premium payment which would cause the policy to fail to qualify as a life insurance contract for federal tax purposes. If at any time the premiums paid under the policy exceed the amount allowable for such tax qualification, the excess amount, including any associated investment gains or losses, shall be removed from the policy as of the date of its payment in accordance with federal tax law, and any appropriate adjustment in the death benefit shall be made as of such date. The excess amount, including any associated investment gains or losses, shall be refunded no later than 60 days after the end of the applicable contract year as determined under federal tax law. For any such refund, any premium load originally assessed will be refunded and no surrender charges will apply. If this excess amount is not refunded by the end of such 60-day period, the death benefit shall be increased retroactively to the minimum extent necessary so that at no time is the death benefit ever less than the amount necessary to ensure or maintain such tax qualification, and the Accumulated Value will be reduced to reflect the increased Monthly Deductions as a result of such death benefit increase. If you request a decrease in policy or rider benefits, it may cause a reduction in any applicable limitations on premiums or cash values for the policy under federal tax law. Such a reduction in these limits may require us to make a distribution from the policy equal to the greatest amount by which the premiums paid or cash values for the policy, as determined under federal tax, exceed any such reduced limits, in order to maintain the policy's tax qualification. If such a distribution is made, the distribution will be paid to you and the Accumulated Value will be reduced by the amount of the distribution. However, no request for a decrease in policy or rider benefits will be allowed to the extent that the resulting reduction in such tax limits would require us to distribute more than the Net Cash Surrender Value for the policy. P0156-NY Page 20 (P) MEC Status - Unless you have given us Written Notice to the contrary, the provisions of this MEC Status subsection apply. MEC stands for Modified Endowment Contract. Under federal tax law, if the funding of a life insurance contract occurs too rapidly, it becomes a MEC and fails to qualify for certain favorable treatment as a result. This policy is intended to qualify as a life insurance contract that is not a MEC for federal tax purposes. This policy, including any other rider, benefit or endorsement, shall be interpreted to prevent the policy from being subject to such MEC treatment, despite any other provision to the contrary. We will not accept a payment as premium or otherwise which would cause the policy to become a MEC. If at any time the amounts paid under the policy exceed the limit for avoiding such MEC treatment, the excess amount, including any associated investment gains or losses, shall be removed from the policy as of the date of its payment in accordance with federal tax law, and any appropriate adjustment in the death benefit shall be made as of such date. The excess amount, including any associated investment gains or losses, shall be refunded no later than 60 days after the end of the applicable contract year as determined under federal tax law. For any such refund, any premium load originally assessed will be refunded and no surrender charges will apply. If this excess amount is not refunded by the end of such 60-day period, the death benefit shall be increased retroactively to the minimum extent necessary so that at no time is the death benefit ever less than the amount necessary to avoid such MEC treatment, and the Accumulated Value will be reduced to reflect the increased Monthly Deductions as a result of such death benefit increase. Any request that would change the death benefits under the policy and riders will not be processed if the change would cause the policy to be treated as a MEC. Such changes include a reduction in the face amount, a change in death benefit option, and a reduction in face amount due to a withdrawal. Other Distributions of Accumulated Value - If the NAR ever exceeds three times the original Face Amount, we reserve the right to make a distribution of Accumulated Value to make the NAR equal three times the original Face Amount. In such case, the distribution will be treated as a premium refund and no surrender charge will be imposed. By treating the distribution as a premium refund, we mean that, in addition to the distribution of Accumulated Value which you will receive, we will also pay you an amount representing a return of premium load associated with the distribution. The amount representing the return of premium load will be equal to the reduction in Accumulated Value multiplied by (1/(1-premium load rate))-1, provided that such amount can never exceed the total premium load paid under the policy. Termination - This policy will terminate on the earliest of: . the death of the Survivor; and . the lapse or surrender of this policy. Compliance - We reserve the right to make any change to the provisions of this policy to comply with, or give you the benefit of, any federal or state statute, rule, or regulation, including those of the state of New York and including the requirements for life insurance contracts under the Code. After filing with, and approval by, the Insurance Department of the state of New York, we will provide you with a copy of any such change. You have the right to refuse the change. P0156-NY Page 21 (P) INDEX
Accumulated Value (AV) 9 MEC Status 19 Administrative Charge 11 Misstatement 18 Age 5 Modified Endowment Contract 19 Assignment 6 Monthly Deduction 10 Automatic Portfolio Rebalancing 13 Monthly Payment Date 5 Automatic Transfer Programs 13 Mortality and Expense Risk Charge 10 Basis of Values 19 NAR 5 Beneficiary 6 Net Asset Value 10 Cash Surrender Value 14 Net Cash Surrender Value 14 Change in Policy Cost Factors 11 Net Investment Factor 10 Code 5 Net Premium 5 Compliance 20 Non-Participating 18 Cost of Insurance Charge 10 Owner 6 Cost of Insurance Rates 10 Paid-Up Benefit 8 Death Benefit 7 Planned Premium 6 Death Benefit Options 8 Policy Date 5 Death Benefit Proceeds 8 Policy Debt 5 Dollar Cost Averaging 13 Policy Illustrations 19 Entire Contract 17 Policy Loans 16 Evidence of Insurability 5, 18 Premium Allocation 6 Face Amount 5 Premium Limitation 7 Face Amount Decrease 8 Premium Load 3, 11 First Year Transfer Program 13 Premiums 6 Fixed Accumulated Value 9 Reinstatement 12 Fixed Options 5, 15 Reports 18 Free Look Transfer Date 5 Risk Class 3 Grace Period 11 Sales Surrender Charge 14 Guideline Premium Limitation 7 Sales Surrender Target 14 Guideline Premium Test 7 Separate Account 5, 16 Home Office 5 Suicide Exclusion 18 Income Benefits 15 Surrender 13 Incontestability 18 Surrender Charge 14 Insureds 5 Survivor 5 Interest on Death Proceeds 15 Tax Qualification as Life Insurance 19 Interest Settlement Option 16 Termination 20 Investment Options 5 Transfers 12 Lapse 11 Underwriting Surrender Charge 14 Loan Account 10, 16 Valuation Date 5 Loan Amount Available 16 Valuation Period 6 Loan Interest 16 Variable Account 6, 17 Loan Repayment 16 Variable Accumulated Value 9 M&E Risk Charge 11 Withdrawals 14 Maturity 18 Written Request 6 MEC 19
P0156-NY Page 22 (P) [LOGO OF PACIFIC LIFE APPEARS HERE] PACIFIC LIFE & ANNUITY COMPANY Mailing Address: 700 Newport Center Drive Newport Beach, CA 92660 ================================================================================ JOINT AND LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE . Death Benefit Payable When Both Insureds Have Died While the Policy is in Force . Net Cash Surrender Value Payable upon Surrender While the Policy is in Force . Adjustable Face Amount . Benefits May Vary Based on Investment Experience . Non-Participating P0156-NY (P) EX-99.1.(5)(B) 7 dex9915b.txt LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER EXHIBIT 1.(5)(B) LAST SURVIVOR ADDED PROTECTION BENEFIT Coverage - When we receive proof that the Survivor's death occurred while this benefit was in force, we will pay the Face Amount in effect, if any, under this benefit on the date of the Survivor's death. This rider has no cash value, but it affects the cash value of the policy. Death Benefit - The Face Amount of the policy to which this benefit is attached is modified to include the Face Amount of this benefit. The death benefit for this policy will depend on the combined Face Amount of the policy and this benefit and will be determined as described in the policy. Face Amount - The Face Amount provided by this benefit in any policy year is shown in the policy specifications pages. Such amount may be level or varying by policy year. Unscheduled increases or decreases in the Face Amount may take place after the policy date as described below. The initial Face Amount is the Face Amount on this benefit's effective date. Unscheduled Change of Face Amount - Subject to our approval, you may to change the Face Amount of this rider by Written Request while this rider is in force. Such request cannot be made effective before the first policy anniversary. Upon approval of any unscheduled change in Face Amount, we will issue a supplemental schedule of coverage, which will include the following information: . the effective date of the change; . the amount of the increase or decrease; . if the change is an increase in Face Amount, the Insured's risk classification for the increase and the Guaranteed Maximum Monthly Cost of Insurance Rates applicable to the increase. Unscheduled Face Amount Increase - If your request to change the Face Amount is a request for an increase, then our approval of the increase is subject to the following conditions: . you provide evidence of insurability satisfactory to us; . no previous increase has been made effective in the same policy year; . the Insured consents to the increase; and . the increase is at least $10,000. An Administrative Charge not to exceed $100 will be deducted from the policy's Accumulated Value on the effective date of any such increase. This charge is to cover expenses associated with our evaluation of evidence of insurability. The effective date of the increase will be the first Monthly Payment Date on or following the date all applicable conditions are met. Unscheduled Face Amount Decrease - The Face Amount may be decreased only if there has been no previous decrease in the same policy year. Any decrease in Face Amount that you request for any policy year will first be applied against the most recent increase, if any, and then against successively earlier increases, if any, and finally against the original Face Amount. The effective date of the decrease will be the first Monthly Payment Date on or following the date we receive your Written Request. If the Face Amount varies automatically by policy year as shown in a schedule of Face Amounts in the Policy Specifications, any unscheduled decrease in the Face Amount which you request for any policy year will require equivalent decreases for future policy years. You will be informed of such equivalent future decreases, and your consent will be obtained before your requested decrease becomes effective. Benefit Charges - The monthly charge for this benefit is equal to the sum of the Benefit Charges applicable to the following portions of the Face Amount: . initial Face Amount of this benefit remaining in force for that month; plus . each increase in the Face Amount of this benefit remaining in force for that month. The Benefit Charge for each portion of the Face Amount noted above is obtained by multiplying the applicable monthly Cost of Insurance Rate by the appropriate portion of the Face Amount at the beginning of the policy month divided by 1.002466. R01LST-NY Page 1 of 3 If there has been an unscheduled decrease in the Face Amount, see the Unscheduled Decrease in Face Amount provision for a description of the order in which the existing Face Amount has been decreased or eliminated. Cost of Insurance Rates - The Cost of Insurance Rates are based on a number of factors, including the policy's duration and on the two Insureds Ages and Risk Classifications. Part of the cost is intended to recover acquisition expenses at issue. Such expense recoveries are greater in the early policy years. The Cost of Insurance Rates for the initial Face Amount are based on the policy duration and on the two insured's ages and risk classifications on the policy date. The Cost of Insurance Rates for each increase in the Face Amount are based on the policy duration applicable to the increase and on the two insured's ages and risk classifications on the effective date of the increase. The current monthly Cost of Insurance Rates will be determined by us and are subject to change at any time, but will not exceed the Guaranteed Maximum Monthly Cost of Insurance Rates for this benefit shown on the policy specifications pages. Guaranteed Maximum Cost of Insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table. The Cost of Insurance Rates used to calculate the Cost of Insurance Charges for an increase in coverage necessary to meet the Guideline Minimum Death Benefit will be the same as those used for the most recent Face Amount in force under this benefit. Changes to Policy Factors - Any change in the cost factors for this benefit, including cost of insurance rates, risk and expense charges will be by class and based on changes in our expectations of future investment earnings, mortality, persistency, taxes and expenses. Class is determined by a number of factors, including the Insured's Age, Risk Classification, Policy Date and policy duration. Any such change will be determined in accordance with procedures and standards on file with the Insurance Department of the state of New York and will apply uniformly to all members of the same class. Cost of insurance rates and other expense factors will be reviewed no more frequently than annually and no less frequently than once every five years to determine whether an adjustment is necessary. M&E Risk Charge - The Mortality and Expense Risk Charge (M&E Risk Charge) is to compensate us for the risk we assume that mortality, expenses and other costs of providing your policy will be greater than estimated. Beginning on the effective date of this benefit and monthly thereafter, there may be an M&E Risk Charge deducted from the Accumulated Value. The guaranteed maximum amount of this charge for this benefit, including any increases in this benefit is shown in the Policy Specifications or in a supplemental schedule of coverage. DECREASE/WITHDRAWALS Decrease - The Decrease provision of the policy to which this benefit is attached is modified to include this benefit. This benefit will always be decreased or eliminated before any decrease is applied to the base policy face amount in effect on the policy date. For further details please see the Decrease provision of your contract. Withdrawals - The Withdrawals provision of the policy, to which this benefit is attached, is modified to include this benefit. For the purpose of the Withdrawals provision, the Last Survivor Added Protection Benefit is considered part of the Face Amount of the policy. If a decrease in Face Amount is required as a result of a Withdrawal, this benefit will always be decreased or eliminated before any decrease is applied to the base policy Face Amount in effect on the policy date. For details, please see the Withdrawals provision of your contract. Misstatement - The Misstatement provision of the policy, to which this benefit is attached, is modified to include this benefit. For the purpose of the Misstatement provision, the Last Survivor Added Protection Benefit is considered part of the Face Amount of the policy. For further details please see the Misstatement provision of your contract. Effective Date - This benefit is effective on the policy date unless otherwise stated. Incontestability - We may not contest coverage under this benefit's original face amount or any increases in Face Amount after such amount has been in force while at least one insured has been alive for 2 years from the R01LST-NY Page 2 of 3 later of the effective date of the Face Amount or any reinstatement date. In no event may we contest coverage under this benefit unless there has been a material misstatement in an application. Suicide Exclusion - If both insureds, or the surviving insured, dies by suicide, while sane or insane, within two years of the effective date of this benefit, no death benefit proceeds will be paid. Instead, we will return to you the amount described in the policy for death by suicide. If only one of the two insureds under this policy dies by suicide, while sane or insane, within two years of the effective date of this benefit, we will automatically, without evidence of insurability, reform and reissue this benefit as a single life term insurance rider on the surviving joint insured for the same amount and at the same risk classification as this benefit. The reissued rider will be attached to a reformed and reissued single life policy on the surviving joint insured, as described in the policy. If both insureds, or the surviving insured, dies by suicide, while sane or insane, within two years of the effective date of any elective increase in this benefit, no death benefit proceeds will be paid for such increase. Instead, we will return to you benefit charges for such increase. If only one of the two insureds under this policy dies by suicide, while sane or insane, within two years of the effective date of any elective increase in this benefit, we will automatically, without evidence of insurability, reform and reissue this benefit as a single life coverage on the surviving joint insured for the same amount and at the same risk classification as the increase. Conversion - Coverage under this benefit is convertible to an increase in Face Amount of the policy to which this benefit is attached after 5 years from the effective date of the benefit coverage or at the younger Insured's Age 80, if earlier. Cost of insurance rates for such increase in Face Amount will be those applicable for conversions. For such Face Amount: . No evidence of insurability will be required; . No M&E Risk Charge will apply; and . No surrender charge will apply. This benefit will be cancelled on the effective date of the corresponding increase in policy Face Amount. Termination - Coverage under this benefit will terminate on the earlier of: . Age 80 of the younger insured; . your written request; . termination of the base policy; . conversion of this benefit; or . upon the Survivor's death. General Conditions - This benefit is part of the base policy to which it is attached. All terms of the base policy which do not conflict with this benefit's terms apply to this benefit. In the event of any conflict between the terms of this benefit and the terms of the base policy, the terms of this benefit shall prevail over the terms of the base policy. Signed for Pacific Life & Annuity Company, /s/ DAVID W. GARTLEY /s/ AUDREY L. MILFS - ------------------------------------- ------------------------------------- President and Chief Executive Officer Secretary R01LST-NY Page 3 of 3 EX-99.1.(5)(C) 8 dex9915c.txt INDIVIDUAL ANNUAL RENEWABLE TERM RIDER EXHIBIT 1.(5)(C) INDIVIDUAL RENEWABLE TERM INSURANCE Insured - The person covered under this rider is listed as the "Person Covered" in the Policy Specifications in the section identified as Individual Renewable Term Insurance Rider. Such person may be either, or both, of the Insureds under this policy. No other person may be insured under this rider. An Insured may be deleted from or, with evidence of insurability satisfactory to us, added to this rider. The remainder of this rider describes the coverage with respect to a single Insured. If both Insureds are covered under this rider, the rider applies separately to each. Coverage - This rider provides term insurance on the Insured under this rider. When we receive proof that the Insured's death occurred while this benefit was in force, we will pay the Face Amount in effect, if any, under this rider on the date of the Insured's death. This rider has no cash value, but it affects the cash value of the policy. Face Amount - The Face Amount of this rider is shown in the Policy Specifications and in any supplemental schedule of coverage and may be level or varying by policy year. Unscheduled changes in the Face Amount may take place after the Policy Date as described below. Unscheduled Change of Face Amount - Subject to our approval, you may to change the Face Amount by Written Request during the lifetime of the Insured and while this rider is in force. Such request cannot be made effective before the first policy anniversary. Upon approval of any unscheduled change in Face Amount, we will issue a supplemental schedule of coverage, which will include the following information: . the effective date of the change; . the amount of the increase or decrease; . if the change is an increase in Face Amount, the Insured's risk classification for the increase and the Guaranteed Maximum Monthly Cost of Insurance Rates applicable to the increase. Unscheduled Face Amount Increase - If your request to change the Face Amount is a request for an increase, then our approval of the increase is subject to the following conditions: . you provide evidence of insurability satisfactory to us; . no previous increase has been made effective in the same policy year; . the Insured consents to the increase; and . the increase is at least $10,000. An Administrative Charge not to exceed $100 will be deducted from the policy's Accumulated Value on the effective date of any such increase. This charge is to cover expenses associated with our evaluation of evidence of insurability. The effective date of the increase will be the first Monthly Payment Date on or following the date all applicable conditions are met. Unscheduled Face Amount Decrease - The Face Amount may be decreased only if there has been no previous decrease in the same policy year. Any decrease in Face Amount that you request for any policy year will first be applied against the most recent increase, if any, and then against successively earlier increases, if any, and finally against the original Face Amount. The effective date of the decrease will be the first Monthly Payment Date on or following the date we receive your Written Request. If the Face Amount varies automatically by policy year as shown in a schedule of Face Amounts in the Policy Specifications, any unscheduled decrease in the Face Amount which you request for any policy year will require equivalent decreases for future policy years. You will be informed of such equivalent future decreases, and your consent will be obtained before your requested decrease becomes effective. Rider Charge - Beginning on the Policy Date and for every month thereafter, there will be a charge for this rider equal to the sum of the charge for the initial Face Amount plus the charge for each increase in the Face Amount. The charge for each such Face Amount is equal to the Face Amount multiplied by the applicable R01IRT-NY Page 1 NY monthly Cost of Insurance Rate for the Face Amount. Cost of Insurance Rates - The Cost of Insurance Rates are based on a number of factors, including the Insured's Age, Risk Classification and the policy duration. The current monthly Cost of Insurance Rates will be determined by us. These rates will not exceed the Guaranteed Maximum Monthly Cost of Insurance Rates shown in the Policy Specifications and any supplemental schedule of coverage. Any changes in the Cost of Insurance Rates will apply uniformly to all members of the same class and based on changes in our expectations of future mortality, persistency and expenses. Any such change will be determined in accordance with procedures and standards on file with the Insurance Department of the state of New York. Cost of insurance rates and other expense factors will be reviewed no more frequently than annually and no less frequently than once every five years to determine whether an adjustment is necessary. Effective Date - This rider is effective on the Policy Date unless otherwise specified. Incontestability - We will not contest coverage under this rider unless there was a material misrepresentation in an application, including any reinstatement application. Except for failure to pay premiums, this policy cannot be contested after the expiration of the following time periods: . the initial Face Amount cannot be contested after the rider has been in force during the Insured's lifetime for two years from the later of the effective date of the rider or any reinstatement date; and . an increase in the Face Amount, which was applied for and for which evidence of insurability was required, cannot be contested after the increased amount has been in force during the Insured's lifetime for two years from the later of its effective date or any reinstatement date. Suicide - If the Insured commits suicide within two years of the effective date of the original Face Amount of this rider or of any increase in the Face Amount of this rider, we will limit the death benefit paid with respect to such Face Amount to the rider charges for such Face Amount . Conversion - This rider is not convertible. Termination - This rider will terminate on the earliest of the following: . the Insured's Age 80; or . your Written Request; or . lapse of the policy; or . termination of the policy. General Conditions - This rider is part of the policy to which it is attached. All terms of this policy that do not conflict with this rider's terms apply to this rider. In the event of any conflict between the terms of this benefit and the terms of the base policy, the terms of this benefit shall prevail over the terms of the base policy. Signed for Pacific Life & Annuity Company, /s/ DAVID W. GARTLEY /s/ AUDREY L. MILFS - ------------------------------------- -------------------------------------- President and Chief Executive Officer Secretary R01IRT-NY Page 2 NY EX-99.1.(5)(D) 9 dex9915d.txt POLICY SPLIT OPTION RIDER EXHIBIT 1.(5)(D) POLICY SPLIT OPTION RIDER Benefit - You may exchange this policy for two new individual policies, one on each of the two insureds, subject to this rider's terms. Exchange Conditions - To exercise this option, you must: . request the exchange in writing on a form that we will provide; . return the base policy; and . provide evidence of insurability for both insureds satisfactory to us. A $200 Administrative Charge will be deducted from the Accumulated Value of the base policy on the day prior to the Exchange Date. This charge is to cover expenses associated with the evaluation of the evidence of insurability. We reserve the right to deduct a charge on the day prior to the Exchange Date from the base policy's Accumulated Value to cover PL&A's expenses arising from any state or federal taxes generated by the exchange. Exchange Date - The exchange will be effective on the Exchange Date, which is the date all of the above exchange conditions are met. New Policies - The exchange may be to any individual flexible premium adjustable life policy that we regularly issue at the time of exchange, subject to our approval. The policy date of each of the two new individual policies will be the Exchange Date. The new policy on each insured will be based on that insured's age and risk classification as of the Exchange Date. The new policies will only take effect once the original policy has terminated and will not provide any insurance until such time. The Accumulated Value less the Surrender Charge under the original policy on the day prior to the Exchange Date will be divided and allocated to the two new individual policies in proportion to their face amounts. Any policy debt under the original policy on the day prior to the Exchange Date will also be divided and allocated to the new policies in proportion to their face amounts. This will result in the Cash Surrender Value of each new policy being equal to the Cash Surrender Value of the original policy multiplied by the face amount of the new policy and divided by the sum of the face amounts of the two new policies. The face amount of each new individual policy may be for any amount you elect, provided that the sum of the face amounts of the two new policies does not exceed the sum, as of the Exchange Date, of the base policy's Death Benefit plus the Coverage Amount under the Last Survivor Added Protection Benefit, if such benefit is attached to the base policy. Your signature of consent is required if the face amounts of the two new individual policies are not equal. Subject to our approval, riders or benefits may be added to the new policies where available. Assignment - Any assignment of this policy will apply to each new individual policy. Effective Date - This rider is effective on the policy date unless otherwise stated. Termination - Coverage under this rider will terminate on the earliest of: . your written request; or . the date that the first death of the two insureds occurs: or . termination of the base policy; or . the policy anniversary nearest the 80th birthday of the older of the two insureds; or . exercise of the option to exchange this policy under this rider. General Conditions - This rider is part of the base policy to which it is attached. All terms of the base policy, which do not conflict with this rider's terms, apply to this rider. In the event of any conflict between the terms of this rider and the terms of the base policy, the terms of this rider shall prevail over the terms of the base policy. Signed for Pacific Life & Annuity Company, /s/ DAVID W. GARTLEY /s/ AUDREY L. MILFS - ------------------------------------- --------------------------------------- President and Chief Executive Officer Secretary R94PSO-NY EX-99.1.(5)(E) 10 dex9915e.txt ACCELERATED LIVING BENEFIT RIDER EXHIBIT 1.(5)(E) ACCELERATED LIVING BENEFIT RIDER THIS RIDER IS ATTACHED TO AND MADE PART OF YOUR POLICY. ISSUE DATE:___________________________________________ POLICY NUMBER:________________________________________ This rider is not meant to cause involuntary access to proceeds ultimately payable to the beneficiary. Therefore, this benefit is not available: a) if either the owner or insured is required by law to use this benefit to meet the claims of creditors, whether in bankruptcy or otherwise; or b) if either the owner or insured is required by a government agency to use this benefit in order to apply for, obtain or otherwise keep a government benefit or entitlement. Accelerated Benefit The owner may elect to receive, while the insured is living, a portion of the policy's proceeds. We will pay an Accelerated Benefit if an insured has been diagnosed with a noncorrectable terminal illness and has a life expectancy of 6 months or less. There are no restrictions or limitations on the use of the Accelerated Benefit Payment. Definitions Accelerated Benefit Payment is the actual dollar amount of benefit you will receive under this rider. Requested Portion is the amount of the policy proceeds the owner requests. The Requested Portion divided by the Eligible Coverage will be called the Requested Percentage. The Requested Portion cannot exceed the lesser of a) 50% the Eligible Coverage, or b) $250,000 for all policies in force with us. Eligible Coverage is the portion of the policy proceeds, which will quality for determining the Accelerated Benefit under this rider. The Eligible Coverage includes: . the base policy death benefit; . any paid-up additions; and . any term rider, term policy, or term coverage on the primary insured that has at least two years of coverage remaining. For coverage amounts that vary by year, the lowest coverage amount during the remaining two-year period will be used. . Survivor Life policies will be eligible for acceleration only after the death of the first insured and the surviving insured has been diagnosed as terminally ill. Any term rider, term policy or term coverage on the surviving insured that has at least two years of coverage remaining will be eligible for acceleration. For coverage amounts that vary by year, the lowest coverage amount during the remaining two-year period will be used. Eligible Coverage does not include: . any insurance provided under the policy on the life of someone other than the insured; . the face amount of any scheduled increase(s) in insurance as provided by an additional benefit rider during the 12 month period after the date the accelerated payment is requested; and . the amount of any accidental death benefit. The minimum Accelerated Benefit Payment amount is $500. The Accelerated Benefit will be paid in a lump sum payment. WE WILL PAY THE ACCELERATED BENEFIT AMOUNT ONLY ONCE PER INSURED. Accelerated Benefit Payment The Accelerated Benefit payment will be determined as of the date we approve your written request. Your Accelerated Benefit Payment will equal the Requested Portion less the following adjustments: 1. An actuarial discount will apply to the Requested Portion. This discount reflects the early payment of the Requested Portion of your policy. The discount will be based on an annual interest rate declared by us and which is in effect as of the date we approve your written request. The interest rate will not be greater than the published monthly average for the calendar month ending two months before the date the rate is determined (Moody's Corporate Bond Yield Average - Monthly Average Corporate as published by Moody's Investors Service Inc.). The rate is determined for each calendar year on January 1st. 2. If there is a policy loan outstanding on your policy as of the date we approve your written request, we will reduce the Requested Portion in order to repay a portion of the outstanding policy loan equal to the Requested Percentage times the outstanding loan. 3. A reduction to the Requested Portion will be applied to any premiums due and unpaid if the policy has entered the Grace Period at the time we approve your request. 4. An administrative charge not to exceed $150. We will refund the amounts discussed in 1. and 4. above should the death of the Insured occur within 30 days of the Accelerated Benefit Payment. R92ALB-NY Page 1 Impact on Policy After an Accelerated Benefit Payment is made the policy and all riders will remain in force subject to the following adjustments. The policy death benefit, any cash value, any paid-up additions, Accumulated Value, if any, and any term insurance eligible to be accelerated under this rider, and any required premium payments will be reduced by the Requested Percentage. Such reduced premiums due after the Accelerated Benefit Payment has been made, will be due at the scheduled premium due dates. Such premiums must be paid in cash to keep this policy in force, unless the policy has an automatic premium loan option, which has been selected by the owner, in which case the premiums will be paid by automatic premium loan if not paid in cash. Any outstanding policy loan will be reduced as specified in the Accelerated Benefit Payment Section. Any adjustment in Accumulated Value will be allocated to the Fixed Account and Variable Accounts on a prorata basis. Cost of Insurance Charges will be adjusted to reflect the reduction in the death benefit. A statement demonstrating how an Accelerated Benefit Payment will impact your policy values will be sent with your payment. Eligibility The following conditions must be met prior to any Accelerated Benefit Payment: . The policy must be in force on the date the Accelerated Benefit Payment is approved. If you have a term insurance policy or your policy is on Extended Term, a minimum period of two years of coverage must be remaining in order to qualify for an Accelerated Benefit Payment. We must receive written proof satisfactory to us that the insured's or for Survivor Life policies the surviving insured's life expectancy is 6 months or less from the date of the written request. Proof will include the certification by a licensed physician, who is not yourself or a member of your family. Such proof should include documentation supported by clinical, radiological or laboratory evidence of the condition. We reserve the right to obtain a second medical opinion from a physician of our choice at our expense. . If the opinions of the insured's physician and the company's physician conflict, an opinion from a third physician mutually acceptable to both the insured and the company will be sought. This opinion will prevail in determining whether the accelerated benefit will be approved. . Owner or legal guardian must apply in writing for this benefit on a form supplied by us. Incontestability This rider is subject to the Incontestability provision of the base policy to which it is attached. Effective Date This rider is effective on the issue date specified. General Provisions There will be an administrative charge, not to exceed $150, which will be deducted from the Accelerated Benefit. This rider will terminate: . on your written request; . on lapse or termination of the policy; or . when an Accelerated Benefit is paid under this rider. Signed for Pacific Life & Annuity Company, /s/ DAVID W. GARTLEY /s/ AUDREY L. MILFS - ------------------------------------- -------------------------------------- President and Chief Executive Officer Secretary R92ALB-NY Page 2 EX-99.1.(5)(F) 11 dex9915f.txt ESTATE TAX REPEAL RIDER EXHIBIT 1.(5)(F) ESTATE TAX REPEAL RIDER Definition of Estate Tax Repeal - By Estate Tax Repeal (also referred to below as "Repeal"), we mean a repeal of the federal estate tax. Such Repeal must become law before the end of the calendar year 2002 and must provide that the federal estate tax will be completely eliminated, either immediately or anytime in the future. The Benefit This Rider Provides - If the federal estate tax is repealed as defined above, you may elect to return your policy to us by following the steps below, in which case we will pay you the amount stated below, and both this rider and the policy will end. When to Elect This Benefit - Your election must be timely. It will be timely if we receive it at the address shown below within 60 days after the date the Repeal becomes law. How To Elect This Benefit - In order to elect this benefit, you must do the following: . prepare and sign a written request to elect this benefit. You may call us at our toll free telephone number (800) 800-6416, Client Services Department, to request an election form; and . mail your election to: Pacific Life & Annuity Company Life Division Attn: Estate Tax Repeal Desk 700 Newport Center Drive Newport Beach, CA 92660 It may be to your benefit to retain proof of delivery. Such proof may, for example, consist of sending the election by US Postal Service Certified Mail with Return Receipt Requested. Proof of delivery will provide you with evidence of the date we received the election. What You Receive If You Elect This Benefit - If your election is timely, we will pay you an amount equal to: . the Accumulated Value of the policy; . plus any policy charges and premium loads deducted; and . less any cost of insurance charges, any outstanding loan, and any charges for policy riders other than the fee for this rider. Such amount will be calculated as of the date we receive your election. In such case, both the policy and this rider will end. Effective Date - This rider is effective on the Policy Date unless otherwise stated. When This Rider Ends - This rider will end on the earliest of: . lapse or termination of the policy; . your election of this rider's benefit according to the provisions above; . your Written Request to us choosing to terminate this rider; or . 60 days after the Repeal becomes law. Fee for This Rider - There is a one-time fee of $500 for this rider. There is no additional charge if you elect the benefit this rider provides. General Conditions - This rider is part of the policy to which it is attached. All terms of the policy that do not conflict with this rider's terms apply to this rider. You cannot elect the benefit this rider provides and also elect the benefit provided under any Enhanced Policy Split Option Rider attached to the policy. Signed for Pacific Life & Annuity Company at our Home Office, 700 Newport Center Drive, Newport Beach, California 92660. /s/ DAVID W. GARTLEY /s/ AUDREY L. MILFS - ------------------------------------ ---------------------------------------- Chairman and Chief Executive Officer Secretary R01ETR-NY EX-99.1.(6)(A) 12 dex9916a.txt BYLAWS OF PL&A EXHIBIT 1.(6)(A) BYLAWS OF PACIFIC LIFE & ANNUITY COMPANY ARTICLE I OFFICES SECTION 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the corporation is fixed at 700 Newport Center Drive, Newport Beach, California 92660. The board of directors may relocate the principal executive office by amendment to these bylaws. SECTION 2. OTHER OFFICES. The board of directors may establish branch or subordinate offices wherever the corporation is authorized to do business. ARTICLE II MEETINGS OF SHAREHOLDERS SECTION 1. PLACE OF MEETINGS. All meetings of shareholders shall be held at the principal office or at such other place as may be designated for that purpose from time to time by the board of directors. SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders shall be held on the fourth Tuesday of February in each year at 10:00 a.m. However, if this day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At this meeting, directors shall be elected, and any other proper business within the power of the shareholders shall be transacted. SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders, for any purpose or purposes whatsoever, may be called at any time by the chairman of the board, the president or by the board of directors, or by any two or more members thereof, or by one or more shareholders holding not less than one-tenth (1/10) of the voting power of the corporation. SECTION 4. NOTICE OF MEETINGS. Notices of annual or special meetings shall be given in writing to shareholders entitled to vote by the secretary or the assistant secretary, or if there be no such officer, or in case of his neglect or refusal, by any director or shareholder. Such notices shall be sent to the shareholder's address appearing on the books of the corporation or supplied by him to the corporation for the purpose of notice, or shall be delivered personally, not less than ten (10) days before such meeting. Notice of any meeting of shareholders shall specify the place, the day and the hour of meeting, and in case of special meeting, as provided by the general corporation law of Arizona, the purpose or purposes for which the meeting is called. When a meeting is adjourned for forty-five (45) days or more, notice of the adjourned meeting shall be given as in case of an original meeting. If the meeting is adjourned for less than forty-five days, it shall not be necessary to give any notice of the adjournment or of the business to be transacted at any adjourned meeting other than by announcement at the meeting at which such adjournment is taken. SECTION 5. CONSENT TO SHAREHOLDERS' MEETINGS. The transactions of any meeting of shareholders, however called and noticed, shall be valid as though had at a meeting duly held after regular call and notice if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Any action which may be taken at a meeting of the shareholders, may be taken without a meeting if authorized by a writing signed by all of the holders of shares who would be entitled to vote at a meeting for such purpose, and filed with the secretary of the corporation. SECTION 6. QUORUM. The holders of a majority of the shares entitled to vote thereat, present in person, or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law, by the articles of incorporation, or by these bylaws. If however, such majority shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at the meeting as originally notified. No notice of the adjourned meeting need be given, other than an announcement at the meeting at which the adjournment is 2 taken, unless the meeting is adjourned for forty-five (45) days or more in which case notice of the adjourned meeting shall be given as in the case of an original meeting. SECTION 7. VOTING RIGHTS; CUMULATIVE VOTING. Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day of any meeting of shareholders, unless some other day be fixed by the board of directors for the determination of shareholders of record, then on such other day, shall be entitled to vote at such meeting. Every shareholder entitled to vote shall be entitled to one vote for each said share and in any election of directors he shall have the right to cumulate his votes as provided in A.R.S. S 10-033. SECTION 8. PROXIES. Every person entitled to vote or execute consents shall have the right to do so either in person or by one or more agents authorized by a written proxy executed by such person or his duly authorized agent and filed with the secretary of the corporation. Any proxy duly executed is not revoked and continues in full force and effect until an instrument revoking it or a duly executed proxy bearing a later date is filed with the secretary of the corporation; provided that no such proxy shall be valid after the expiration of eleven months from the date of its execution, unless the person executing it specifies therein the length of time for which such proxy is to continue in force, which in no case shall exceed seven years from the date of its execution. SECTION 9. INSPECTORS OF ELECTION. In advance of any meeting of shareholders, the board of directors may appoint any persons, other than nominees for office, inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election be not so appointed, the chairman of any such meeting may, and on the request of any shareholder or his proxy shall, make such appointment at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting, or at the meeting by the chairman. The duties of such inspectors shall include: determining the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies; receiving votes, ballots or consents, hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders. 3 ARTICLE III DIRECTORS; MANAGEMENT SECTION 1. POWERS. Subject to the articles of incorporation, the bylaws and the laws of the State of Arizona as to action to be authorized or approved by the shareholders, all corporate powers shall be exercised by or under authority of, and the business and affairs of this corporation shall be controlled by, a board of directors. SECTION 2. NUMBERS AND QUALIFICATION OF DIRECTORS. The authorized number of directors of the corporation shall be not less than five (5) nor more than fifteen (15). The exact number of directors shall be five (5) until changed, within the limits specified herein, by a bylaw amending this Section 2, duly adopted by the board of directors or by the shareholders. SECTION 3. ELECTION AND TENURE OF OFFICE. The directors shall be elected by ballot at the annual meeting of the shareholders, to serve for one (1) year and until their successors are elected and have qualified. Their term of office shall begin immediately after election. SECTION 4. VACANCIES. Vacancies in the board of directors may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual meeting of shareholders or at a special meeting called for that purpose. The shareholders may at any time elect a director to fill any vacancy not filled by the directors, and may elect the additional directors at the meeting at which an amendment of the bylaws is voted authorizing an increase in the number of directors. A vacancy or vacancies shall be deemed to exist in case of the death, resignation or removal of any director, or if the shareholders shall increase the authorized number of directors but shall fail at the meeting at which such increase is authorized, or at an adjournment thereof, to elect the additional director so provided for, or in case the shareholders fail at any time to elect the full number of authorized directors. If the board of directors accepts the resignation of a director tendered to take effect at a future time, the board, or the shareholders, shall have power to elect a successor to take office when the resignation shall become effective. 4 No reduction of the number of directors shall have the effect of removing any director prior to the expiration of his term of office. SECTION 5. REMOVAL OF DIRECTORS. The entire board of directors or any individual director may be removed from office as provided by A.R.S. S 10-039. SECTION 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. Meetings of the board of directors shall be held at the principal office of the corporation in the State of California, or at any place within or without the State of California as may be designated for that purpose, from time to time, by resolution of the board of directors, or written consent of all of the members of the board. Any meeting shall be valid, wherever held, if held by the written consent of all members of the board of directors, given either before or after the meeting and filed with the secretary of the corporation. Any meeting, regular or special, may be held by conference telephone or similar communication equipment, as long as all directors participating in the meeting can hear one another, and all such directors shall be deemed to be present in person at the meeting. SECTION 7. ORGANIZATION MEETINGS AND REGULAR MEETINGS. The organization meetings of the board of directors shall be held immediately following the adjournment of the annual meetings of the shareholders at the place where the annual meeting of the shareholders was held or at any other place that shall have been designated by the board of directors, for the purpose of organization, any desired election of officers, and the transaction of other business. Notice of this meeting shall not be required. Regular meetings of the board of directors as scheduled by the board of directors may be held without notice. SECTION 8. SPECIAL MEETINGS--NOTICES. Special meetings of the board of directors for any purpose or purposes shall be called at any time by the chairman of the board, the president or by any vice president, or by any two directors. Notice of the time and place of special meetings shall be delivered personally or by telephone to the directors or sent to each director by letter or by telegram, charges prepaid, addressed to him at his address as it is shown upon the records of the corporation, or if it is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company in the place in which the principal office of the corporation is located at least ninety-six (96) hours prior to the time of the holding of the meeting if sent by mail and at least forty-eight (48) hours prior to the time of the holding of the meeting if sent by telegram or if personally delivered, it shall be so delivered at least forty-eight (48) hours prior to the time of the holding of the meeting. Such mailing, telegraphing, 5 personal delivery, or telephonic notice above provided shall be due, legal and personal notice to such director. SECTION 9. WAIVER OF NOTICE. When all the directors are present at any directors' meeting, however called or noticed, and sign a written consent thereto on the records of such meeting, or, if a quorum of the directors are present, and if those not present sign in writing a waiver of notice of such meeting, whether prior to or after the holding of such meeting, which said waiver shall be filed with secretary of the corporation, the transactions thereof are as valid as if had at a meeting regularly called and noticed. Any such waiver of notice of consent need not specify the purpose of the meeting. SECTION 10. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned, unless the meeting is adjourned for more than twenty-four (24) hours, in which case notice of the time and place shall be given to the absent directors in the manner specified in Section 8 of this Article III. SECTION 11. QUORUM. A majority of the authorized number of directors shall constitute a quorum for the transaction of business. The action of a majority of the directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that the directors present in the absence of a quorum, may adjourn from time to time, but may not transact any business. SECTION 12. ACTION WITHOUT MEETING BY UNANIMOUS CONSENT. Notwithstanding anything to the contrary contained in these bylaws, any action required or permitted to be taken by the board of directors may be taken without a meeting, if all members of the board of directors shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. ARTICLE IV OFFICERS SECTION 1. OFFICERS. The officers shall be a chairman of the board, a president, one or more vice presidents, a secretary, a chief financial officer/treasurer, and such other officers as the board of directors may from time to time determine, which officers shall be elected by, and hold office at the pleasure of, the board of directors. 6 SECTION 2. ELECTION. After their election, the directors shall meet and organize by electing a chairman of the board, a president, one or more vice presidents, a secretary and a chief financial officer/treasurer, who may, but need not be, members of the board of directors. The directors shall also elect such other officers as they may from time to time determine. Any two or more of such offices, except those of president and secretary, may be held by the same person. SECTION 3. COMPENSATION AND TENURE OF OFFICE. The compensation and tenure of office of all the officers of the corporation shall be fixed by the board of directors. SECTION 4. REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the board, or, except in case of any officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors. Any officer may resign at any time by giving written notice to the board of directors, or to the chairman of the board, or to the president, or to the secretary of the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the bylaws for regular appointments to such office. SECTION 6. CHAIRMAN OF THE BOARD. The chairman of the board shall preside at all meetings of the board of directors, shall preside at all meetings of the shareholders, shall be an ex- officio member of all standing committees, including the executive committee, if any, shall be the chief executive officer of the corporation and shall exercise and perform such other powers and duties as may be from time to time assigned to him by the board of directors or prescribed by the bylaws. SECTION 7. PRESIDENT. Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, the president shall have general supervision, direction and control of the business and affairs of the corporation, subject only to the control of the board of directors 7 and subject to any supervisory power granted the chairman of the board. In the absence of the chairman of the board, he shall preside at meetings of the shareholders and at meetings of the board of directors. He shall be ex-officio a member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the board of directors or the bylaws. SECTION 8. VICE PRESIDENTS. In the absence or disability of the president, the vice presidents in order of their rank as fixed by the board of directors or, if not ranked, the vice- president designated by the board of directors, shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions upon the president. The vice-presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors or by the bylaws. SECTION 9. SECRETARY. The secretary shall keep or cause to be kept, at the principal office or such other place as the board of directors may order, a book of minutes of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation's transfer agent, a share register, or a duplicate share register, showing the names of the shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the board of directors required by the bylaws or by law to be given, and shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by the bylaws. SECTION 10. CHIEF FINANCIAL OFFICER/TREASURER. The chief financial officer/treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any director. 8 The chief financial officer/treasurer shall deposit all monies and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or the bylaws. SECTION 11. ASSISTANTS. Any assistant secretary or assistant treasurer, respectively, may exercise any of the powers of secretary or treasurer, respectively, as provided in these bylaws or as directed by the board of directors, and shall perform such other duties as may be prescribed by the bylaws or the board of directors. SECTION 12. OTHER. The board of directors may from time to time appoint such other officers or agents as the business of the corporation may require, fix their tenure of office and allow them suitable compensation. ARTICLE V EXECUTIVE AND OTHER COMMITTEES The board of directors may appoint an executive committee, and such other committees as may be necessary from time to time, consisting of such number of its members and with such powers as it may designate, consistent with the articles of incorporation and bylaws and the general corporation laws of the State of Arizona. Such committees shall hold office at the pleasure of the board. ARTICLE VI CORPORATE RECORDS AND REPORTS--INSPECTION SECTION 1. RECORDS. The corporation shall maintain adequate and correct accounts, books and records of its business and properties. All of such books, records and accounts shall be kept at its principal place of business in the State of California, as fixed by the board of directors from time to time. SECTION 2. INSPECTION BY DIRECTORS. Every director shall have the absolute right at any reasonable time to inspect all books, records and documents of every kind and the physical properties of the corporation and each of 9 its subsidiary corporations. This inspection by a director may be made in person or by an agent or attorney and the right of inspection includes the right to copy and make extracts of documents. SECTION 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The accounting books and records and minutes of proceedings of the shareholders and the board of directors and any committee or committees of the board of directors shall be kept at such place or places designated by the board of directors, or, in the absence of such designation, at the principal executive office of the corporation. The minutes shall be kept either in written form or in any other form capable of being converted into written form. The minutes and accounting books and records shall be open to inspection upon the written demand of any shareholder or holder of a voting trust certificate, at any reasonable time during usual business hours, for a purpose reasonably related to the holder's interest as a shareholder or as the holder of a voting trust certificate. The inspection may be made in person or by an agent or attorney, and shall include the right to copy and make extracts. These rights of inspection shall extend to the records of each subsidiary corporation of the corporation. SECTION 4. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall keep at its principal business office in California, the original or a copy of these bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. SECTION 5. INSURANCE POLICIES -- HOW SIGNED. All policies issued by the corporation shall be signed by the president and countersigned by the secretary either personally or by facsimile. SECTION 6. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by resolution of the board of directors. SECTION 7. CONTRACTS, ETC. -- HOW EXECUTED. The board of directors, except as in the bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation, and this authority may be general or confined to specific instances; and, unless so authorized or ratified by the board of directors or within the authority of an officer, no office, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 10 SECTION 8. ANNUAL REPORTS. Unless dispensed with by resolution of the board of directors as to any calendar year or waived by written consent of all shareholders entitled to vote as to any calendar year, the board of directors shall cause annual reports to be made to the shareholders as provided by the general corporation law of Arizona. If made, the board of directors shall cause such annual reports to be sent to the shareholders not later than one hundred twenty (120) days after the close of the calendar year. ARTICLE VII INVESTMENTS SECTION 1. INVESTMENTS IN THE CORPORATION'S NAME. All investments of the corporation shall be made in the name of the corporation or its nominee. SECTION 2. INVESTMENTS BY THE CORPORATION. All investments of the corporation shall be authorized or approved by the board of directors or by a committee of the board charged with the duty of supervising or making such investments. If authorized or approved by such a committee, a report shall be submitted to the board of directors at its next meeting. The approval of investments shall be entered on the records of the corporation in such form and detail as required by the general corporation law of Arizona. ARTICLE VIII CERTIFICATES AND TRANSFER OF SHARES SECTION 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of such form and device as the board of directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; the par value; a statement of the rights, privileges, preferences and restrictions, if any; a statement as to redemption or conversion, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable, or, if assessments are collectible by personal action, a plain statement of such facts. Every certificate for shares must be signed in the name of the corporation by the president, or a vice president and the secretary or an assistant secretary or must be authenticated by facsimiles of the signatures of the president and secretary or by a facsimile of the signature of its president and the written signature of its secretary or an assistant secretary. 11 SECTION 2. TRANSFER ON THE BOOKS. Upon surrender to the secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. SECTION 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and advertise the same in such manner as the board of directors may require, and shall, if the directors so require, give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the board, in at least double the value of the stock represented by said certificate, whereupon, a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed. SECTION 4. TRANSFER AGENTS AND REGISTRARS. The board of directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, which shall be an incorporated bank or trust company--either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the board of directors may designate. SECTION 5. CLOSING STOCK TRANSFER BOOKS. The board of directors may close the transfer books in their discretion for a period not exceeding thirty (30) days preceding any meeting, annual or special, of the shareholders, or the day appointed for the payment of a dividend. ARTICLE IX CORPORATE SEAL The corporate seal shall be circular in form, and shall have inscribed thereon the name of the corporation, the date of its incorporation, and the word Arizona. ARTICLE X AMENDMENTS TO BYLAWS SECTION 1. BY SHAREHOLDERS. New bylaws may be adopted or these bylaws may be repealed or amended at their annual meeting, or at any other meeting of the shareholders called for that purpose, by a vote of 12 shareholders entitled to exercise a majority of the voting power of the corporation, or by written assent of such shareholders. SECTION 2. POWERS OF DIRECTORS. Subject to the rights of the shareholders to adopt, amend or repeal bylaws, as provided in Section 1 of this Article X, the board of directors may adopt, amend or repeal any of these bylaws or amendment thereof, provided, however that the board of directors may adopt a bylaw or amendment of a bylaw changing the authorized number of directors only for the purpose of fixing the exact number of directors within the limits specified in Section 2 of Articles III of the bylaws. SECTION 3. RECORD OF AMENDMENTS. Whenever an amendment or new bylaw is adopted, it shall be copied in the Book of Bylaws with the original bylaw, in the appropriate place. If any bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book. 13 EX-99.1.(6)(B) 13 dex9916b.txt ARTICLES OF INCORPORATION OF PM GROUP LIFE INSURANCE EXHIBIT 1.(6)(B) AMENDED AND RESTATED ARTICLES OF REDOMESTICATION OF PM GROUP LIFE INSURANCE COMPANY The Articles of Redomestication of PM Group Life Insurance Company are hereby amended and restated, effective as of September 30, 1990, to read as follows: We, the undersigned, acting as incorporators for the purpose of redomesticating PM Group Life Insurance Co., a California corporation, which intends to simultaneously redomesticate to Arizona and merge with Pacific Financial Life Insurance Company of Arizona, an Arizona corporation, without interruption, as a corporation organized under the laws of the State of Arizona pursuant to Arizona Revised Statutes Section 20-231.A, do hereby adopt the following Articles of Redomestication for said corporation. ARTICLE I --------- The name of the corporation shall be PM Group Life Insurance Company. ARTICLE II ---------- The corporation was incorporated in the State of California on September 20, 1982. ARTICLE III ----------- The existence of the corporation shall be perpetual. ARTICLE IV ---------- Upon the approval of these Articles of Redomestication, PM Group Life Insurance Company shall be and continue to be possessed of all privileges, franchises and powers to the same extent as if it had been originally incorporated under the laws of the State of Arizona; and all privileges, franchises and powers belonging to said corporation, and all property, real, personal and mixed, and all debts due on whatever account, all Certificates of Authority, agent appointments, outstanding insurance policies, and all choses in action, shall be and the same are hereby ratified, approved, confirmed and assured to PM Group Life Insurance Company, with like effect and to all intents and purposes as if it had been originally incorporated under the laws of the State of Arizona. Said corporation shall be given recognition as a domestic insurer of the State of Arizona from and after September 20, 1982, the date of its initial incorporation under the laws of the State of California. ARTICLE V --------- The purpose for which this corporation is organized is the transaction, direct and as a reinsurer, of life and disability insurance and such other lines of insurance as it may be authorized to transact. In no event shall the corporation incur indebtedness in excess of the amount authorized by law. ARTICLE VI ---------- The authorized amount of capital stock of the corporation shall be Five Million (5,000,000) shares of common stock with a par value of One Dollar ($1.00) per share. Two Million Nine Hundred Thousand (2,900,000) shares have been issued, and are fully paid and non-assessable. Any additional shares of common stock shall be issued and paid for at such time or times and in such manner as the Board of Directors shall determine and, when issued and paid for shall be non-assessable, except as provided by Article 14, Section 11 of the Constitution of Arizona. ARTICLE VII ----------- The affairs of the corporation shall be conducted by a Board of Directors consisting of not less than five (5) nor more than fifteen (15) directors as fixed by the Bylaws, and such officers as the said directors may at any time elect or appoint. No officer or director need be a shareholder of this corporation. The directors shall be elected by the shareholders during the annual meeting of each year, beginning in 1990. The annual meeting shall be held at the principal office of the corporation in Phoenix, Arizona, or at any place determined by the Board of Directors at an hour to be named in the Notice of Meeting or Waiver of Notice of Meeting. If the date of the annual meeting falls on a legal holiday, the meeting shall be held on the next succeeding business day. A director shall serve until his successor is duly elected and qualified. The Board of Directors shall have the power to adopt, amend, alter and repeal the Bylaws. Bylaws made by the Board may be altered or repealed and new Bylaws made by the shareholders, in accordance with the provisions contained in said Bylaws and these Articles. The Board of Directors shall have the power to manage the corporate affairs and make all rules and regulations necessary for the management of the affairs of the corporation, to appoint or remove any officer and to fill all vacancies occurring on the Board or in any office for any cause, and to appoint from their own number an Executive Committee and other committees and invest said committee with all the powers permitted by the Bylaws. 2 ARTICLE VIII ------------ The private property of the shareholders, directors and officers of the corporation shall be forever exempt from debts and obligations of the corporation. ARTICLE IX ---------- Subject to the further provisions hereof, the corporation shall indemnify and hold harmless any and all of its existing and former directors and officers against all expenses incurred by them, including but not limited to legal fees, judgments and penalties which may be incurred, rendered or levied in any legal action brought against any of them, for or on account of any action or omission alleged to have been committed while acting within the scope of employment as director or officer of the corporation. Whenever any such person has ground to believe that he may incur any such aforementioned expense he shall promptly make a full report of the matter to the president and the secretary of the corporation. Thereafter, the Board of Directors of the corporation shall, within a reasonable time, determine if such person acted, or failed to act, in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interest of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. If the Board of Directors determines that such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, then indemnification shall be mandatory and shall be automatically extended as specified herein, provided, however, that the corporation shall have the right to refuse indemnification, wholly or partially, in any instance in which the person to which indemnification would have otherwise been applicable, shall have unreasonably refused to permit the corporation, at its own expense and through counsel of its own choosing, to defend him in the action, or shall have unreasonably refused to cooperate in the defense of such action. To the fullest extent permitted by Title 10, Chapter 1 of the Arizona Revised Statutes as the same exists or may hereafter be amended, no director shall be liable to the corporation or its shareholders for monetary damages for breach of fiduciary duties as director. ARTICLE X --------- The fiscal year of the corporation shall be the calendar year. 3 ARTICLE XI ---------- J. Michael Low, of Low & Childers, P.C., whose address is 1221 East Osborn Road, Suite 104, Phoenix, Arizona 85014, having been a bonafide resident of Arizona for at least three (3) years is hereby appointed statutory agent of the corporation in the State of Arizona, upon whom notices and processes, including service of summons may be served, and which, when so served, shall have lawful personal service on the corporation. The Board of Directors may revoke this appointment at any time, and shall fill the vacancy in such position whenever one exists. ARTICLE XII ----------- The corporation reserves the right to amend, alter, change or repeal any provisions contained in these Articles of Redomestication in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on shareholders, directors or officers are subject to this reserve power. ARTICLE XIII ------------ The incorporators of the corporation are: J. Michael Low 1221 East Osborn Road Suite 104 Phoenix, Arizona 85014 S. David Childers 1221 East Osborn Road Suite 104 Phoenix, Arizona 85014 Steven R. Henry 1221 East Osborn Road Suite 104 Phoenix, Arizona 85014 Carrie M. McDonald 1221 East Osborn Road Suite 104 Phoenix. Arizona 850l4 Robin Bradshaw 1221 East Osborn Road Suite 104 Phoenix, Arizona 85104 4 The initial Directors of the corporation are: Mr. William L. Ferris PM Group Life Insurance Company 700 Newport Center Drive Newport Beach, California 92660 Ms. Audrey L. Milfs PM Group Life Insurance Company 700 Newport Center Drive Newport Beach, California 92660 Mr. Thomas C. Sutton PM Group Life Insurance Company 700 Newport Center Drive Newport Beach, California 92660 Mr. Harold G. Joanning PM Group Life Insurance Company 700 Newport Center Drive Newport Beach, California 92660 Mr. Glenn S. Schafer PM Group Life Insurance Company 700 Newport Center Drive Newport Beach, California 92660 All individual incorporators are eighteen (18) years of age or older. All powers, duties and responsibilities of the incorporators shall cease at the time of delivery of these Articles of Redomestication to the Arizona Corporation Commission for filing. WHEREOF, we have hereunto affixed our signatures this 29th day of October, 1990. (signed) (signed) - ------------------------ ------------------------ J. Michael Low S. David Childers (signed) (signed) - ------------------------ ------------------------ Steven R. Henry Carrie M. McDonald (signed) - ------------------------ Robin G. Bradshaw ****************************************************** 5 STATE OF ARIZONA ) ) ss. County of Maricopa ) IN WITNESS WHEREOF, I, Lori M. Barker, hereby place my hand and official seal as acknowledgement that J. Michael Low, S. David Childers, Steven R. Henry, Carrie M. McDonald and Robin R. Bradshaw, being the persons represented herein, placed their hand as of the 29th day of October, 1970. (signed) -------------------------- Lori M. Barker My Commission~Expires: 8/15/91 - ------------------------- 6 ACCEPTANCE OF NOTIFICATION OF APPOINTMENT AS STATUTORY AGENT I, J. Michael Low, hereby acknowledge that I have been notified of my appointment as Statutory Agent for PM Group Life Insurance Company, an Arizona corporation, and I hereby agree to serve in such capacity until removal by Company or written resignation as permitted by Arizona Revised Statute. (signed) -------------------------------- J. Michael Low, Esq. 1221 East Osborn Road, Suite 104 Phoenix, Arizona 85014 pacific art.red 7 EX-99.1.(6)(C) 14 dex9916c.txt AMENDED & RESTATED ARTICLES OF INCORPORATION EXHIBIT 1.(6)(C) AMENDED & RESTATED ARTICLES OF INCORPORATION FOR PM GROUP LIFE INSURANCE COMPANY William L Ferris and Audrey L. Milfs certify that: 1. They are the President and Chief Executive Officer, and Secretary, respectively, of PM Group Life Insurance Company, an Arizona corporation. 2. Article I of the restated articles of incorporation of this corporation is amended to read as follows: "the name of this Corporation shall be PACIFIC LIFE & ANNUITY COMPANY." 3. The foregoing amendment of the Amended and Restated Articles of Redomestication was duly approved by the board of directors on November 1, 1998. 4. The foregoing amendment of the restated articles of incorporation has been duly approved by the required vote of shareholders in accordance with Section 10-1006 of the Arizona Revised Statutes. The total number of outstanding shares of the corporation is 2,900,000. The total number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. We further declare under penalty of perjury under the laws of the State of Arizona that the matters set forth in this certificate are true and correct of our own knowledge. Dated: January 4, 1999 /s/ WILLIAM L. FERRIS ____________________________________ William L. Ferris President & Chief Executive Officer /s/ AUDREY L. MILFS ____________________________________ Audrey L. Milfs Secretary EX-99.1.(9)(A) 15 dex9919a.txt FORM OF PARTICIPATION AGREEMENT EXHIBIT 1.(9)(a) FUND PARTICIPATION AGREEMENT ---------------------------- 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 ------------------- 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 1 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 2 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 ------------------- 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 3 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. 4 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. 5 ARTICLE II. Representations and Warranties ------------------------------ 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. 6 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. 7 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. 8 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. 9 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 10 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 11 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 12 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 13 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 ----------------------------------------- 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. 14 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 15 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 16 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 17 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 18 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, 19 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. 20 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 700 Newport Center Drive 700 Newport Center Drive P.O. Box 7500 P.O. Box 7500 Newport Beach, CA 92660 Newport Beach, CA 92660 If to the Distributor: If to Pacific Life: Pacific Mutual Distributors Pacific Life Insurance Company Attn: Compliance Officer Attn: Variable Regulatory Compliance 700 Newport Center Drive, NB-4 Department Newport Beach, CA 92660 700 Newport Center Drive P.O. Box 7500 Newport Beach, CA 92660 ARTICLE XI. Miscellaneous ------------- 11.1. The Fund and the Company agree that if and to the extent Rule 6e-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 Trustees or shareholders of the shares of the Fund's Series from exercising any of the rights provided to such Trustees or shareholders in the Fund's Agreement and Declaration of Trust, as amended, a copy of which will be provided to the Company upon request. 11.4. It is understood that the name "Pacific", "Pacific 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: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON ----------------------- ----------------------- Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board & Trustee PACIFIC MUTUAL DISTRIBUTORS, INC. ATTEST: /s/ AUDREY L. MILFS BY: /s/ GERALD W. ROBINSON ----------------------- ----------------------- Name: Audrey L. Milfs Name: Gerald W. Robinson Title: Secretary Title: Chairman & Chief Exec. Officer 31 PACIFIC LIFE INSURANCE COMPANY ATTEST: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON ----------------------- ---------------------- Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board & Chief Exec. Officer ATTEST: /s/ AUDREY L. MILFS BY /s/ GLENN S. SCHAFER ----------------------- ----------------------- Name: Audrey L. Milfs Name: Glenn S. Schafer Title: Secretary Title: President PACIFIC LIFE & ANNUITY COMPANY ATTEST: /s/ AUDREY L. MILFS BY: /s/ LYNN C. MILLER ----------------------- ---------------------- Name: Audrey L. Milfs Name: Lynn C. Miller Title: Secretary Title: Executive Vice President 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 I-Net Tollkeeper Portfolio* *Effective 05/01/2000 34 ADDENDUM TO FUND PARTICIPATION AGREEMENT The Fund Participation Agreement, made the 1st day of January, 2000, and subsequently amended on January 28, 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 the Agreement; PACIFIC LIFE & ANNUITY 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 the 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 SELECT DISTRIBUTORS, INC. ("Distributor"), a California corporation, is hereby amended by the addition of the provisions set forth in this Addendum to the Agreement ("Addendum"), which is made this 14th day of August, 2000. 1. Effective October 2, 2000, Exhibit B attached to the Agreement, is amended as shown on Exhibit B attached to this Addendum. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PACIFIC SELECT FUND ATTEST: /s/ AUDREY L. MILFS BY: /s/ TC SUTTON ----------------------- ----------------------- Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board and Trustee PACIFIC MUTUAL DISTRIBUTORS, INC. ATTEST: /s/ AUDREY L. MILFS BY: /s/ GERALD W. ROBINSON ----------------------- ------------------------- Name: Audrey L. Milfs Name: Gerald W. Robinson Title: Secretary Title: Chairman and Chief Executive Officer 35 PACIFIC LIFE INSURANCE COMPANY ATTEST: /s/ AUDREY L. MILFS BY: /s/ TC SUTTON ---------------------- ------------------------ Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board and Chief Executive Officer ATTEST: /s/ AUDREY L. MILFS BY: /s/ GLENN S. SCHAFER ------------------------ ------------------------ Name: Audrey L. Milfs Name: Glenn S. Schafer Title: Secretary Title: President PACIFIC LIFE & ANNUITY COMPANY ATTEST: /s/ AUDREY L. MILFS BY: /s/ LYNN C. MILLER ----------------------- ---------------------- Name: Audrey L. Milfs Name: Lynn C. Miller Title: Secretary Title: Executive Vice President 36 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 I-Net Tollkeeper Portfolio Strategic Value Portfolio* Focused 30 Portfolio* * Effective October 2, 2000 37 ADDENDUM TO FUND PARTICIPATION AGREEMENT The Fund Participation Agreement, made the 1st day of January, 2000, and subsequently amended on January 28, 2000 and August 14, 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 the Agreement; PACIFIC LIFE & ANNUITY 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 the 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 SELECT DISTRIBUTORS, INC. ("Distributor"), a California corporation, is hereby amended by the addition of the provisions set forth in this Addendum to the Agreement ("Addendum"), which is made this 22nd day of December 2000. 1. Effective January 2, 2001, Exhibit B attached to the Agreement, is amended as shown on Exhibit B attached to this Addendum. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PACIFIC SELECT FUND ATTEST: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON ------------------------------ ----------------------------------- Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board & Trustee PACIFIC SELECT DISTRIBUTORS, INC. ATTEST: /s/ AUDREY L. MILFS BY: /s/ GERALD W. ROBINSON ------------------------------ ----------------------------------- Name: Audrey L. Milfs Name: Gerald W. Robinson Title: Secretary Title: Chairman & Chief Executive Officer 38 PACIFIC LIFE INSURANCE COMPANY ATTEST: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON ------------------------------ ----------------------------------- Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board & Chief Executive Officer ATTEST: /s/ AUDREY L. MILFS BY: /s/ GLENN S. SCHAFER ------------------------------ ----------------------------------- Name: Audrey L. Milfs Name: Glenn S. Schafer Title: Secretary Title: President PACIFIC LIFE & ANNUITY COMPANY ATTEST: /s/ AUDREY L. MILFS BY: /s/ LYNN C. MILLER ------------------------------ ----------------------------------- Name: Audrey L. Milfs Name: Lynn C. Miller Title: Secretary Title: Executive Vice President 39 Exhibit B Aggressive Equity Portfolio Emerging Markets Portfolio Diversified Research Portfolio Small-Cap Equity Portfolio International Large-Cap Portfolio Equity Portfolio I-Net Tollkeeper Portfolio Multi-Strategy Portfolio Equity Income Portfolio Growth LT Portfolio Strategic Value Portfolio Focused 30 Portfolio Mid-Cap Value Portfolio Equity Index Portfolio Small-Cap Index Portfolio REIT Portfolio International Value Portfolio Government Securities Portfolio Managed Bond Portfolio Money Market Portfolio High Yield Bond Portfolio Large-Cap Value Portfolio Global Growth Portfolio* Mid-Cap Growth Portfolio* Capital Opportunities Portfolio* Technology Portfolio* Financial Services Portfolio* Telecommunications Portfolio* Health Sciences Portfolio* Aggressive Growth Portfolio* Blue Chip Portfolio* *Effective January 2, 2001 40 EX-99.1.(9)(B) 16 dex9919b.txt ADMINISTRATIVE AGREEMENT EXHIBIT 1.(9)(B) SERVICES AGREEMENT THIS Services Agreement ("Agreement") is made this 8th day of July 1999, by and between Pacific Life & Annuity Co. ("PLA"), an Arizona corporation, and Pacific Life Insurance Company (PLIC), a California corporation. WHEREAS, PLA desires to contract with PLIC to provide certain services for certain individual life, individual annuity, and institutional product contracts; and WHEREAS, PLIC desires to provide such administrative services for PLA on the following terms and conditions; NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties do mutually agree as follows: 1. Services. Subject to the terms and conditions set forth in this Agreement, PLIC agrees with respect to certain PLA contracts, specifically, any and all individual life, individual annuity, and institutional product contracts (collectively "the Contracts"), to provide the administrative services described in Schedule A, attached hereto and made a part hereof, together with such other services that PLA may reasonably request (collectively "the Services") with respect to the Contracts. 2. Charges for Services. As consideration for the Services provided by PLIC pursuant to this Agreement, PLA agrees to pay PLIC a fee based on actual costs, determined in a fair and reasonable manner, which costs will not include a profit factor and which will be allocated equitably in accordance with customary insurance accounting practices, where applicable, consistently applied. For purposes of this Agreement, the parties agree that at no time will charges for Services exceed the amounts reflected in the Contract Specifications provided by PLA from time to time to PLIC. 3. Subcontractors. PLIC may subcontract with any subsidiary or affiliate of PLIC to provide Services; provided that subcontracting shall not result in an increase in the amount charged for such Services or a decrease in the quality of such Services provided. 4. Indemnification. PLA agrees to defend, indemnify and hold PLIC harmless from and against all costs, reasonable expenses, losses, damages, attorneys' fees, claims, obligations and liabilities imposed upon, incurred or asserted against PLIC which arise out of or in any manner are connected with Contracts administered by PLIC under this Agreement, except if the conduct of PLIC constitutes an intentional tort, reckless conduct, gross negligence or bad faith, or if PLIC issues a Contract which is inconsistent with the approved policy specifications. 5. Underwriting and Claims Services. All underwriting and claims services provided to PLA under this Agreement are to be based upon the written criteria, standard and guidelines of PLA. PLA shall have the ultimate and final authority over decisions 1 and policies relating to the Contracts; to include but not be limited to the acceptance, rejection or canceling of risks relating to or with respect to such Contracts. 6. Supervision by the Company. PLIC acknowledges that (a) the Board of Directors and officers of PLA are vested with the power, authority, and responsibility for managing the business and affairs of PLA, and (b) any and all actions taken or advice or services provided pursuant to this Agreement by PLIC are subject to the continuous supervision and approval of the Board of Directors and the officers of PLA. 7. Billing. All charges made pursuant to this Agreement shall be billed by PLIC monthly, if feasible, but in no event less frequently than quarterly. Payment is due as soon as practicable, but in no event later than 60 days after presentation of the billing. Interest may be assessed by PLIC 61 days after presentment of the billing, at a 3-month LIBOR rate. Billings shall be accompanied by sufficient documentation to support the charges and to meet all state insurance regulatory requirements. Statements are subject to final adjustment only if mutually agreed upon by both parties. 8. Accounting Records and Documents. (a) The books, accounts, and records of each party to all transactions shall be maintained so as to clearly and accurately disclose the precise nature and details of the transactions, including accounting information that is necessary to support the reasonableness of the charges or fees to the parties. PLIC shall keep such account and records insofar as they pertain to the computation of charges hereunder available at its principal offices for audit, inspection, and copying, during reasonable business hours, by PLA and persons authorized by it and any governmental agency having jurisdiction over PLA. (b) All books, records and files established and maintained by PLIC by reason of its performance under this Agreement which, absent this Agreement, would have been held by PLA, shall be deemed the property of PLA, and shall be subject to audit, inspection, and copying, during reasonable business hours, by PLA and persons authorized by it and any governmental agency having jurisdiction over PLA. All such books, records and files shall be promptly transferred to PLA by PLIC upon termination of this Agreement, at PLA's expense. 9. Notices. All written notices, requests, and other communications hereunder shall be delivered to the addresses set forth on the signature page of this Agreement, or any address hereinafter agreed upon by the parties. 10. Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State of Arizona. 2 11. Entire Agreement; Amendment. This Agreement shall constitute the entire agreement among the parties and supersedes all prior agreements and understandings, whether written or verbal, to the extent such agreements pertain to the rights and responsibilities set forth herein. Notwithstanding the foregoing, this Agreement does not supersede either of the Pacific Life Insurance Company Administrative Services Agreement with Pacific Life Insurance Company and its Subsidiaries and Affiliates dated September 1, 1997 and the Investment Management Agreement dated January 1, 1990. This Agreement may be amended only in a writing executed by all parties. 12. Arbitration. In the event any dispute arises between the parties related in any way to this Agreement on which agreement between the parties cannot be reached, the dispute shall be decided by arbitration in accordance with procedures agreed upon by the parties after such dispute arises. 13. Termination. This Agreement may be terminated upon 60 days written notice by written agreement of either party hereto. PLA may terminate the contract in the event PLIC fails to perform its responsibilities hereunder in a satisfactory manner. 14. Assignment. Except as set forth in Section 3 hereof, PLIC cannot assign its duties or obligation, in whole or in part, under this Agreement to any other firm, organization or individuals without the express written consent of PL&A, which consent shall not be unreasonably withheld. 15. 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 provision of this Agreement shall not be deemed to affect the validity or legality of any other provision of this Agreement. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. PACIFIC LIFE & ANNUITY COMPANY PACIFIC LIFE INSURANCE COMPANY 17360 Brookhurst 700 Newport Center Drive Fountain Valley, CA 92708 Newport Beach, CA 92660 By: /s/ WILLIAM L. FERRIS By: /s/ THOMAS C. SUTTON -------------------------- ------------------------- William L. Ferris Thomas C. Sutton President & Chief Executive Chairman & Chief Executive Officer Officer By: /s/ AUDREY L. MILFS By: /s/ AUDREY L. MILFS -------------------------- ------------------------- Audrey L. Milfs Audrey L. Milfs Vice President & Secretary Vice President & Secretary 3 SCHEDULE A SERVICES PROVIDED BY PLIC PURSUANT TO THIS AGREEMENT FOR THE CONTRACTS 1. Marketing Supervision, recruiting and product training. Preparation and distribution of illustrations and marketing materials. Communications with the field. Contest qualification and production credit tracking. 2. Compliance Provide contracts and policies in compliance with applicable state and federal laws. File PLA contracts and policies with insurance departments and other regulatory agencies. 3. Policy Administration Prepare, in accordance with Section 5, and deliver and maintain contracts and policies. Obtain clients' acceptance of contracts and policies. Maintain originals of all contracts and policies. Provide customer service in relation to all contracts and policies. Prepare and issue reports required by state and federal law. 4. Accounting and Financial Reporting Prepare billings and collect premiums and other fees in relation to contracts and policies. Provide accounting for contracts and policies. Provide financial reporting results for inclusion in PLA financial statements. Provide valuation and compliance with valuation and actuarial requirements for business subject to this Agreement. Provide support for PLA examinations and audits. 5. Claims Processing In accordance with Section 5, process all claims arising under policies and contracts. Maintain claim documents, files and related information. Maintain and update beneficiary designations and life assignments. Control and maintain all draft and check stock, claim forms and other forms and documents incidental to claims processing. Maintain claims procedural manuals and other instructions. Monitor claims for possible fraud. 4 Page 2 Schedule A 6. Licensing and Commission Payment Process and issue licenses and commission agreements, and pay applicable fees. Calculate and pay commissions. Maintain commission payment information, and report such information as required by applicable laws. 7. Separate Accounts Provide services necessary for the maintenance of separate accounts, including but not limited to state and federal regulations as applicable. 5 EX-99.1.(10) 17 dex99110.txt APPLICATION FOR FLEXIBLE PREMIUM VARIABLE LIFE EXHIBIT 1.(10) [LOGO OF PACIFIC LIFE] APPLICATION FOR INDIVIDUAL LIFE INSURANCE PACIFIC LIFE & ANNUITY COMPANY P.O. Box 6520 Newport Beach, CA 92656-6520 INSTRUCTIONS TO SOLICITING AGENT(S) - -------------------------------------------------------------------------------- GENERAL INSTRUCTIONS [_] Every appropriate section of the application must be fully completed prior to signing the application. A blank application must never be signed. [_] The following indicates who must complete the various sections: Page(s) 1 and 4-7 Applicant Page 2 Applicant or Agent must complete Page 3 Applicant or Agent completes for an additional or alternate policy Page(s) 11 and 12 Agent [_] Changes noted on this application must be lined out and the new information must be indicated and initialed by the Applicant in Sections A - D, Proposed Insured(s) in Section E and Agent in Sections F - I. Changes made any other way will be amended. [_] The Disclosure Notice To Applicants must be detached and given to the Applicant. If the Disclosure Notice To Applicants is not detached when the application is received at Pacific Life & Annuity Company, written verification that the Notice was given to the Applicant will be required before the underwriting process can begin. [_] For "Survivor Life" type policies, the Second Insured is considered the Additional Insured. All Additional Insured sections must be completed. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- IMPORTANT SIGNATURE REQUIREMENTS [_] The party initiating the application for life insurance is considered the Applicant. Depending on the situation, the Applicant may also be the Insured or Owner. [_] The following parties must sign page 6 of the application: Applicant Proposed Insured (if other than Applicant) Other Adult Proposed Insured (if applicable) Owner (if other than Proposed Insured or Applicant) Soliciting Agent [_] The Authorization on page 7 must be signed and dated by the Proposed Insured and Other Adult Proposed Insured (if applicable). Underwriting cannot begin without a signed Authorization. [_] Where the Applicant, Owner or Proposed Insured is above the age of fourteen years and six months, he or she must sign the application on his or her own behalf. Where the Applicant, Owner or Proposed Insured is aged fourteen years and six months or less, he or she may not sign the application or enter into a life insurance contract. [_] The Soliciting Agent(s) must sign on pages 6 and 12. [_] If multiple Owners, then all Owners must sign on page 6 of the application. [_] For corporate signatures, the signature and title of any authorized officer other than the Proposed Insured is required and the full name of the corporation must be shown on page 6. [_] If policy is trust owned, trustee(s) must sign on page 6 of the application on the Signature of Applicant line indicating the title "Trustee" after the signature. Owner designation, on page 1, must include name of trust, date of trust, trustee(s) name, with the wording "successor or successors in trust." - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNDERWRITING REQUIREMENTS [_] Underwriting requirements are based on the age of the Proposed Insured(s) and amount applied for. Refer to the Life Underwriting Requirements Chart (not attached) to determine the appropriate requirements. [_] The Non-Medical is NOT part of this application. APPLICATION, PART II, Non-Medical (AP9500-P2-NY) must be obtained separately. - -------------------------------------------------------------------------------- AP9500-NY 85-21245-00 5/2000 INSTRUCTIONS TO SOLICITING AGENT(S) - ------------------------------------------------------------------------------- SECTION A - CLIENT INFORMATION [_] Complete all questions, unless a question does not apply. [_] If submitting money with the application, complete question 31A, B and C on page 1. Also submit a Temporary Insurance Agreement (AP8112-NY) with the application. The date on the application, check and Temporary Insurance Agreement (TIA) must all be the same date. [_] Money and the TIA must not be taken if: a) any health question on the TIA is answered "yes." b) the proposed insured is under 15 days of age or is over 70 years old (nearest birthday) on the date of the application. [_] If the face amount applied for is greater than the TIA maximum binding limit, complete the application in the following manner: 1) Indicate the total face amount as applied for in question 31C. Also indicate all applied for Optional Benefits here. If additional space is needed, use Remarks section on page 2 or 3. 2) On page 2, question 3, complete with the maximum binding limit as noted on the TIA. Leave question 5 "Optional Benefits" blank. SECTION B - POLICY INFORMATION FOR VARIABLE LIFE PRODUCTS [_] Indicate product desired, base face amount, initial Annual Renewable Term amount (if appliedfor) and Total Initial Coverage in question 3. Whether Annual Renewable Term is level or varying, always indicate initial Annual Renewable Term amount. This information can be found on the Producer/Home Office Administration Worksheet page of the illustration. [_] Indicate all other optional benefits in question 5. [_] Answer all Suitability questions and include the date of the current Separate Account prospectus and Fund prospectus. [_] If requesting an alternate or additional policy, complete the Alternate/Additional Policy section on page 3. All suitability questions on page 2 must also be completed. SECTION C - MEDICAL CERTIFICATION [_] Complete only when submitting a medical examination from another insurance company. SECTION D - ADDITIONAL INSURED [_] Complete if requesting an optional benefit such as Annual Renewable Term on an Additional Insured. This section is also completed for "Survivor Life" type policies. SECTION E - GENERAL INFORMATION [_] Complete every question of this section for the Proposed Insured and Additional Insured (if applicable). [_] If Proposed Insured or Additional Insured (if applicable) participates in a hazardous occupation/sport, complete a General Questionnaire form (not attached) for each insured that participates. SECTION F - UNI-CHECK (AUTOMATIC BANK WITHDRAWAL) [_] The Uni-Check billing method is available on a monthly payment frequency for automatic checking account deductions. Complete this section if electing Uni-Check. Also complete Uni-Check method and monthly mode on page 1, questions 30A and 30B. A voided check must be submitted with the application. SECTION G - BUSINESS INSURANCE [_] Complete only if applying for Business Insurance. SECTION H - FOR PROPOSED INSURED 14 YEARS AND 6 MONTHS OR YOUNGER [_] Complete this section if the application is submitted on a non-medical basis and the Proposed Insured is 14 years and 6 months or younger. If the application is submitted on a medical basis, a medical exam is necessary. Refer to the Life Underwriting Requirements Chart to determine the appropriate requirements. SECTION I - AGENT INFORMATION [_] Complete every question of this section. [_] The signature of the Soliciting Agent(s) is required at the bottom of page 12. [_] Commissions are paid in accordance with the information presented at the bottom of page 12. The Agent listed first is the Servicing Agent, unless indicated otherwise in the remarks section. Always include Agent Code for prompt payment of commissions. AP9500-NY 85-21245-00 5/2000 APPLICATION FOR INDIVIDUAL LIFE INSURANCE, PART I
PACIFIC LIFE & ANNUITY COMPANY [LOGO OF P.O. Box 6520 PACIFIC LIFE Newport Beach, CA 92658-6520 & ANNUITY COMPANY] - ------------------------------------------------------------------------------------------------------------------------------------ SECTION A CLIENT INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ PROPOSED INSURED - ------------------------------------------------------------------------------------------------------------------------------------ 1. Full Name (PRINT AS TO APPEAR IN POLICY / FIRST, MIDDLE, LAST) 2. Sex: 3. State of Birth 4. Date of Birth (MO. DAY YR.) [_] Male [_] Female - ------------------------------------------------------------------------------------------------------------------------------------ 5. Insurance Age 6. Drivers License No. & State 7. Social Security No. or Taxpayer I.D. No. 8. Telephone No. ( ) - ------------------------------------------------------------------------------------------------------------------------------------ 9. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 10. How Long - ------------------------------------------------------------------------------------------------------------------------------------ 11. Employer Name and Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 12. How Long - ------------------------------------------------------------------------------------------------------------------------------------ 13. Occupation 14. Type of Business - ------------------------------------------------------------------------------------------------------------------------------------ OWNER IF OTHER THAN PROPOSED INSURED - ------------------------------------------------------------------------------------------------------------------------------------ 15. Full Name (PRINT AS TO APPEAR IN POLICY / FIRST, MIDDLE, LAST) 16. Date of Birth 17. Relationship 18. Telephone No. ( ) - ------------------------------------------------------------------------------------------------------------------------------------ 19. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 20. Social Security No. or Taxpayer I.D. No. - ------------------------------------------------------------------------------------------------------------------------------------ BENEFICIARY - ------------------------------------------------------------------------------------------------------------------------------------ 21. Primary Beneficiary (PRINT FULL NAME / FIRST, MIDDLE, LAST) 22. Relationship - ------------------------------------------------------------------------------------------------------------------------------------ 23. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) - ------------------------------------------------------------------------------------------------------------------------------------ 24. Contingent Beneficiary (PRINT FULL NAME / FIRST, MIDDLE, LAST) 25. Relationship - ------------------------------------------------------------------------------------------------------------------------------------ 26. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) - ------------------------------------------------------------------------------------------------------------------------------------ PREMIUM NOTICES - ------------------------------------------------------------------------------------------------------------------------------------ 27. Send to: [_] Insured [_] Owner at [_] Residence [_] Business or [_] Other (INDICATE BELOW) - ------------------------------------------------------------------------------------------------------------------------------------ 28. Name 29. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) - ------------------------------------------------------------------------------------------------------------------------------------ BILLING INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ 30A. Method: 30B. Frequency of Premium Reminder Notice [_] Single Premium or Premium Payment: [_] Direct (annual, semi-annual or quarterly only) [_] Annual [_] List Bill (3 or more lives) [_] Semi-Annual [_] Uni-Check -- Attach a Voided Check and Complete Uni-check Section on Page 6. [_] Quarterly (monthly only) [_] Monthly - ------------------------------------------------------------------------------------------------------------------------------------ AMOUNT PAID WITH THIS APPLICATION - ------------------------------------------------------------------------------------------------------------------------------------ 31A. Is cash or check tendered with this application? [_] Yes [_] No If Yes, show amount $_______________________ If No, do not complete question below B. Do you understand, accept and agree to the terms of the Temporary Insurance Agreement (TIA)? [_] Yes [_] No C. If Yes, and a policy face amount is applied for which is larger than that which Pacific Life & Annuity Company will insure under the TIA, complete the following statement: If approved, please issue a policy for a face amount of $__________________ - ------------------------------------------------------------------------------------------------------------------------------------ SPECIAL DATING REQUESTED - ------------------------------------------------------------------------------------------------------------------------------------ 32. [_] Date to Save Age [_] Specific Date Month____________________________ Day________________ Year__________________ - ------------------------------------------------------------------------------------------------------------------------------------ AP9500-NY Page 1 85-21245-00 5/2000
- ------------------------------------------------------------------------------------------------------------------------------------ SECTION B POLICY INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ 1. Policy Name 2a. Initial Premium 2b. Planned Annual Premium $ $ - ------------------------------------------------------------------------------------------------------------------------------------ 3. Face Amount (Base only) $__________________ Plus Initial Annual Renewable Term Amount $_____ = Total Initial Coverage $_________________________________________ - ------------------------------------------------------------------------------------------------------------------------------------ 4. Check one: [_] Option A (Level) [_] Option B (Includes Accumulated Value) [_] Option C (Includes Premiums Less Distributions) - ------------------------------------------------------------------------------------------------------------------------------------ OPTIONAL BENEFITS - ------------------------------------------------------------------------------------------------------------------------------------ 5. A. [_] Annual Renewable Term on Other Covered Person $ D.______________________ [_] Disability Benefit Rider B. [_] Accidental Death Benefit $_____________________ E. [_] Guaranteed Insurability Rider C. [_] Children's Term $____________________ F. [_] Waiver of Charges [_] Under 2 years and 6 months of age (maximum = $1,000) [_] 2 years and 6 months or more of age and under 9 years and 6 months (maximum = $2,000) [_] First Year Transfer Program* [_] 9 years and 6 months or more of age and under 11 years and 6 months [_] Dollar Cost Averaging* (maximum = $3,000) [_] Automatic Portfolio Rebalancing* [_] 11 years and 6 months or more of age and under 14 years and 6 months * if elected, submit the proper (maximum = $5,000) authorization form. - ------------------------------------------------------------------------------------------------------------------------------------ 6. If any optional benefit applied for cannot be approved, should the policy be issued without it? [_] Yes [_] No - ------------------------------------------------------------------------------------------------------------------------------------ PREMIUM ALLOCATIONS - ------------------------------------------------------------------------------------------------------------------------------------ 7. INDICATE ALLOCATIONS: THE TOTAL OF THE PERCENTAGES MUST BE 100%. (USE WHOLE NUMBERS) Investment Options Manager Investment Options Manager ----------------------- ---------------- ---------------------- ------------------------ Blue Chip AIM _______% Mid-Cap Value Lazard _______% Aggressive Growth AIM _______% International Value Lazard _______% Aggressive Equity Alliance Capital _______% Equity Index Mercury Asset Management _______% Emerging Markets Alliance Capital _______% Small-Cap Index Mercury Asset Management _______% Diversified Research Capital Guardian _______% Capital Opportunities MFS _______% Small-Cap Equity Capital Guardian _______% Mid-Cap Growth MFS _______% International Large-Cap Capital Guardian _______% Global Growth MFS _______% Equity Goldman Sachs _______% REIT Morgan Stanley _______% I-Net Tollkeeper Goldman Sachs _______% Money Market Pacific Life _______% Technology INVESCO _______% High Yield Bond Pacific Life _______% Telecommunications INVESCO _______% Government Securities PIMCO _______% Health Services INVESCO _______% Managed Bond PIMCO _______% Financial Services INVESCO _______% Large-Cap Value Salomon _______% Strategic Value Janus _______% Fixed Account Pacific Life _______% Growth LT Janus _______% Fixed LT Account* Pacific Life _______% Focused 30 Janus _______% Multi-Strategy J.P. Morgan _______% * The Fixed LT Account has less transfer liquidity and may Equity Income J.P. Morgan _______% credit a higher current rate of interest than the Fixed Account. Both fixed accounts credit a fixed interest rate, guaranteeing a minimum interest rate of 3% annually. - ------------------------------------------------------------------------------------------------------------------------------------ SUITABILITY - ------------------------------------------------------------------------------------------------------------------------------------ Yes No 8. Do you believe that this policy will meet your insurance needs and financial objectives? . . . . . . . . . . . . . . . [_] [_] 9. Do you understand that the amount and duration of the death benefit may vary, depending on the investment performance of the variable accounts in the separate account? . . . . . . . . . . . . . . . . . . . . . . . [_] [_] 10. Do you understand that the policy values may increase or decrease, depending on the investment experience of the variable accounts in the separate account? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [_] [_] 11. Did you receive the separate account prospectus and the fund prospectus for the policy applied for?. . . . . . . . . . [_] [_] If "Yes", give dates of prospectuses: S.A. _________________________ Fund _________________________ - ------------------------------------------------------------------------------------------------------------------------------------ Policy values may increase or decrease, and may even be reduced to zero, in accordance with the experience of the variable accounts in the separate account (subject to any specified minimum guarantees). The death benefit maybe variable or fixed under specified conditions. Current illustrations of benefits, including death benefits and cash surrender values, are available upon request. - ------------------------------------------------------------------------------------------------------------------------------------ REMARKS - ------------------------------------------------------------------------------------------------------------------------------------ AP9500-NY Page 2 85-21245-00 5/2000
- ----------------------------------------------------------------------------------------------------------------------------------- SECTION B POLICY INFORMATION (Continued) - ----------------------------------------------------------------------------------------------------------------------------------- COMPLETE THIS PAGE IF APPLYING FOR (Check one): [_] ADDITIONAL POLICY or [_] ALTERNATE POLICY (COMPLETE SUITABILITY QUESTIONS ON PAGE 2) - ----------------------------------------------------------------------------------------------------------------------------------- 12. Policy Name 13a. Total Modal Premium 13b. Planned Annual Premium $ $ - ----------------------------------------------------------------------------------------------------------------------------------- 14. Face Amount (Base only) $ ------------------ Plus Initial Annual Renewable Term Amount $ = Total Initial Coverage $ ---- ----------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 15. Check one: [_] Option A (Level) [_] Option B (Includes Accumulated Value) [_] Option C (Includes Premiums Less Distributions) - ----------------------------------------------------------------------------------------------------------------------------------- OPTIONAL BENEFITS - ----------------------------------------------------------------------------------------------------------------------------------- 16. A. [_] Annual Renewable Term on Other Covered Person $ D. [_] Disability Benefit Rider ------------------- B. [_] Accidental Death Benefit $ E. [_] Guaranteed Insurability Rider -------------------------- C. [_] Children's Term $ F. [_] Waiver of Charges --------------------- [_] Under 2 years and 6 months of age (maximum = $1,000) [_] 2 years and 6 months or more of age and under 9 years and 6 months (maximum = $2,000) [_] First Year Transfer Program* [_] 9 years and 6 months or more of age and under 11 years and 6 months [_] Dollar Cost Averaging* (maximum = $3,000) [_] Automatic Portfolio Rebalancing* [_] 11 years and 6 months or more of age and under 14 years and 6 months * If elected, submit the proper (maximum = $5,000) authorization form. - ----------------------------------------------------------------------------------------------------------------------------------- 17. If any optional benefit applied for cannot be approved, should the policy be issued without it? [_] Yes [_] No - ----------------------------------------------------------------------------------------------------------------------------------- PREMIUM ALLOCATIONS - ----------------------------------------------------------------------------------------------------------------------------------- 18. INDICATE ALLOCATIONS: THE TOTAL OF THE PERCENTAGES MUST BE 100%. (USE WHOLE NUMBERS) Investment Options Manager Investment Options Manager ----------------------- ------------------------- ---------------------- ------------------------- Blue Chip AIM _____% Mid-Cap Value Lazard _____% Aggressive Growth AIM _____% International Value Lazard _____% Aggressive Equity Alliance Capital _____% Equity Index Mercury Asset Management _____% Emerging Markets Alliance Capital _____% Small-Cap Index Mercury Asset Management _____% Diversified Research Capital Guardian _____% Capital Opportunities MFS _____% Small-Cap Equity Capital Guardian _____% Mid-Cap Growth MFS _____% International Large-Cap Capital Guardian _____% Global Growth MFS _____% Equity Goldman Sachs _____% REIT Morgan Stanley _____% I-Net Tollkeeper Goldman Sachs _____% Money Market Pacific Life _____% Technology INVESCO _____% High Yield Bond Pacific Life _____% Telecommunications INVESCO _____% Government Securities PIMCO _____% Health Services INVESCO _____% Managed Bond PIMCO _____% Financial Services INVESCO _____% Large-Cap Value Salomon _____% Strategic Value Janus _____% Fixed Account Pacific Life _____% Growth LT Janus _____% Fixed LT Account* Pacific Life _____% Focused 30 Janus _____% Multi-Strategy J.P. Morgan _____% * The Fixed LT Account has less transfer liquidity and may credit Equity Income J.P. Morgan _____% a higher current rate of interest than the Fixed Account. Both fixed accounts credit a fixed interest rate, guaranteeing a minimum interest rate of 3% annually. - ----------------------------------------------------------------------------------------------------------------------------------- REMARKS - ----------------------------------------------------------------------------------------------------------------------------------- AP9500-NY Page 3 85-21245-00 5/2000
- ------------------------------------------------------------------------------------------------------------------------------------ SECTION D MEDICAL CERTIFICATION - ------------------------------------------------------------------------------------------------------------------------------------ COMPLETE WHEN SUBMITTING MEDICAL EXAMINATION OF ANOTHER INSURANCE COMPANY 1. The attached examination, which is to be attached to and made part of the policy, is on the life of: - ------------------------------------------------------------------------------------------------------------------------------------ Proposed Insured Name Name of the other Insurance Company Date of Examination - ------------------------------------------------------------------------------------------------------------------------------------ Additional Insured Name Name of the other Insurance Company Date of Examination - ------------------------------------------------------------------------------------------------------------------------------------ Additional Insured Name Name of the other Insurance Company Date of Examination - ------------------------------------------------------------------------------------------------------------------------------------ Additional Insured Name Name of the other Insurance Company Date of Examination - ------------------------------------------------------------------------------------------------------------------------------------ Proposed Insured Additional Insured 2. To the best of your knowledge and belief, are the statements in the examination true as of today? [_] Yes [_] No [_] Yes [_] No 3. Has the person who was examined consulted a doctor or their practitioner or received medical or surgical advice since the date of the examination? [_] Yes [_] No [_] Yes [_] No (If yes, explain in remarks. Use an additional sheet if necessary) - ------------------------------------------------------------------------------------------------------------------------------------ SECTION E ADDITIONAL INSURED - ------------------------------------------------------------------------------------------------------------------------------------ 1. Full Name (PRINT AS TO APPEAR IN POLICY / FIRST, MIDDLE, LAST) 2. Sex: 3. State of Birth 4. Date of Birth (MO. DAY YR.) [_] Male [_] Female - ------------------------------------------------------------------------------------------------------------------------------------ 5. Insurance Age 6. Drivers License No. & State 7. Social Security No. or Taxpayer I.D. No. 8. Telephone No. ( ) - ------------------------------------------------------------------------------------------------------------------------------------ 9. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 10. How Long - ------------------------------------------------------------------------------------------------------------------------------------ 11. Employer Name and Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 12. How Long - ------------------------------------------------------------------------------------------------------------------------------------ 13. Occupation 14. Type of Business - ------------------------------------------------------------------------------------------------------------------------------------ 15. Relationship to Primary Insured - ------------------------------------------------------------------------------------------------------------------------------------ BENEFICIARY TO ADDITIONAL INSURED - ------------------------------------------------------------------------------------------------------------------------------------ 16. Primary Beneficiary (PRINT FULL NAME / FIRST, MIDDLE, LAST) 17. Relationship - ------------------------------------------------------------------------------------------------------------------------------------ 18. Contingent Beneficiary (PRINT FULL NAME / FIRST, MIDDLE, LAST) 19. Relationship - ------------------------------------------------------------------------------------------------------------------------------------ SECTION F GENERAL INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ 1. Give details of life insurance in force in other companies on PROPOSED INSURED. If none (or if conversion application) check this box [_] Company Year Taken Plan Life Amount Acc. Death Amount - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 2. Give details of life insurance in force in other companies on ADDITIONAL INSURED. If none (or if conversion application) check this box [_] Company Year Taken Plan Life Amount Acc. Death Amount - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ REMARKS - ------------------------------------------------------------------------------------------------------------------------------------ AP9500-NY Page 4 85-21245-00 5/2000
- ------------------------------------------------------------------------------------------------------------------------------------ SECTION F GENERAL INFORMATION CONTINUED - ------------------------------------------------------------------------------------------------------------------------------------ PROPOSED INSURED 3. COMPLETE EACH QUESTION BELOW FOR THE PROPOSED INSURED AND ADDITIONAL INSURED YES NO ANY ADDITIONAL INSURED. YES NO - ------------------------------------------------------------------------------------------------------------------------------------ A. Is the Proposed/Additional Insured married? - ------------------------------------------------------------------------------------------------------------------------------------ $ B. Income of spouse, if any. $ - ------------------------------------------------------------------------------------------------------------------------------------ $ C. Amount of insurance in force on spouse. $ - ------------------------------------------------------------------------------------------------------------------------------------ $ D. Annual earned income from occupation (after deduction of $ business expenses). - ------------------------------------------------------------------------------------------------------------------------------------ $ E. Other Income (state source in remarks). $ - ------------------------------------------------------------------------------------------------------------------------------------ $ F. Net Worth. $ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ PROPOSED INSURED ADDITIONAL INSURED YES NO 4. Does any Proposed Insured/Additional Insured contemplate YES NO [_] [_] leaving the U.S.A. for travel or residence? [_] [_] (If yes, explain in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ 5. Within the last 2 years has any Proposed/Additional Insured: [_] [_] A. Flown or plan to fly as a pilot, student pilot or crew member? [_] [_] [_] [_] B. Engaged in parachute jumping, scuba diving, auto, motor boat or [_] [_] motorcycle racing, hang gliding, mountain climbing or other hazardous sport? (If yes to A. or B., complete a separate General Questionnaire for each Proposed/Additional Insured) - ------------------------------------------------------------------------------------------------------------------------------------ [_] [_] 6. Has any Proposed/Additional Insured ever had insurance declined, [_] [_] rated, modified cancelled or not renewed? (If yes, explain in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ [_] [_] 7. Has any Proposed/Additional Insured been convicted of a felony within [_] [_] the past 5 years? (If yes, explain in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ [_] [_] 8. Has any Proposed/Additional Insured had a drivers license restricted [_] [_] or revoked or been convicted of 3 or more moving violations within the past 5 years? (If yes, explain in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ [_] [_] 9. Has any other insurance been applied for within the last 3 months on [_] [_] any Proposed/Additional Insured? (If yes, explain in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ [_] [_] 10. Will the policy applied for replace or change any existing insurance [_] [_] or annuity on any Proposed/Additional Insured? (If yes, agent must complete state replacement notice, if applicable) [_] [_] A. Is this a 1035 Exchange? [_] [_] [_] [_] B. Will a loan be carried over? [_] [_] - ------------------------------------------------------------------------------------------------------------------------------------ [_] [_] 11. Have you smoked a cigarette(s) in the last 12 months? [_] [_] Date:_______________ If yes, give date last smoked. Date:_______________ - ------------------------------------------------------------------------------------------------------------------------------------ [_] [_] 12. Have you used tobacco in any other form within the last 24 months? [_] [_] Type:_______________ If yes, specify type and date last used. Type:_______________ Date:_______________ Date:_______________ - ------------------------------------------------------------------------------------------------------------------------------------ 13. If a child 14 years and 6 months of age or younger is to be insured under this policy or an associated rider: A. What is the relationship of the owner to the child?_______________________________________________________ B. What is the total amount of insurance on the owner, which is in force and applied for in this and all other companies?_____________________________________________________ - ------------------------------------------------------------------------------------------------------------------------------------ REMARKS - ------------------------------------------------------------------------------------------------------------------------------------
AP9500-NY Page 5 85-21245-00 5/2000
- ------------------------------------------------------------------------------------------------------------------------------------ SECTION G UNI-CHECK - ------------------------------------------------------------------------------------------------------------------------------------ COMPLETE THIS SECTION ONLY IF UNI-CHECK BILLING METHOD (AUTOMATIC MONTHLY CHECKING ACCOUNT DEDUCTION) IS DESIRED -------------------------------------- ------------------------------------- 1. [_] Bank Account No. ______________________________________ 2. Bank Account in Name of ------------------------------------- 3. [_] If other than policy date, complete day of the month you want draft to draw from bank account. ------------------------------ (Must be between the 4th and 28th) ------------------------------ As a convenience to me, I request and authorize you to pay and charge to the above account any debit entries on that account by and payable to the order of Pacific Life & Annuity Company, provided there are sufficient collected funds in said account to pay the same upon presentation. I agree that your rights in respect to each such debit shall be the same as if it were a debit drawn on you and signed personally by me. This authority is to remain in effect until revoked by me in writing, and until you actually receive such notice I agree that you shall be fully protected in honoring any such debit. - ------------------------------------------------------------------------------------------------------------------------------------ REMARKS - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ GPT/CVAT DISCLOSURE: - ------------------------------------------------------------------------------------------------------------------------------------ The Internal Revenue Code has two separate tests, at least one of which must be satisfied by a policy for it to qualify as life insurance for federal tax purposes. As applicant, you choose which of the two tests you want to use. You may not change the test after the policy has been issued. The two tests are the Guideline Premium Test (GPT) and the Cash Value Accumulation Test (CVAT). GPT limits the amount of premiums that can be paid for a policy, and may require the death benefit to increase above the specified amount if the cash value is large. CVAT does not limit premiums, but it also requires the death benefit to increase above the specific amount if the cash value is large. With CVAT the death benefit may need to be increased earlier than with GPT and by a larger amount, assuming the same cash values under both tests. Under either test, the cost of insurance charge is based on the total death benefit in force, including any increases resulting from your choice of GPT or CVAT. You should consider the CVAT test if you wish to maximize premium payments over a short period. You should consider the GPT test if you wish to maintain a higher level of cash value in relation to death benefit protection. Your agent can supply you with illustrations showing the effects of each test and explain how each affects the policy. You should consult your tax advisor for any tax questions. - ------------------------------------------------------------------------------------------------------------------------------------ DECLARATIONS - ------------------------------------------------------------------------------------------------------------------------------------
I represent that the foregoing answers and statements contained in Parts I and II are correctly recorded, complete, and true to the best of my knowledge and belief. I agree that such answers and statements shall be attached to and made part of the policy. I understand that: 1. Except as otherwise provided in any Temporary Insurance Agreement, no insurance will take effect before the policy for such insurance is delivered and the first premium paid during the lifetime(s) and before any change in the health of the Proposed Insured(s). Upon such delivery and payment, insurance will take effect if the answers and statements in this application are then true to the best of my knowledge and belief. 2. No agent or medical examiner is authorized to make or modify contracts or to waive any of the Company's rights or requirements. 3. Signed and Dated by Applicant in: ______________________ On _____________ _____________________________________ CITY STATE MO. DAY YR. Signature of Applicant _____________________________________ Signature of Proposed Insured (IF OTHER THAN APPLICANT, OR SIGNATURE OF PARENT IF PROPOSED INSURED IS 14 YEARS AND 6 MONTHS OR YOUNGER) _____________________________________ Signature of Other Adult Proposed Insured _____________________________________ Signature of Owner (IF OTHER THAN PROPOSED INSURED OR APPLICANT) If owner is a corporation, the signature and title of any authorized officer other than the proposed insured is required and the full name of the corporation must be shown. I certify that I have truly and accurately recorded hereon the information supplied. ___________________________________ __________________________________________ Signature of Soliciting Agent Please Print Soliciting Agent Name AP9500-NY Page 6 85-21245-00 5/2000 THIS AUTHORIZATION MUST BE SIGNED IN EVERY CASE - -------------------------------------------------------------------------------- AUTHORIZATION TO OBTAIN INFORMATION - -------------------------------------------------------------------------------- I authorize any physician, medical practitioner, hospital, clinic, other medical or medically related facility, insurance company, the Medical Information Bureau, consumer reporting agency or employer to release to Pacific Life & Annuity Company, its subsidiaries, its reinsurer(s) or its legal representative any information they may have as to diagnosis, treatment and prognosis of any physical or mental condition (to include an investigative consumer report) and/or any other information on me and my minor children. I understand that any information obtained will be used to determine eligibility for insurance and will not be released to any person or organization except reinsurer(s), the Medical Information Bureau, and other persons or organizations performing business or legal services in connection with my application, or as may be otherwise lawfully required, or as I may further authorize. I also understand that the information authorized for release may include medical information about a communicable or venereal disease, including but not limited to diseases such as hepatitis, syphilis, gonorrhea and the human immunodeficiency virus, also known as Acquired Immune Deficiency Syndrome (AIDS). I know that I may request a copy of this authorization. I also acknowledge receipt of the Disclosure Notice to Applicants for Insurance. A photographic copy of this Authorization shall be as valid as the original and shall be valid for two years from the date shown below. Signed and Dated by Proposed Insured in: _______________________ On ______________ ____________________________________ CITY STATE MO. DAY YR. Signature of Proposed Insured (OR SIGNATURE OF PARENT IF PROPOSED INSURED IS 14 YEARS AND 6 MONTHS OR YOUNGER) ____________________________________ Signature of Other Adult Proposed Insured AP9500-NY Page 7 85-21245-00 5/2000 THIS PAGE IS INTENTIONALLY LEFT BLANK AP9500-NY Page 8 85-21245-00 5/2000 DISCLOSURE NOTICE TO APPLICANTS FOR INSURANCE This brief description of our underwriting process is designed to help you to understand how an application for insurance is handled, the types and sources of information we may collect about you, the circumstances under which we may disclose that information to others and your right to learn the nature and substance of that information upon written request. The purpose of the underwriting process is to make sure you qualify for insurance under our rules, and assuming you do, establish the proper premium charge for that insurance. This process - the evaluation of risks - assures that the cost of insurance is distributed equitably among all policyowners, and that each individual pays his or her fair share. To determine your insurability, we must consider such factors as your medical history, physical condition, occupation and hazardous avocations. We get this information from various sources. SOURCES OF INFORMATION Application and Medical Records - Your application, including the medical history, is the primary source of information in the evaluation process. In addition, we may ask you to take a physical examination or other special test such as an electrocardiogram. We may also ask for a report from your doctor or hospital, another insurance company, or the Medical Information Bureau. When we do so, we will use the authorization form you signed with your application. MIB, Inc., (Medical Information Bureau) - MIB, Inc., is a non-profit corporation which operates an information exchange on behalf of member life insurance companies. As a member company, we will ask the MIB if it has a record concerning you. If you previously applied to a member company for insurance, MIB may have information about you in its file. The purpose of the MIB is to protect member companies and their policyowners from those who would conceal significant facts relevant to their insurability. The information, which is obtained from MIB, may be used only as an alert to the possible need for further independent investigation. It cannot be used as a basis in making a final underwriting decision. Information regarding your insurability will be treated as confidential. Pacific Life & Annuity Company, its subsidiaries or its reinsurer(s) may, however, make a brief report to the MIB. If you later apply to another MIB member company for life or health insurance coverage, or a claim for benefits is submitted to such a company, the MIB, upon request, will supply the company with the information it may have about you in its file. Pacific Life & Annuity Company, its subsidiaries or its reinsurer(s) may also release information in its file to other life insurance companies to whom you may apply for life or health insurance, or to whom a claim for benefits may be submitted. At your request, the MIB will arrange disclosure of any information it may have about you in its file. If you question the accuracy of information on file, you may contact the MIB and seek a correction in accordance with the procedures set forth in the federal Fair Credit Reporting Act. The address of the information office of MIB, Inc. is Post Office Box 105, Essex Station, Boston, Massachusetts 02112, telephone number (617) 426-3660. Investigative Consumer Report - As part of our underwriting procedure, we may request an investigative consumer report from a consumer reporting agency. Because you may want to know more about the nature and scope of such a report, we are providing this information below as part of this Notice. A consumer report confirms and supplements the information on your application pertaining to employment and residence verification, smoking habits, marital status, occupation, hazardous avocations and general health. This report may also cover information concerning your general reputation, motor vehicle driving record, criminal activity, personal characteristics and mode of living, except as may be related directly or indirectly to your sexual orientation. This information may be obtained through personal interviews with you, your family, friends, neighbors and business associates. If a report is required and you wish to be personally interviewed, please let us know and we will notify the consumer reporting agency. The information contained in the report may be retained by the consumer reporting agency and subsequently disclosed to other companies to the extent permitted by the Fair Credit Reporting Act. Investigative consumer reports are held in strict confidence and used only to evaluate your application on a fair and equitable basis. You have a right to make a written request within a reasonable time to receive additional detailed information about the nature and scope of this investigation. These reports may have an adverse effect on an individual's eligibility for insurance. If it should, however, we will notify you in writing and identify the reporting agency. DISCLOSURE TO OTHERS Personal information obtained about you during the underwriting process is confidential and will not be disclosed to other persons or organizations without your written authorization except to the extent necessary for the conduct of our business. Examples of situations where we may share information about you are as follows. 1. The agent may retain a copy of your application. If reinsurance were required, the reinsurance company would have access to our application file. 2. We may release information to another life insurance company to whom you have applied for life or health insurance or to whom you have submitted a claim for benefits, if you have authorized it to obtain such information. 3. As stated earlier, we may report information to the Medical Information Bureau. 4. We will disclose information to government regulatory officials, law enforcement authorities and others where required by law. DISCLOSURE TO YOU In general, you have a right to learn the nature and substance of any personal information about you in our file upon written request. Whenever an adverse underwriting decision is made, we will notify you of the reason(s) for the decision and the source of the information upon which our action is based. Medical record information, however, will normally be given only to a licensed physician of your choice. Please refer to the section on MIB, Inc., for that organization's disclosure procedure. Should you feel that any information we have is inaccurate or incomplete, please write to the Manager, Risk Selection Department, Pacific Life & Annuity Company, 700 Newport Center Drive, Newport Beach, California 92660. Your comments will be carefully considered and corrections made where justified. We hope this Notice will help you to understand how we obtain and use personal information in the underwriting process, and the ways you can learn about this information. We are concerned with insuring privacy as well as lives, and the collection, use and disclosure of personal information is limited to those specified in this Notice. NMIB-NY Page 11 85-21245-00 5/2000 THIS PAGE IS INTENTIONALLY LEFT BLANK NMIB-NY Page 12 85-21245-00 5/2000 - ------------------------------------------------------------------------------- SECTION G BUSINESS INSURANCE (COMPLETE THIS SECTION IF APPLYING FOR BUSINESS INSURANCE) - ------------------------------------------------------------------------------- 1. Purpose of this Insurance: A. [_] Buy - Sell D. [_] Split Dollar B. [_] Employee Fringe Benefit E. [_] Key Employee C. [_] Deferred Compensation F. [_] Other (Explain in remarks) - ------------------------------------------------------------------------------- 2. Name of Principal Officers, % of Amount of Insurance Partners or Key Employees Position Business Owned Owned By Business - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 3. What is the current fair market $ value of the business? -------------- 4. What was the annual net profit Last Year $ 2 Years Ago $ (before taxes) of business? --------------- -------------------- 5. Are other officers, partners or key employees proportionately insured? [_]Yes [_]No (If no, explain in remarks) - ------------------------------------------------------------------------------- SECTION H COMPLETE THIS SECTION IF PROPOSED INSURED IS 14 YEARS AND 6 MONTHS OR YOUNGER - ------------------------------------------------------------------------------- 1. Did you personally observe the Proposed Insured? [_]Yes [_]No (If no, explain in remarks) - ------------------------------------------------------------------------------- 2. Are Proposed Insured's brothers and sisters insured for equal amounts? [_]Yes [_]No (If no, explain in remarks) - ------------------------------------------------------------------------------- 3. Person on whom Proposed Insured depends for support: A. Name B. Relationship - ------------------------------------------------------------------------------- C. Estimated annual income D. Estimated net worth E. Estimated amount of life insurance $ $ $ - ------------------------------------------------------------------------------- 4. Information on Applicant: A. Name B. Relationship - ------------------------------------------------------------------------------- C. Purpose of insurance D. Amount of life insurance in force $ - ------------------------------------------------------------------------------- REMARKS - ------------------------------------------------------------------------------- AP9500-NY Page 11 85-21245-00 5/2000
- ------------------------------------------------------------------------------------------------------------------------------------ SECTION I COMPLETE FOR ALL APPLICATIONS - AGENT INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ 1. How well do you know Proposed Insured? 2. How well do you know Additional Insured? (or Applicant If Proposed Insured is under age 16) - ------------------------------------------------------------------------------------------------------------------------------------ 3. Have you personally asked all applicable questions in this application? Proposed Insured Additional Insured (If no, explain in remarks) [_] Yes [_] No [_] Yes [_] No - ------------------------------------------------------------------------------------------------------------------------------------ 4. Are you aware of any information not given in the application which might affect the insurability of: Proposed Insured [_] Yes [_] No Additional Insured [_] Yes [_] No (If yes, explain in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ 5. Did the Proposed Insured or Applicant make the initial inquiry which led to the sale of this insurance? [_] Yes [_] No (If yes, explain in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ 6. Has the Proposed Insured changed name within the last 5 years? [_] Yes [_] No 7. Has the Additional Insured changed name within the last 5 years? [_] Yes [_] No (If yes, give former name in remarks) - ------------------------------------------------------------------------------------------------------------------------------------ 8. To the best of your knowledge, does any policy applied for either replace, involve a change in, or involve use of value from any existing life insurance policy or annuity? Proposed Insured Additional Insured (IF "YES", GIVE COMPANY AND POLICY NUMBER IN "REMARKS" ON PAGE 5. [_] Yes [_] No [_] Yes [_] No IF PL POLICY, THEN GIVE POLICY NUMBER AND HOW VALUES ARE TO BE APPLIED IN "REMARKS".) - ------------------------------------------------------------------------------------------------------------------------------------ 9. If this policy is a tax qualified plan indicate type: [_] Pension / Profit sharing [_] HR-10 [_] Other - ------------------------------------------------------------------------------------------------------------------------------------ 10. Is application submitted on a: Proposed Insured Additional Insured Yes No Yes No (A) Medical Basis? [_] [_] [_] [_] (B) Non-Medical Basis? (Submit Part 2) [_] [_] [_] [_] (C) Guaranteed Issue Basis? [_] [_] [_] [_] (D) Guaranteed to Issue Basis? [_] [_] [_] [_] - ------------------------------------------------------------------------------------------------------------------------------------ 11. Check appropriate items which have been ordered: Proposed Insured Additional Insured Proposed Insured Additional Insured Yes No Yes No Yes No Yes No Medical Exam [_] [_] [_] [_] H.O. Specimen [_] [_] [_] [_] Paramedical Exam [_] [_] [_] [_] APS____________ [_] [_] [_] [_] EKG [_] [_] [_] [_] _______________ [_] [_] [_] [_] Blood Profile [_] [_] [_] [_] _______________ [_] [_] [_] [_] - ------------------------------------------------------------------------------------------------------------------------------------ REMARKS - ------------------------------------------------------------------------------------------------------------------------------------ I certify that to the best of my knowledge and belief: Yes No A. I have presented to the Company all pertinent facts and have correctly and completely recorded all required answers... [_] [_] B. I have given the Proposed Insured (or Parent for Juvenile insurance) a copy of the Fair Credit Reporting Act and MIB Disclosure Notice, and any other disclosure notice or statement required by state or federal law...................... [_] [_] C. I have fully explained the terms and conditions of the Temporary Insurance Agreement(s) to the Proposed Insured (or Applicant) and have given it to him/her (them).................................................................... [_] [_] D. I have complied with state and federal laws on disclosure, cost comparison and replacement............................ [_] [_] E. I have reviewed the purchase of this insurance policy as to suitability............................................... [_] [_] Signature(s) Of Soliciting Agent(s). Pay Commission as Indicated Below. X_____________________________________________________________ X________________________________________________________________ First Name Listed Below Will Be The Servicing Agent - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ PHONE FAX AGENCY AGENT AGENT NAME NUMBER NUMBER NUMBER CODE COMM % - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer Name (IF APPLICABLE)_____________________________________________. AP9500-NY Page 12 85-21245-00 5/2000 Use this receipt only if a premium has been paid for a conversion policy PACIFIC LIFE & ANNUITY COMPANY P.O. Box 6520 Newport Beach, CA 92658-6520 Received from __________________________________the sum of $ ________ as payment on account of premium for policy on the life of the person named in an application to Pacific Life & Annuity Company bearing the same number as this receipt. All checks must be made payable to Pacific Life & Annuity Company. Do not make checks payable to the Agent or leave payee blank. Date__________________ ___________________________________________________Agent MO. DAY YR. AP9500-NY Page 13 85-21245-00 5/2000 EX-99.2 18 dex992.txt FORM OF OPINION AND CONSENT OF LEGAL OFFICER EXHIBIT 2 [Letterhead of PL&A] May 24, 2001 Pacific Life & Annuity Company 700 Newport Center Drive Newport Beach, CA 92660 Dear Sirs: In my capacity as Senior Vice President and General Counsel of Pacific Life & Annuity Company ("PL&A") I, or attorneys employed by PL&A under my general supervision, have supervised the establishment of Pacific Select Exec Separate Account of Pacific Life & Annuity Company on September 24, 1998, which has been authorized by resolutions of the Board of Directors of PL&A adopted July 1, 1998, concerning Pacific Select Exec Separate Account as the separate account for assets applicable to Pacific Select Estate Preserver-NY Last Survivor Flexible Premium Variable Universal Life Insurance Policies ("Policies"), pursuant to the provisions of A.R.S. Sections 20-2606, 250-651, 20-515, and 20- 536.01 of the Insurance Code of the State of Arizona. Moreover, I have been associated with the preparation of the Registration Statement on Form S-6 ("Registration Statement") filed by PL&A and Pacific Select Exec Separate Account (File No. pending) with the Securities and Exchange Commission under the Securities Act of 1933, as amended, for the registration of interests in the Pacific Select Exec Separate Account funding the Policies. I have made such examination of the law and examined such corporate records and such other documents as in my judgment are necessary and appropriate to enable me to render the following opinion that: 1. PL&A has been duly organized under the laws of the State of Arizona and is a validly existing corporation. 2. Pacific Select Exec Separate Account is duly created and validly existing as a separate account, pursuant to the aforesaid provisions of Arizona law. 3. The portion of the assets to be held in Pacific Select Exec Separate Account equal to the reserves and other liabilities under the Policies and any other policies issued by PL&A that are supported by Pacific Select Exec Separate Account is not chargeable with liabilities arising out of any other business PL&A may conduct. 4. The Policies have been duly authorized by PL&A and, when issued as contemplated by the Registration Statement, will constitute legal, validly issued and binding obligations of PL&A, except as limited by bankruptcy and insolvency laws affecting the right of creditors generally. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ DAVID R. CARMICHAEL David R. Carmichael Senior Vice President and General Counsel DRC/kjh EX-99.6.(A) 19 dex996a.txt CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 6.(A) Pacific Life and Annuity Company Pacific Select Exec Separate Account Consent to the use of our reports in Registration Statement on Form S-6 for Pacific Select Estate Preserver-NY June 6, 2001 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Registration Statement of Pacific Select Exec Separate Account of Pacific Life & Annuity Company on Form S-6 of our report dated February 6, 2001, related to the statement of assets and liabilities of Pacific Select Exec Separate Account of Pacific Life & Annuity Company as of December 31, 2000, and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000, and of our report dated February 26, 2001, related to the financial statements - statutory basis of Pacific Life & Annuity Company as of December 31, 2000 and 1999, and for each of the two years in the period ended December 31, 2000, which report expresses an unqualified opinion with respect to the presentation of such financial statements-statutory basis in accordance with the accounting basis prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, and also states that such financial statements-statutory basis, are not presented fairly in accordance with accounting principles generally accepted in the United States of America, appearing in the Prospectus of Statement of Pacific Select Estate Preserver-NY, which is part of such Registration Statement. We also consent to the reference to us under the heading "Experts" appearing in such Prospectus. DELOITTE & TOUCHE LLP Costa Mesa, California June 6, 2001 EX-99.6.(B) 20 dex996b.txt CONSENT OF DECHERT [LETTERHEAD OF DECHERT PRICE & RHOADS] EXHIBIT 6(B) June 6, 2001 Via E-Mail and First Class Mail Pacific Life & Annuity Company 700 Newport Center Drive Newport Beach, California 92660 Re: 2001 Prospectus for Pacific Select Estate Preserver -- NY Dear Sir or Madam: We hereby consent to the reference to this firm in the legal proceedings and legal matters section of the above prospectus. In giving this consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Yours truly, /s/ DECHERT EX-99.8 21 dex998.txt MEMORANDUM DESCRIBING ISSUANCE, TRANSFER & REDEMPTION EXHIBIT 8 PACIFIC LIFE & ANNUITY COMPANY'S DESCRIPTION OF ISSUANCE, TRANSFER AND REDEMPTION PROCEDURES FOR POLICIES PURSUANT TO RULE 6e-3(T)(b)(12)(iii) This document sets forth the administrative procedures that will be followed by Pacific Life & Annuity Company ("PL&A") in connection with the issuance of its Pacific Select Estate Preserver-NY Flexible Premium Joint Survivorship Variable Life Insurance Policy ("Policy"), the transfer of assets held under the Policies, and the redemption by Policy owners of their interests in said Policies. I. PURCHASE AND RELATED TRANSACTIONS A. Premium Schedules and Underwriting Standards -------------------------------------------- The Policy is a flexible premium joint survivorship variable life insurance policy. The Policy provides lifetime insurance protection on the lives of two insureds named in the Policy, with a death benefit payable when the last surviving insured dies while the Policy is in force. A Policy owner may elect one of four options to calculate the amount of death benefit payable under the Policy. The Policy will be offered and sold pursuant to an established mortality structure and underwriting standards in accordance with state insurance laws which prohibit unfair discrimination among Policy owners, but allow cost of insurance rates to be based upon factors such as age, health or occupation. A Policy owner may choose the amount and frequency of premium payments, subject to a minimum of $50 per payment. B. Application and Initial Premium Processing ------------------------------------------ Upon receipt of a completed application for a Policy, PL&A will follow certain insurance underwriting (i.e., evaluation of risk) procedures designed to determine whether the proposed insureds are insurable. This process may involve verification procedures and may require that further information be provided by the applicant before a determination can be made. PL&A will first become obligated under a Policy when the total initial premium is received or on the date the application is accepted by PL&A, whichever is later. After the Policy is issued, insurance coverage under the Policy will be deemed to have begun as of the Policy Date. The Policy Date is usually the date that the Policy is issued. The Policy Date is the date used to determine Policy years, Policy months, and Policy monthly, quarterly, semi-annual and annual anniversaries. C. Additional Premium Payments --------------------------- The Policy is a flexible premium policy, and it provides flexibility to pay premiums at the Policy owner's discretion. When applying for a Policy, a Policy owner will determine a planned periodic premium that provides for the payment of level premiums of fixed intervals over a specified period of time. Each Policy owner will receive a premium reminder notice or listbill on either an annual, semi-annual, or quarterly basis (or monthly (listbill only)), at the option of the Policy owner; however, the Policy owner is not required to pay planned periodic premiums. Payment of the planned periodic premium will not guarantee that a Policy will remain in force. Instead, the duration of the Policy depends upon the Policy's accumulated value. Even if planned periodic premiums are paid, the Policy will lapse any time accumulated value less Policy debt is insufficient to pay the current monthly deduction and a grace period expires without sufficient payment. Any premium payment must be for at least $50. PL&A also may reject or limit any premium payment that would result in an immediate increase in the net amount at risk under the Policy, although such a premium may be accepted with satisfactory evidence of insurability. D. Premium Allocation ------------------ A Policy owner may allocate net premiums among the variable accounts and/or the fixed accounts. When a Policy is issued and all delivery requirements are received at PL&A's Service Center, the Accumulated Value will be automatically allocated according to the Policy owner's instructions in the application or more recent instructions if any (except for amounts allocated to the Loan Account to secure any Debt). The initial allocation must be made in the application for the Policy. All net premiums are allocated to the Policy owner's instructions the later of 10 days after the Policy is issued or when all requirements for the Policy to be considered in force are delivered to the Service Center (the Free-Look Transfer Date). Additional net premium payments will be allocated among the investment alternatives according to the Policy owner's instructions (after the Free-Look Transfer Date). A Policy owner may change the allocation of accumulated value by submitting a proper written request to PL&A's Service Center. PL&A reserves the right to limit the amount allocated to the Fixed LT Account to $1,000,000 during the most recent 12 months for all of a Policy owner's policies. Allocations include net premium payments, transfers and loan repayments. Any excess over $1,000,000 would be transferred to a Policy owner's other Investment Options according to the Policy owner's most recent instructions. E. Reinstatement ------------- PL&A will reinstate a lapsed Policy (see "Policy Lapsation", Section III.C. of this document) at any time within five years after the end of the grace period, provided PL&A receives the following: (1) a written application of the Policy owner; (2) evidence of insurability satisfactory to PL&A for each insured; and (3) payment of all monthly charges and deductions that were due and unpaid during the grace period, and payment of a premium at least equal to three times the most recent monthly deduction. When the Policy is reinstated, the accumulated value will be equal to the accumulated value on the date of the lapse subject to the following: (1) if the Policy is reinstated after the first monthly payment date following lapse, the accumulated value will be reduced by the amount of the Policy debt on the date of lapse and no Policy debt will exist on the date of reinstatement; (2) if the Policy is reinstated on the monthly payment date next following lapse, any Policy debt on the date of lapse will also be reinstated; and (3) no interest on amounts held in PL&A's Loan Account to secure Policy debt will be paid or credited between lapse and reinstatement. Reinstatement will be effective as of the monthly payment date on or next following the date of approval by PL&A, and accumulated value minus Policy debt will be allocated among the variable accounts and the fixed accounts in accordance with the Policy owner's current premium allocation instructions. F. Policy Loans ------------ A Policy owner may borrow from PL&A an amount up to the greater of 90% of the Policy's accumulated value, less any outstanding Policy debt and any surrender charges, or (2) 100% of the product of (a x b/c - d) where (a) equals the Policy's accumulated value less 12 times the current monthly deduction; (b) equals 1 plus the annual loan interest rate credited; (c) equals 1 plus the annual loan interest rate currently charged; and (d) equals any existing Policy debt. The minimum loan that may be taken is $200. A Policy is the only security required for a loan. When a Policy owner takes a loan, an amount equal to the loan is transferred out of the Policy owner's accumulated value in the variable accounts and the fixed accounts on a proportional basis, unless the Policy owner instructs PL&A otherwise. The interest rate on loans is 4.10% annually for all years. PL&A will credit interest monthly on amounts held in the Loan Account to secure the loan at an annual rate of 3.0% in Policy years 1 through 10, and 3.6% in Policy years 11 through 20, and 3.85% in Policy year 21 and thereafter. The owner may repay all or a part of the loan at any time while the Policy is in force. If not repaid, the Policy debt will reduce the amount of death proceeds paid upon the death of the insured, the cash surrender value paid upon surrender, or the refund of premium upon exercise of the Free-Look Right. A loan may affect the length of time the Policy remains in force. The Policy will lapse when accumulated value minus Policy debt is insufficient to cover the monthly deduction against the Policy's accumulated value on any monthly payment date and the minimum payment required is not made during the grace period. Moreover, the Policy may enter the grace period more quickly when a loan is outstanding, because the loaned amount is not available to cover monthly deductions. II. TRANSFER AMONG INVESTMENT OPTIONS The Pacific Select Exec Separate Account (the "Separate Account") is a separate investment account of PL&A used to support the variable death benefits and policy values of PL&A's life insurance policies. The Separate Account currently is made up of thirty one variable accounts which invest in shares of a corresponding portfolio of Pacific Select Fund (the "Fund"), the investment vehicle of the Separate Account. The Fund is registered with the Securities and Exchange Commission under the Investment Company Act of 1940 as an open-end management investment company of the series type. The portfolios of the Fund, each of which has a different investment objective, are the Blue Chip Portfolio, the Aggressive Growth Portfolio, the Aggressive Equity Portfolio, the Emerging Markets Portfolio, the Diversified Research Portfolio, the Small-Cap Equity Portfolio, the International Large-Cap Portfolio, the Equity Portfolio, the I- Net Tollkeeper Portfolio, the Financial Services Portfolio, the Health Sciences Portfolio, the Technology Portfolio, the Telecommunications Portfolio, the Multi-Strategy Portfolio, the Equity Income Portfolio, the Strategic Value Portfolio, the Growth LT Portfolio, the Focused 30 Portfolio, the Mid-Cap Value Portfolio, the International Value Portfolio, the Capital Opportunities Portfolio, the Mid-Cap Growth Portfolio, the Global Growth Portfolio, the Equity Index Portfolio, the Small-Cap Index Portfolio, the REIT Portfolio, the Inflation Managed Portfolio, the Managed Bond Portfolio, the Money Market Portfolio, the High Yield Bond Portfolio, and the Large-Cap Value Portfolio. A Policy owner may allocate accumulated value from the variable accounts to the fixed accounts. However, for the Fixed LT Account, such a transfer will only be permitted in the Policy month preceding a Policy anniversary. Also, if you have transferred out of either Fixed Option within the last 90 days, you cannot transfer into the Fixed Account, except that such a transfer may be made at any time during the first 18 Policy months. Transfers from the fixed accounts to the variable accounts are also permitted, subject to the following restrictions: (1) the Policy owner may not make more than one transfer from the fixed accounts to the variable accounts in any 12-month period; and (2) the Policy owner may transfer no more than the greater of 25% of the Accumulated Value in the Fixed Account or $5,000 to the Variable Accounts in any 12-month period, and no more than the greater of 10% of the Accumulated Value in the Fixed LT Account or $5,000 to the Variable Accounts. PL&A reserves the right to limit the amount allocated to the Fixed LT Account to $1,000,000 during the most recent 12 months for all of a Policy owner's policies. Allocations include net premium payments, transfers and loan repayments. Any excess over $1,000,000 would be transferred to a Policy owner's other Investment Options according to the Policy owner's most recent instructions. III. REDEMPTION PROCEDURES: SURRENDER AND RELATED TRANSACTIONS A. Surrender for Net Cash Surrender Value -------------------------------------- A Policy owner can make partial withdrawals of the net cash surrender value of the Policy starting on the first Policy anniversary. A withdrawal may cause a reduction in Face Amount if the Death Benefit Option is Option A or Option D, as described below. A partial withdrawal must be for at least $500, and the Policy's net cash surrender value after the withdrawal must be at least $500. If there is any Policy debt, the maximum partial withdrawal amount is limited to the excess, if any, of the cash surrender value immediately prior to the withdrawal over the result of the Policy debt divided by 90%. When a partial withdrawal is made on a Policy on which the owner has selected Death benefit Option A or Death Benefit Option D, the face amount under the Policy is decreased by the excess, if any, of the face amount over the result of the death benefit immediately prior to the partial withdrawal minus the amount of the partial withdrawal. A partial withdrawal will not change the face amount of a Policy on which the owner has selected Death Benefit Option B or Death Benefit Option C. However, assuming that the death benefit is not equal to accumulated value times a death benefit percentage, the partial withdrawal will reduce the death benefit by the amount of the partial withdrawal. To the extent the death benefit is based upon the accumulated value times the death benefit percentage applicable to the insureds, a partial withdrawal may cause the death benefit to decrease by an amount greater than the amount of the partial withdrawal. B. Death Claims ------------ Upon the death of both insureds, PL&A will pay to a named beneficiary death benefit proceeds, either in a lump sum or under a payment plan offered under the Policy. The proceeds will be the death benefit under the Policy, plus any insurance proceeds provided by rider, reduced by adjustments for any outstanding Policy debt (and, if in the grace period, any overdue charges). The death benefit will be the greater of the Guideline Minimum Death Benefit or one of the following four options: (1) Death Benefit Option A -- the face amount of the Policy; (2) Death Benefit Option B -- the face amount of the Policy plus the accumulated value; or (3) Death Benefit Option C -- the face amount of the Policy plus the total premiums paid minus total withdrawals; or (4) Death Benefit Option D - the face amount of the policy multiplied by a death benefit factor shown on a Policy's specifications pages. Because the specified percentage is applied to a Policy owner's accumulated value, an increase in accumulated value may increase the death benefit. However, because the death benefit will never be less than the face amount while the Policy is in force, a decrease in the accumulated value may decrease the death benefit but never below the face amount while the Policy is in force. The face amount of the Policy may be decreased by the Policy owner. A decrease in face amount may only be made after the first Policy year. Such a change may change the death benefit, depending, among other things, upon the death benefit option chosen by the owner and whether, and the degree to which, the death benefit under a Policy exceeds the face amount prior to the change. A change in the face amount may affect the net amount at risk under a Policy, which may affect a Policy owner's cost of insurance charge. For these purposes, the net amount at risk is equal to the death benefit less the policy owner's accumulated value. Any request for a change in face amount must be by written application to PL&A's Service Center. A Policy owner may make only one such request per Policy year. C. Policy Lapsation ---------------- If the accumulated value less Policy debt of a Policy is insufficient to cover deductions and charges on a monthly payment date, PL&A will give written notice to the Policy owner that if the amount shown in the notice (which will be sufficient to cover the deduction amount(s) due) is not paid within 61 days (the "grace period"), the Policy owner faces a danger of lapse. The Policy will remain in force through the grace period, but if no payment is forthcoming, it will terminate at the end of the grace period. In order to avoid termination, the Policy owner must pay an amount equal to three times the charges and deductions due on the monthly payment date in which the insufficiency occurred. If the required payment is made during the grace period, such payment will be allocated among the variable accounts and the fixed accounts in accordance with the Policy owner's allocation instructions. If the survivor dies during the grace period, the death benefit proceeds will equal the amount of the death benefit immediately prior to the commencement of the grace period, reduced by any unpaid monthly deductions and charges due and any Policy debt. A lapsed Policy may be reinstated at any time within five years after the end of the grace period but before the maturity date. See "Reinstatement", Section I.E. above. D. Policy Loans ------------ See Section I.F. above. EX-99.9 22 dex999.txt POWERS OF ATTORNEY EXHIBIT 9 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: March 23, 1999 /s/ DAVID R. CARMICHAEL ------------------------------- David R. Carmichael POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger and Jeffrey S. Puretz his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 6/15/99 /s/ BRIAN D. KLEMENS ------------------------------- Brian D. Klemens POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 3/23/99 /s/ WILLIAM L. FERRIS ------------------------------- William L. Ferris POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 3/23/99 /s/ AUDREY L. MILFS ------------------------------- Audrey L. Milfs POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 4/7/99 /s/ LYNN C. MILLER ------------------------------- Lynn C. Miller POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 3/23/99 /s/ GLENN S. SCHAFER ------------------------------- Glenn S. Schafer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 22 MAR 99 /s/ TC SUTTON ------------------------------- Thomas C. Sutton POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 3/23/99 /s/ KHANH T. TRAN ------------------------------- Khanh T. Tran -----END PRIVACY-ENHANCED MESSAGE-----