EXHIBIT 99.3(b)
Form of Selling Agreement between PM Group, PMD and various Broker-Dealers.
DRAFT
PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]
VARIABLE CONTRACT SELLING AGREEMENT
This Agreement ("Agreement") is made as of _______________________, 19__ by
and among PM GROUP LIFE INSURANCE COMPANY ("PM Group") [PACIFIC LIFE & ANNUITY
COMPANY ("PLA")], PACIFIC MUTUAL 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 PM Group
[PLA] and distributed by Distributor through representatives who are both (a)
state insurance licensed and appointed agents of PM Group [PLA] 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, PM Group [PLA] 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 PM Group [PLA] 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 PM Group [PLA] in its sole discretion, where
the Contracts specified in such Schedule B have been approved for sale.
From time to time, PM Group [PLA] will provide Selling Entities with
information regarding the jurisdictions in which PM Group [PLA] 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 PM Group [PLA] 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 PM Group [PLA]. All completed applications, supporting
documents and payments are the sole property of PM Group [PLA] and must be
promptly delivered to PM Group [PLA]. All applications are subject to
acceptance by PM Group [PLA] at its sole discretion.
3. NEW PRODUCTS
Distributor may propose and PM Group [PLA] 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 PM Group [PLA] 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
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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 PM Group [PLA] shall have the right in
its sole discretion to terminate the appointment of any Subagent upon notice
from PM Group [PLA] 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 PM Group [PLA], to furnish proof of such fulfillment as PM Group
[PLA] 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 PM Group [PLA] or Distributor, and (b) use material,
the use of which PM Group [PLA] or Distributor has specifically approved, in
writing, prior to such use. In order for PM Group [PLA] or Distributor to
review and approve materials not produced by PM Group [PLA] in accordance with
clause (b) above, Broker/Dealer must provide PM Group [PLA] 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 PM Group [PLA] or Distributor at such times as PM
Group [PLA] 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 PM
Group [PLA] 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. PM Group [PLA] and
Distributor shall furnish Selling Entities, at no cost to Selling Entities,
reasonable quantities of prospectuses and such other material as PM Group [PLA]
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 PM Group [PLA] 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;
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(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 PM Group [PLA], 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 PM Group [PLA];
(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 PM Group [PLA] 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 PM Group [PLA] 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 PM Group [PLA], and will establish rules
and procedures necessary to supervise diligently the activities of licensed and
appointed agents of PM Group [PLA] associated with Agency. Upon request by PM
Group [PLA] or Distributor, Agency will furnish such appropriate records as are
necessary to document such diligent supervision.
10. PM GROUP [PLA] REPRESENTATIONS
PM Group [PLA] 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 PM Group [PLA], 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 PM Group [PLA] in its sole discretion. Selling Entities shall
pay all Subagents. PM Group [PLA] 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
PM Group [PLA].
11.2 PM Group [PLA] 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
PM Group [PLA], Distributor, Broker/Dealer and Agency agree to cooperate
fully in any insurance or securities regulatory investigation or proceeding or
judicial proceeding with respect to PM Group [PLA],
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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 PM Group [PLA] 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 PM Group [PLA] and Distributor of same.
Selling Entities shall provide PM Group [PLA] 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 PM Group [PLA] 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 PM Group [PLA] 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 PM Group
[PLA] and Distributor.
13.2 Selling Entities agree to, jointly and severally, hold harmless and
indemnify PM Group [PLA] 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 PM Group [PLA] or Distributor, and (ii) any use of any
sales material that either has not been specifically approved in writing by PM
Group [PLA] or Distributor or that, although previously approved in writing by
PM Group [PLA] 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 PM Group [PLA] 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 PM Group [PLA] may
require evidence that such coverage is in force, and Broker/Dealer or Agency
shall promptly give notice to PM Group [PLA] of any notice of cancellation or
change of coverage.
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Selling Entities each assign any proceeds received from the fidelity bond
company, error and omissions or other liability coverage, to PM Group [PLA] to
the extent of PM Group's [PLA's] loss due to activities covered by the bond. If
there is any deficiency, Selling Entities will promptly pay PM Group [PLA] the
amount of such deficiency on demand. Selling Entities each shall indemnify and
hold harmless PM Group [PLA] from any such deficiency and from the cost of
collection.
15. LIMITATIONS OF AUTHORITY
The Contract forms are the sole property of PM Group [PLA]. No person
other than PM Group [PLA] has the right or authority to: (i) make, alter or
discharge any policy, Contract, certificate, supplemental contract or form
issued by PM Group [PLA]; (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 PM Group [PLA] or the Contracts; (v) extend the time for
payment of any premiums, bind PM Group [PLA] 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 PM Group [PLA]; or (vii) institute or file any response to any legal
proceeding in connection with any matter pertaining to the Contracts on behalf
of PM Group [PLA] without the prior written consent of PM Group [PLA] (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 PM Group [PLA]).
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 PM Group [PLA] 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 PM
Group [PLA] or Distributor for tax or any other purposes. Neither PM Group
[PLA] 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 PM Group [PLA].
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 PM
Group [PLA] 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
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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) PM Group [PLA] or Distributor
has authorized such disclosure in writing or (b) if such disclosure is expressly
required by state or federal regulatory authorities and PM Group [PLA] 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 PM Group [PLA].
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.
PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:______________________________________
Title:___________________________________
PACIFIC MUTUAL DISTRIBUTORS, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:______________________________________
Title:___________________________________
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BROKER/DEALER:___________________________
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SCHEDULE A
PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]
CONTRACTS COVERED BY THIS AGREEMENT
Contract Name Contract Number
------------- ---------------
Pacific Portfolios
Pacific Select Exec II
Date:_____________________
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SCHEDULE B
JURISDICTIONS IN WHICH
PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]
IS APPROVED FOR SALE OF CONTRACTS
COVERED BY THIS AGREEMENT
CONTRACT JURISDICTIONS
-------- -------------
Pacific Portfolios New York
Pacific Select Exec II New York
Date:____________________
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SCHEDULE C
GENERAL LETTER OF RECOMMENDATION
Selling Entities hereby certify to PM Group [PLA] 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 PM Group [PLA] 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 PM
Group [PLA], and to hold himself out in good faith to the general public. We
vouch for each applicant.
2. We have on file a ▇-▇▇▇, ▇-▇▇▇ 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 PM Group [PLA] 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 PM
Group [PLA] 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.
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SCHEDULE D-1
COMPENSATION SCHEDULE FOR
PACIFIC PORTFOLIOS - INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ACCUMULATION DEFERRED ANNUITY
[To Be Filed By Pre-Effective Amendment]
