EXHIBIT (11)(e)
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Distribution Agreement
DISTRIBUTION AGREEMENT
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AGREEMENT made this ____ day of _____________________, 1998, between PFL
Endeavor Target Account (the "Account") and Endeavor Group, a California
corporation (the "Distributor") each with offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Account is a registered managed separate account, which
currently offers accumulation or annuity units ("Units") in two sub-accounts,
each as set forth on Schedule A hereto (the "Existing Sub-Accounts"), and the
Account may offer Units of one or more additional Sub-Accounts in the future;
WHEREAS, the Account was organized to act as the funding vehicle for
certain individual variable life insurance policies and individual and group
variable annuity contracts (collectively referred to herein as "Variable
Contracts") offered by PFL Life Insurance Company ("PFL") and life insurance
companies affiliated with PFL (collectively, the "Life Companies"), and/or to
qualified pension and retirement plans (the "Qualified Plans"); and
WHEREAS, it is contemplated that, in addition to entering into sales
agreements with Life Companies and/or Qualified Plans, the Distributor shall
engage in certain promotional and sales efforts on behalf of the Account, as
described in the Brokerage Enhancement Plan pursuant to Rule 12b-1 adopted by
the Account.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. (a) The Account proposes to issue and sell Units to Life Companies and
to the Qualified Plans as may be permitted by applicable law and subject to the
Account's obtaining any necessary regulatory approvals. The Account hereby
appoints the Distributor as agent to sell the Units and the Distributor hereby
accepts such appointment. The Units will be distributed under such terms as are
set by the Account and will be sold to the Life Companies and the Qualified
Plans permitted to buy the Units as specified by the Account's Board of
Managers.
(b) In the event that the Account from time to time designates one or more
Sub-Accounts in addition to the Existing Sub-Accounts ("Additional Sub-
Accounts"), it shall notify the Distributor. If the Distributor is willing to
perform services hereunder for the Additional Sub-Accounts, it shall so notify
the Account. Thereafter, the Account and the Distributor shall mutually agree
to amend Schedule A to this Agreement in writing to add the Additional Sub-
Accounts and the Additional Funds shall be subject to this Agreement, subject to
the approval of the Board of Managers as set forth in Section 7.(a) below. The
Existing Sub-Accounts and all Additional Sub-Accounts subject to this Agreement
are referred to collectively as "Sub-Accounts."
2. The Distributor agrees that (i) all Units sold by the Distributor shall
be sold at the net asset value as described in the Account's prospectus, and
(ii) the Account shall receive 100% of such net asset value.
3. (a) All sales literature and advertisements used by the Distributor in
connection with sales of Units shall be subject to approval by the Account. The
Account authorizes the Distributor, in connection with the sales or arranging
for the sale of Shares, to provide only such information and to make only such
statements or representations as are contained in the Account's then-current
Prospectus or in sales literature or advertisements approved by the Account or
in such financial and other statements which are furnished in writing to the
Distributor pursuant to the next paragraph. The Account shall not be
responsible in any way for any information provided or statements or
representations made by the Distributor or its representatives or agents other
than the information, statements and representations described in the preceding
sentence. The Distributor shall review all materials submitted to it by Life
Companies and Qualified Plans that describe the Account, the Units or the
Account's investment manager and investment advisers. The Distributor shall not
be responsible for any information provided or statements or representations
made by Life Companies or Qualified Plans, representatives or agents of Life
Companies or Qualified Plans, or any other persons or entities other than the
Distributor's representatives or agents.
(b) The Account shall keep the Distributor fully informed with regard to
its affairs, shall furnish the Distributor with a certified copy of all
financial statements and a signed copy of each report prepared by its
independent certified public accountants, and shall cooperate fully in the
efforts of the Distributor to sell the Units and in the performance by the
Distributor of all its duties under this Agreement.
4. (a) The Account will pay or cause to be paid:
(i) registration fees for registering its shares under
the Securities Act of 1933 (the "1933 Act") as required;
(ii) the expenses, including counsel fees, of preparing
registration statements and such other documents as the Account
believes are necessary for registering the Units with the
Securities and Exchange Commission (the "SEC") and such states as
are deemed necessary or appropriate;
(iii) expenses incident to preparing amendments to
registration statements of the Account under the 1933 Act and the
Investment Company Act of 1940, as amended (the "1940 Act");
(iv) expenses for preparing and setting in type all
prospectuses and the expense of supplying them to the then
existing Unitholders or beneficial owners of Units (including
owners
of Variable Contracts whose Contracts use one or more Sub-
Accounts as their funding vehicle); and
(v) expenses incident to the issuance of its Units such
as the cost of certificates, if any, taxes and fees of the
transfer agent for establishing Unitholder record accounts and
confirmations.
(b) The Distributor shall pay all of its own costs and expenses
connected with the offer and sale of Units ("Distribution
Expenses"), except that certain Distribution Expenses may be
reimbursed to the Distributor as provided in Section 5 hereof.
5. (a) Pursuant to a Brokerage Enhancement Plan (the "Plan") adopted by
the Board of Managers of the Account in accordance with Section 12(b) of the
1940 Act, Rule 12b-1 and other rules and regulations promulgated thereunder, as
the same may be, from time to time, issued or amended, the Account, on behalf of
a Sub-Account that has approved the Plan pursuant to Section 5 thereof, may
reimburse the Distributor, for Distribution Expenses as described in Section
5(b) hereof. Reimbursements shall be payable only from brokerage commissions
paid by the Sub-Account in connection with its portfolio transactions which have
been made available for use by the Sub-Account as described in the Plan.
Reimbursements to the Distributor shall be payable on a monthly basis. Such
reimbursement may be made only for the one year period commencing on the date
hereof and for each twelve month period (or portion thereof) thereafter, in
which the Plan is in effect for that Sub-Account.
(b) Distribution Expenses reimbursable hereunder shall include, but not
necessarily be limited to, the following costs:
(i) printing and mailing of Account prospectuses,
statements of additional information, any supplements thereto and
shareholder reports for existing and prospective Variable
Contract owners;
(ii) development, preparation, printing and mailing of
Account advertisements, sale literature and other promotional
materials describing and/or relating to the Sub-Accounts and
including materials intended for use within the Life Company, or
for broker-dealer only use or retail use;
(iii) holding or participating in seminars and sales
meetings designed to promote the distribution of Account Units;
(iv) marketing fees requested by broker-dealers who
sell Variable Contracts;
(v) obtaining information and providing explanations
to Variable Contract owners regarding Account investment
objectives and policies and other information about the Account
and the Sub-Accounts, including the performance of the Sub-
Accounts;
(vi) training sales personnel regarding sales of
Variable Contracts and underlying Units of the Account;
(vii) compensating broker-dealers and/or their
registered representatives in connection with the allocation of
cash values and premiums of the Variable Contracts to the
Account;
(viii) personal service and/or maintenance of Variable
Contract owner accounts with respect to Account Units
attributable to such accounts; and
(ix) financing any other activity that the Account's
Board of Managers determines is primarily intended to result in
the sale of Units.
(c) The Distributor shall submit annual reimbursable Distribution
Expense budgets to the Board of Managers of the Account. As soon as practicable
after the end of each calendar quarter, the Distributor shall submit to the
Board of Managers for ratification reports of Distribution Expenses reimbursed
as to each Sub-Account for that quarter. The Board of Managers will consider
each report at its next regular meeting after such report is submitted, and the
Distributor shall only retain those reimbursements that are approved by the
Board of Managers, including a majority of the "Disinterested Managers" (as that
term is defined in Section 7 hereof).
6. (a) The Account shall maintain a currently effective Registration
Statement on Form N-3 and shall file with the SEC such reports and other
documents as may be required under the 1933 Act and the 1940 Act or by the rule
and regulations of the SEC thereunder.
(b) The Account represents and warrants that its Registration
Statement, post-effective amendments, Prospectus and Statement of Additional
Information (excluding statements based upon written information furnished by
the Distributor expressly for inclusion therein) shall not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that all statements or information furnished to the Distributor, pursuant to
Section 3(b) hereof shall be true and correct in all material respects.
7. (a) This Agreement shall take effect on the date set forth above,
provided it has been approved by a vote of the majority of the Managers of the
Account and those
Managers of the Account who are not "interested persons" of the Account and who
have no direct or indirect financial interest in the operation of the Plan or
this Agreement (the "Disinterested Managers"), cast in person at a meeting
called for the purpose of voting on this Agreement. This Agreement shall remain
in full force and effect until May 1, 1999, and may be continued for twelve
month periods (or portions thereof) thereafter; provided that such continuance
shall be specifically approved annually by a majority of the Board of Managers
of the Account and by a majority of the Disinterested Managers. This Agreement
may be amended, with respect to any Sub-Account, with the approval of a majority
of the Board of Managers and by a majority of the Disinterested Managers.
(b) This Agreement, with respect to any Sub-Account, may be terminated, at
any time without payment of any penalty, by vote of a majority of the
Disinterested Managers or by vote of a majority of the outstanding voting
securities of that Sub-Account, or may be terminated by the Distributor, in
either case on not more than 60 days' written notice delivered personally by
registered mail, postage prepaid, to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) The terms "interested persons," "assignment" and "vote of a majority of
the outstanding voting securities" as used herein shall have the meanings given
to them in the 1940 Act.
8. In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties ("disabling conduct") hereunder on
the part of the Distributor (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity affiliated with
the Distributor or retained by it to perform or assist in the performance of its
obligations under this Agreement) the Distributor shall not be subject to
liability to the Account or to any Unitholder of the Sub-Accounts of the Account
for any act or omission in the course of, or connected with, rendering services
hereunder, or for any loss suffered by any of them in connection with the
matters to which this Agreement relates.
9. (a) The Account shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith), which the Distributor or such controlling person may
incur under the 1933 Act or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of a material fact
contained in the Registration Statement, as from time to time amended or
supplemented, any prospectus or annual or interim report to Unitholders of the
Account, or arising out of or based upon any omission, or alleged omission, to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, unless such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Account
in connection therewith by or on behalf of the Distributor; provided, however,
that in no case (i) is the indemnity of the Account in favor of the Distributor
and any such controlling persons to be deemed to protect such Distributor or any
such controlling persons thereof against any liability to the Account or its
security holders to which the Distributor or any such controlling persons would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of the reckless
disregard of their obligations and duties under this Agreement; or (ii) is the
Account to be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Distributor or any such controlling
persons, unless the Distributor or such controlling persons, as the case may be,
shall have notified the Account 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 the Distributor or such controlling persons
(or after the Distributor or such controlling persons shall have received notice
of such service on any designated agent), but failure to notify the Account of
any such 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 its
indemnity agreement contained in this paragraph. The Account will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the
Account elects to assume the defense, such defense shall be conducted by counsel
chosen by it and satisfactory to the Distributor or such controlling person or
persons, defendant or defendants in the suit. In the event the Account elects to
assume the defense of any such suit and retain such counsel, the Distributor or
such controlling person or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional counsel retained by them, but, in
case the Account does not elect to assume the defense of any such suit, it will
reimburse the Distributor or such controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Account shall promptly notify the Distributor of the
commencement of any litigation or proceeding against it or any of its officers
or directors in connection with the issuance or sale of any of the Units.
(b) The Distributor shall indemnify and hold harmless the Account and each
of its Managers and officers and each person, if any, who controls the Account
against any loss, liability, claim, damage or expense described in the foregoing
indemnity contained in paragraph 4.1, but only with respect to statements or
omissions made in reliance upon, and in conformity with, information furnished
to the Account in writing by or on behalf of the Distributor for use in
connection with the Registration Statement, as from time to time amended, or the
annual or interim reports to Unitholders. In case any action shall be brought
against the Account or any persons so indemnified, in respect of which indemnity
may be sought against the Distributor, the Distributor shall have the rights and
duties given to the Account, and the Account and each person so indemnified
shall have the rights and duties given to the Distributor by the provisions of
paragraph 4.1.
10. This Agreement is made by the Account, on behalf of each Sub-Account,
pursuant to authority granted by the Board of Managers, and the obligations
created hereby are not binding on any of the Managers or Unitholders of the
Account individually, but bind only the property of the Account.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed by their duly authorized officers and under their respective seals
on the day and year first above written.
PFL ENDEAVOR TARGET ACCOUNT
Attest:
By:
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., President
ENDEAVOR GROUP
Attest:
By:
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Chief Executive Officer
SCHEDULE A
The Distributor shall act as distributor for shares of the following Sub-
Accounts of PFL Endeavor Target Account:
The Dow Target 5 Sub-Account
The Dow Target 10 Sub-Account