<PAGE>
As filed with the Securities and Exchange Registration No.33-62473
Commission on March 4, 1996 Registration No. 811-2512
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 2
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
- --------------------------------------------------------------------------------
Variable Annuity Account B of Aetna Life Insurance and Annuity Company
(EXACT NAME OF REGISTRANT)
Aetna Life Insurance and Annuity Company
(NAME OF DEPOSITOR)
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(NAME AND ADDRESS OF AGENT FOR SERVICE)
- --------------------------------------------------------------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective on March 8, 1996.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant filed a Rule 24f-2 Notice for the fiscal year ended December 31, 1995
on February 29, 1996.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION
<S> <C> <C>
1 Cover Page . . . . . . . . . . . . . . . . . . . . Cover Page
2 Definitions. . . . . . . . . . . . . . . . . . . . Glossary of Special Terms
3 Synopsis or Highlights . . . . . . . . . . . . . . Prospectus Summary; Fee Table
4 Condensed Financial Information. . . . . . . . . . Not Applicable
5 General Description of Registrant, Depositor, The Company; Variable
and Portfolio Companies. . . . . . . . . . . . . . Annuity Account B; The Funds
6 Deductions and Expenses. . . . . . . . . . . . . . Charges and Deductions;
Distribution; Commissions and
Distribution Expenses
7 General Description of Variable Annuity
Contracts. . . . . . . . . . . . . . . . . . . . . Contract Rights; Miscellaneous
8 Annuity Period . . . . . . . . . . . . . . . . . . Annuity Period
9 Death Benefit. . . . . . . . . . . . . . . . . . . Death Benefit
10 Purchases and Contract Value . . . . . . . . . . . Purchase; Certificate Holder's
Account Values
11 Redemptions. . . . . . . . . . . . . . . . . . . . Contract Rights - Withdrawals;
Right to Cancel
12 Taxes. . . . . . . . . . . . . . . . . . . . . . . Tax Status
13 Legal Proceedings. . . . . . . . . . . . . . . . . Miscellaneous - Legal Proceedings
14 Table of Contents of the Statement of Statement of Additional
Additional Information . . . . . . . . . . . . . . Information - Table of Contents
<PAGE>
<CAPTION>
FORM N-4
ITEM NO. PART B (STATEMENT OF ADDITIONAL INFORMATION) LOCATION
<S> <C> <C>
15 Cover Page . . . . . . . . . . . . . . . . . . . . Cover page
16 Table of Contents. . . . . . . . . . . . . . . . . Table of Contents
17 General Information and History. . . . . . . . . . General Information and History
18 Services . . . . . . . . . . . . . . . . . . . . . General Information and
History; Independent Auditors
19 Purchase of Securities Being Offered . . . . . . . Offering and Purchase of
Contracts
20 Underwriters . . . . . . . . . . . . . . . . . . . Offering and Purchase of
Contracts
21 Calculation of Performance Data. . . . . . . . . . Performance Data
22 Annuity Payments . . . . . . . . . . . . . . . . . Annuity Payments
23 Financial Statements . . . . . . . . . . . . . . . Financial Statements
</TABLE>
PART C (OTHER INFORMATION)
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
The Prospectus and the Statement of Additional Information for The New
Retirement--Nicholas-Applegate/Aetna Annuity are incorporated into Part A and
Part B, respectively, by reference to the Registrant's Pre-Effective Amendment
No. 1 as filed electronically with the Securities and Exchange Commission on
February 16, 1996.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account B:
-Independent Auditors' Report
-Statement of Assets and Liabilities as of December 31, 1994
-Statement of Operations for the year ended December 31, 1994
-Statements of Changes in Net Assets for the years ended
December 31, 1994 and 1993
-Notes to Financial Statements
-Unaudited Statement of Assets and Liabilities as of September 30,
1995
-Unaudited Statement of Operations for the nine-month period ended
September 30, 1995
-Unaudited Statements of Changes in Net Assets for the nine-month
period ended September 30, 1995 and year ended December 31, 1994
-Notes to Financial Statements
Financial Statements of the Depositor:
-Independent Auditors' Report
-Consolidated Statements of Income for the years ended December
31, 1994, 1993 and 1992
-Consolidated Balance Sheets as of December 31, 1994 and 1993
-Consolidated Statements of Changes in Shareholder's Equity for
the years ended December 31, 1994, 1993 and 1992
-Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
-Notes to Financial Statements
-Unaudited Consolidated Statements of Income for the nine-month
periods ended September 30, 1995 and 1994
-Unaudited Consolidated Balance Sheets as of September 30, 1995
and December 31, 1994
-Unaudited Consolidated Statements of Changes in Shareholder's
Equity for the nine-month periods ended September 30, 1995 and
1994
-Unaudited Consolidated Statements of Cash Flows for the nine-
month periods ended September 30, 1995 and 1994
-Condensed Notes to Consolidated Financial Statements
<PAGE>
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance and
Annuity Company establishing Variable Annuity Account B(1)
(2) Not applicable
(3.1) Form of Selling Agreement(2)
(4) Form of Variable Annuity Contracts (G-CDA-IC(NQ)), (GMCC-IC(NQ)),
(G-CDA-IC(IR)), (GMCC -IC(IR)), (I-CDA-IC(NQ/MP)), (I-CDA-
IC(IR/MP))(2)
(5) Form of Variable Annuity Contract Application (300-MAR-IB)(2)
(6) Certificate of Incorporation and By-Laws of Depositor(3)
(7) Not applicable
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Nicholas-Applegate Series Trust, and Nicholas-
Applegate Capital Management(4)
(8.2) Form of Marketing and Services Agreement Among Aetna Life
Insurance and Annuity Company, Nicholas-Applegate Capital
Management and Nicholas-Applegate Securities
(9) Opinion of Counsel
(10.1) Consent of Independent Auditors
(10.2) Consent of Counsel (included in exhibit 24(b)(9))
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data(5)
(14) Financial Data Schedule (See Exhibit 27)(5)
(15.1) Powers of Attorney(6)
(15.2) Authorization for Signatures(7)
1. Incorporated by reference to Registration Statement on Form N-4 (File No. 2-
52448) filed February 28, 1986.
2. Incorporated by reference to Post-Effective Amendment No. 15 to Registration
Statement on Form N-4 (File No. 33-34370) filed on April 19, 1994.
3. Incorporated by reference to Post-Effective Amendment No. 58 to Registration
Statement on Form N-4 (File No. 2-52449) filed on February 28, 1994.
4. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N1-A (File No. 33-94896), as filed electronically, on
January 24, 1996.
5. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-62473), as filed electronically, on
February 16, 1996.
6. The Power of Attorney for Timothy A. Holt is incorporated by reference to
Post-Effective Amendment No. 21 to Registration Statement on Form N-4 (File
No. 33-34370), as filed electronically, on February 27, 1996. The Powers of
Attorney for all other signatories are incorporated by reference to Pre-
Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 33-
75982), as filed electronically, on February 20, 1996.
<PAGE>
7. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-79122) filed electronically on August 16,
1995.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL
BUSINESS ADDRESS* POSITIONS AND OFFICES WITH DEPOSITOR
Daniel P. Kearney Director and President
Christopher J. Burns Director and Senior Vice President
Laura R. Estes Director and Senior Vice President
Timothy A. Holt Director, Senior Vice President and Chief
Financial Officer
Gail P. Johnson Director and Vice President
John Y. Kim Director and Senior Vice President
Shaun P. Mathews Director and Vice President
Glen Salow Director and Vice President
Creed R. Terry Director and Vice President
Zoe Baird Senior Vice President and General Counsel
Susan E. Schechter Corporate Secretary and Counsel
Eugene M. Trovato Vice President and Treasurer, Corporate
Controller
Diane Horn Vice President and Chief Compliance Officer
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Incorporated herein by reference to Item 26 to Post-Effective Amendment
No. 5 to Registration Statement on Form N-4 (File No. 33-75982), as filed
electronically on February 20, 1996.
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 31, 1995, there were 33,702 individuals holding interests in
variable annuity contracts funded through Account B.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents, and
certain other defined individuals against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses actually incurred in connection with
proceedings against the corporation. The corporation's obligation to provide
such indemnification does not apply unless (1) the individual is successful on
the merits in the defense of any such proceeding; or (2) a determination is made
(by a majority of the board of directors not a party to the proceeding by
written consent; by independent legal counsel selected by a majority of the
directors not involved in the proceeding; or by a majority of the shareholders
not involved in the proceeding) that the individual acted in good faith and in
the best interests of the corporation; or (3) the court, upon application by the
individual, determines in view of all the circumstances that such person is
reasonably entitled to be indemnified.
C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either greater
or less than that authorized by the statute, e.g., pursuant to its certificate
of incorporation, bylaws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Consistent with the statute, Aetna Life and Casualty Company has procured
insurance from Lloyd's of London and several major United States excess insurers
for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor, which supplements the indemnification
rights provided by C.G.S. Section 33-320a to the extent such coverage does not
violate public policy.
ITEM 29. PRINCIPAL UNDERWRITER
(a) In addition to serving as the principal underwriter for the Registrant,
Aetna Life Insurance and Annuity Company (ALIAC) also acts as the
principal underwriter for Variable Life Account B and Variable Annuity
Accounts C and G (separate accounts of ALIAC registered as unit
investment trusts), and Variable Annuity Account I (a separate account of
Aetna Insurance Company of America registered as a unit investment
trust). Additionally, ALIAC is the investment adviser for Aetna Variable
Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Investment
Advisers Fund, Inc., Aetna GET Fund, Aetna Series Fund, Inc. and Aetna
Generation Portfolios, Inc. ALIAC is also the depositor of Variable Life
Account B and Variable Annuity Accounts C and G.
<PAGE>
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1994:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
- ----------- ----------- ---------------- ----------- -------------
<C> <C> <C> <C> <C>
Aetna Life $269,230 $9,036,662
Insurance and
Annuity
Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and expense
risk guarantees and contract charges assessed to cover costs incurred in the
sales and administration of the contracts issued under Account B.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All records concerning contract owners of Variable Annuity Account B are
located at the home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on
Form N-4 as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than
sixteen months old for as long as payments under the variable annuity
contracts may be accepted;
(b) to include as part of any application to purchase a contract offered by a
prospectus which is part of this registration statement on Form N-4, a
space that an applicant can check to request a Statement of Additional
Information; and
<PAGE>
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) Insofar as indemnification for liability arising under the Securities Act
of 1933 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 of 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.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance and
Annuity Company, has duly caused this Pre-Effective Amendment No. 2 to its
Registration Statement on Form N-4 (File No. 33-62473) to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Hartford,
State of Connecticut, on the 4th of March, 1996.
VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY
(REGISTRANT)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: Daniel P. Kearney*
-----------------------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, as amended, this Pre-Effective
Amendment No. 2 to Registration Statement on Form N-4 (File No. 33-62473) has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Daniel P. Kearney* Director and President )
- --------------------------- (principal executive officer) )
Daniel P. Kearney )
)
Timothy A. Holt* Director, Senior Vice President and)
- --------------------------- Chief Financial Officer )
Timothy A. Holt )
Christopher J. Burns* Director ) March
- ---------------------------
Christopher J. Burns ) 4, 1996
)
Laura R. Estes* Director )
- ---------------------------
Laura R. Estes
)
Gail P. Johnson* Director )
- ---------------------------
Gail P. Johnson )
<PAGE>
John Y. Kim* Director )
- ---------------------------
John Y. Kim )
)
Shaun P. Mathews* Director )
- ---------------------------
Shaun P. Mathews )
)
Glen Salow* Director )
- ---------------------------
Glen Salow )
)
Creed R. Terry* Director )
- --------------------------- )
Creed R. Terry )
Eugene M. Trovato* Vice President and Treasurer, )
- --------------------------- Corporate Controller )
Eugene M. Trovato
/s/ Julie E. Rockmore
- -------------------------------------
Julie E. Rockmore
*Attorney-in-Fact
</TABLE>
<PAGE>
VARIABLE ANNUITY ACCOUNT B
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
99-B.1 Resolution of the Board of Directors of Aetna Life
Insurance and Annuity Company establishing Variable
Annuity Account B *
99-B.3.1 Form of Selling Agreement *
99-B.4 Form of Variable Annuity Contracts *
99-B.5 Form of Variable Annuity Contract Application *
99-B.6 Certificate of Incorporation and By-Laws of Depositor *
99-B.8.1 Fund Participation Agreement between Aetna Life
Insurance and Annuity Company and Nicholas-Applegate
Series Trust, and Nicholas-Applegate Capital Management *
99-B.8.2 Form of Marketing and Services Agreement among Aetna
Life Insurance and Annuity Company, Nicholas-Applegate
Capital Management and Nicholas-Applegate Securities --------
99-B.9 Opinion of Counsel --------
99-B.10.1 Consent of Independent Auditors --------
99-B.10.2 Consent of Counsel (See item 99-B.9) *
99-B.13 Computation of Performance Data *
99-B15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
(27) Financial Data Schedule *
*Incorporated by reference
<PAGE>
Page 1
EXHIBIT 99-B.8.2
RESTATED MARKETING AND SERVICES AGREEMENT
AMONG
AETNA LIFE INSURANCE AND ANNUITY COMPANY
AND
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
AND
NICHOLAS-APPLEGATE SECURITIES
DATED
FEBRUARY 20, 1996
<PAGE>
Page 2
RESTATED
MARKETING AND SERVICES AGREEMENT
THIS RESTATEMENT is made, by and among AETNA LIFE INSURANCE AND ANNUITY
COMPANY, a Connecticut insurance company and registered broker-dealer,
referred to herein as "ALIAC," with principal offices at 151 Farmington
Avenue, Hartford, Connecticut 06156, and NICHOLAS-APPLEGATE CAPITAL
MANAGEMENT ("NACM"), a California limited partnership and registered
investment adviser, and NICHOLAS-APPLEGATE SECURITIES ("NAS"), a California
limited partnership and registered broker-dealer (together referred to herein
as "NICHOLAS-APPLEGATE"), each with its principal place of business at 600
West Broadway, San Diego, California 92101. This Restatement shall be
effective as of the date both parties hereto have executed this Restated
Agreement, as noted on the signature pages.
WITNESSETH:
WHEREAS, ALIAC is a stock life insurance company authorized to
conduct an insurance business in all fifty (50) states and the District of
Columbia; and
WHEREAS, Nicholas-Applegate has expertise in the marketing and
servicing of investment products; and
WHEREAS, the exclusive principal underwriter and distributor for
the Contracts ("Underwriter") shall be ALIAC, a registered broker-dealer
authorized to conduct business in all fifty (50) states and the District of
Columbia, and ALIAC shall perform all functions relating to the acceptance of
applications for the Contracts; and
WHEREAS, the parties are desirous of entering into a relationship
whereby Nicholas-Applegate will provide product development, marketing and
marketing support services in connection with certain variable insurance
products issued by ALIAC supported by separate accounts whose underlying
investment options will be registered investment companies advised or
administered by Nicholas-Applegate or an Affiliate, and certain registered
investment companies advised and administered by ALIAC or an Affiliate and a
guaranteed option account managed by the General Account of ALIAC; and
WHEREAS, this Restatement is merely a restatement of the agreement
of the parties;
NOW, THEREFORE, it is agreed as follows:
<PAGE>
Page 3
SECTION 1
DEFINITIONS
1.1 AFFILIATE.
"Affiliate" shall mean, with respect to a person, any other person
controlling, controlled by, or under common control with, such person in
accordance with Section 2(a)(3)(c) and Section 2(a)(9) of the Investment
Company Act of 1940 ("1940 Act").
1.2 AGENT.
"Agent" shall mean those individuals who are appropriately licensed
under applicable insurance and securities statutes and regulations to sell
the Contracts in all jurisdictions where required to be so licensed and who
are appointed by ALIAC.
1.3 CONTRACTS.
"Contracts" shall mean the class or classes of variable annuity
contracts, which may include certain guaranteed account options managed as a
non-insulated, non-unitized separate account of ALIAC's General Account, as
set forth on Schedule 1 to this Agreement as in effect at the time this
Agreement is executed, and such other variable insurance products and
guaranteed account products that may be added to Schedule 1 from time to time
in accordance with Section 2.2.1 of this Agreement. For this purpose and
under this Agreement generally, a "Class of Contracts" shall mean those
Contracts issued by ALIAC on the same policy form or forms and covered by the
same Securities and Exchange Commission ("SEC") registration statement.
1.4 DISTRIBUTOR.
"Distributor" shall mean an entity registered as a broker-dealer and
licensed as a life insurance agent or affiliated with an entity so licensed,
and that has executed a Selling Agreement with ALIAC pursuant to which it is
authorized to distribute the Contracts as contemplated by Section 3.4 of this
Agreement.
1.5 FUND.
"Fund" shall mean an investment company advised or administered by
Nicholas-Applegate or an Affiliate or ALIAC or an Affiliate, as set forth on
Schedule 2 to this Agreement and in effect at the time this Agreement is
executed, and such other investment companies that may be added to Schedule 2
from time to time in accordance with Section 2.2.3 of this Agreement.
1.6 GENERAL ACCOUNT.
"General Account" shall mean the general assets of ALIAC other than
those allocated
<PAGE>
Page 4
to a Separate Account.
1.7 SEPARATE ACCOUNT.
"Separate Account" shall mean each insulated unitized Separate Account
of ALIAC registered under the 1940 Act and whose securities are registered
under the Securities Act of 1933 ("1933 Act") specified on Schedule 3 to this
Agreement, as in effect at the time this Agreement is executed, and such
other separate accounts of ALIAC that may be added from time to time to
Schedule 3 to this Agreement in accordance with Section 2.2.2, each of which
is established and operated in compliance with any applicable insurance
regulations of all necessary jurisdictions.
1.8 SUBACCOUNTS OR SEPARATE ACCOUNT SUBACCOUNTS.
"Subaccounts" or "Separate Account Subaccounts" shall mean the
subaccounts of the Separate Accounts available under the Contracts, which
shall include those Subaccounts named on Schedule 3 to this Agreement as in
effect at the time this Agreement is executed, and such other Subaccounts
that may be added to Schedule 3 in accordance with Section 2.2.3 of this
Agreement.
1.9 TERRITORY.
"Territory" shall mean the fifty (50) states of the United States and
the District of Columbia.
SECTION 2
SCOPE OF AGREEMENT
2.1 THE SEPARATE ACCOUNTS AND THE FUNDS.
2.1.1 SEPARATE ACCOUNTS AND SUBACCOUNTS. The Separate Account
Subaccounts for the Contracts shall initially consist of the subaccounts set
forth on Schedule 3 hereto. Each Separate Account Subaccount shall invest in
a corresponding Fund or series of a Fund ("Fund Series") as set forth on
Schedule 2 to this Agreement.
2.1.2 THE FUNDS. Schedule 2 lists the Funds and, in the case of a
Fund of the "series" type, the Series of such a Fund that have been made
available as investment options for each class of Contracts. Each Fund
listed on Schedule 2, as in effect at the time this Agreement is executed,
has been established and a registration statement has been filed with the
SEC. Additional Funds and Fund Series may be added to Schedule 2 from time
to time in accordance with Section 2.2.3 of this Agreement.
Nicholas-Applegate understands and agrees that with regard to the Funds, it
must at all times maintain one (1) subadviser that is not Nicholas-Applegate
or an Affiliate of Nicholas-Applegate.
<PAGE>
Page 5
2.2 ADDING CLASSES OF CONTRACTS, SEPARATE ACCOUNTS, SEPARATE ACCOUNT
SUBACCOUNTS, FUNDS AND FUND SERIES.
Subject to the following provisions of this Section 2.2, the parties to
this Agreement may by mutual agreement amend the Schedules to this Agreement
from time to time for the purposes described in the following subsections
2.2.1 through 2.2.3. Notwithstanding any provision to the contrary, nothing
in this Section 2.2 shall prohibit a party from taking action required by
applicable federal or state law, or require a party to take action prohibited
by applicable federal or state law.
2.2.1 ADDING CLASSES OF CONTRACTS. Although the parties contemplate
a long-term relationship, at the time this Agreement is executed, the parties
have not agreed upon other classes of Contracts to be serviced during the
course of their relationship other than the initial classes of Contracts
described in Section 1.3. Nonetheless, the parties intend for this Agreement
to cover any additional classes of Contracts to which ALIAC and
Nicholas-Applegate may agree to have Nicholas-Applegate provide marketing and
marketing support services during the course of their relationship.
Accordingly, the parties by mutual agreement may amend the Schedules to this
Agreement to add classes of Contracts, and the provisions of this Agreement
shall be equally applicable to each such added class, unless the context
otherwise requires. Notwithstanding the foregoing, ALIAC shall neither be
required nor expected to add any additional contracts subject to the terms of
this Agreement during the term of this Agreement, nor shall ALIAC have any
right to use a Nicholas-Applegate Fund or its series as an underlying
investment medium for any variable insurance products, except as provided
under this Agreement or as the parties hereto may otherwise agree.
2.2.2 ADDING SEPARATE ACCOUNTS. The parties hereto by mutual
agreement may amend the Schedules to this Agreement to add new Separate
Accounts, which may be used to support new classes of Contracts or as
alternative or substitute Separate Accounts for an outstanding class or
classes of Contracts.
2.2.3 ADDING FUNDS, FUND SERIES AND SEPARATE ACCOUNT SUBACCOUNTS.
The parties hereto by mutual agreement may amend the Schedules to this
Agreement to add additional Funds, including new series of a Fund, and
Separate Account Subaccounts, and the provisions of this Agreement shall be
equally applicable to each such added Fund, Series or Separate Account
Subaccount, unless the context otherwise requires.
2.3 NON-EXCLUSIVE.
This Agreement does not create an exclusive relationship between ALIAC
and Nicholas-Applegate, and each party shall be free to enter into
relationships with third parties.
2.4 INDEPENDENT CONTRACTOR.
Each of the parties will act as an independent contractor under the
terms of this Agreement. Nothing contained in this Agreement creates or is
intended to create the relationship of employer-employee, partnership or
association between ALIAC and
<PAGE>
Page 7
Nicholas-Applegate.
SECTION 3
SERVICING AND MARKETING THE CONTRACTS
3.1 SERVICES.
In consideration of the fees to be paid pursuant to Section 9 of this
Agreement, and in accordance with Schedules 4 and 6 hereof,
Nicholas-Applegate and ALIAC shall perform the services stated in this
Agreement, including but not limited to the specific services set forth
below. It is the intention of the parties that Nicholas-Applegate shall
provide services to facilitate the marketing of the Contracts, but that
Nicholas-Applegate, its agents and representatives shall not offer or sell
the Contracts or market the Contracts in such a manner that
Nicholas-Applegate could be considered a Distributor or the Underwriter of
the Contracts. However, certain agents and representatives of
Nicholas-Applegate may become licensed as insurance agents and may be
appointed by ALIAC as its Agents. It is understood by the parties that ALIAC
shall serve as Underwriter of the Contracts. From time-to-time, the services
to be provided by Nicholas-Applegate or ALIAC may be modified or additional
services added by mutual written agreement.
3.2 NICHOLAS-APPLEGATE SERVICES REGARDING THE CONTRACTS. During the term of
this Agreement, Nicholas-Applegate shall, with regard to the Contracts:
3.2.1 DEVELOPMENT OF THE CONTRACTS. Nicholas-Applegate shall assist
ALIAC in the design and development of the Contracts. If a new class of
Contract is developed, this process shall include documented market research
by both parties which indicates that the proposed provisions of a Contract
are designed to be positively received in the marketplace. If a new class of
Contract is developed, the parties anticipate a period of three (3) months
from the time specifications are approved by both parties until a filing can
be made with necessary regulatory authorities.
3.2.2 SALES AND MARKETING SERVICES. Nicholas-Applegate shall provide
the following sales and marketing services:
A. RECRUIT CURRENT DISTRIBUTORS. Nicholas-Applegate shall recruit
distributors with whom ALIAC currently has a Selling Agreement and obtain
verbal commitments from such distributors to agree to add the Contracts to a
Selling Agreement. Nicholas-Applegate shall provide ALIAC with written
documentation of all such verbal commitments prior to ALIAC sending such
distributors a letter acknowledging the addition of the Contracts to the
Selling Agreement. ALIAC shall use its reasonable best efforts to facilitate
this process.
B. RECRUIT PROSPECTIVE DISTRIBUTORS. Nicholas-Applegate shall
also recruit prospective distributors and assist ALIAC in developing
relationships with prospective distributors through identification of key
contacts and firm organizations. Nicholas-Applegate
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shall use its reasonable best efforts to have such prospective distributors
execute a Selling Agreement with ALIAC. ALIAC shall use its best efforts to
facilitate this process and will establish relationships with key
administrative contacts at each Distributor following the signing of a
Selling Agreement.
C. APPOINTMENT OF AGENTS. Nicholas-Applegate shall provide
reasonable assistance to ALIAC, if necessary, in securing the appointment of
wholesalers, the Distributors and their licensed representatives as Agents by
facilitating the submission of necessary documentation to ALIAC.
D. TRAINING. After receiving appropriate introductory training
from ALIAC (as described in Section 3.3.2.C. below), and follow-up training,
if necessary, from ALIAC, Nicholas-Applegate shall assist the Distributors in
the training of Agents in sales techniques and provide them with information
concerning the Contracts and the Funds. Nicholas-Applegate shall answer all
questions from Agents concerning the Contracts and the Funds and shall
provide training to wholesalers concerning the Contracts and the Funds.
ALIAC will provide reasonable necessary assistance to Nicholas-Applegate in
responding to questions from Agents concerning the Contracts and the Funds.
E. DESIGN AND PREPARE MATERIALS. Nicholas-Applegate shall design
and prepare promotional, sales, advertising and training materials.
Nicholas-Applegate will ensure that all materials directed to Distributors
and Agents provide an "800" Nicholas-Applegate service desk number.
Nicholas-Applegate shall maintain an appropriate inventory and provide
fulfillment for all promotional, sales, advertising and training materials to
the wholesalers, Distributors and Agents, including Contracts, forms,
prospectuses and the contents of any selling kits used by the Distributors.
Fulfillment shall include the stocking of such materials, but specifically
shall not include the production of the materials specified in Section 3.3.3
of this Agreement.
3.2.3 MARKETING SUPPORT -- "800" SERVICE DESK. Nicholas-Applegate
shall maintain an "800" service desk to answer questions from Distributors
and Agents concerning the Contracts and the Funds. After receiving
appropriate introductory training from ALIAC (as described in Section
3.3.2.c. below), and follow-up training, if necessary, from ALIAC,
Nicholas-Applegate shall train its telephone support staff so they are able
to answer questions from Distributors and Agents concerning the Contracts and
the Funds (including monthly information about Fund performance.)
Nicholas-Applegate will ensure that all telephone support staff are
appropriately licensed. Nicholas-Applegate also shall provide wholesalers
with appropriate feedback regarding calls and fulfillment activity and shall
distribute monthly Fund performance reports to them as well as to
Distributors and Agents.
3.2.4 GUARANTEED ACCOUNT OPTION. After receiving appropriate
introductory training from ALIAC on the guaranteed account option (as
described in Section 3.3.5 below), and follow-up training, if necessary, from
ALIAC, Nicholas-Applegate shall provide administrative services and support
to the Distributors in connection with the guaranteed account options. This
shall include answering all questions of Distributors and Agents through
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the "800" service desk (including the appropriate training of the telephone
support staff). Nicholas-Applegate shall be responsible for reasonable
notification of all Distributors of changes in rates or terms of the
guaranteed account option.
3.2.5 REGULATORY FILINGS. Nicholas-Applegate shall, with any
necessary assistance from ALIAC, and in accordance with all applicable laws,
rules and regulations: (i) annually prepare, print and file with all
appropriate regulatory authorities registration statements for the Funds,
including the prospectuses and statements of additional information; (ii) if
necessary, prepare, print and file with all appropriate regulatory
authorities any amendments to the registration statements for the Funds,
including the prospectuses and statements of additional information to
reflect any changes in the Contracts or the Fund(s); (iii) prepare, print,
and provide to all shareholders of the Funds and file with all appropriate
regulatory authorities all proxy solicitation or voting instruction materials
required under the federal securities laws to be provided to Contract owners;
and (iv) prepare, print and provide to all shareholders of the Funds and file
with all appropriate regulatory authorities all semi-annual and annual
reports required by Rule 30d-1 under the 1940 Act to be provided to
shareholders of the Fund.
3.2.6 OTHER SERVICES. Nicholas-Applegate shall provide such other
related services as requested by ALIAC and agreed to in writing by
Nicholas-Applegate; but in no event shall Nicholas-Applegate or its
Affiliates provide any customer services, as specified in Section 3.3.6.F.,
or engage in any activities that may be considered sales activities involving
a customer.
3.3 ALIAC SERVICES REGARDING THE CONTRACTS. During the term of this
Agreement, ALIAC shall, with regard to the Contracts:
3.3.1 DEVELOPMENT OF THE CONTRACTS. ALIAC shall design and develop the
Contracts with Nicholas-Applegate's assistance pursuant to Section 3.2.1 of
this Agreement. If a new class of Contract is developed, this process shall
include documented market research which indicates that the proposed
provisions of a Contract are designed to be positively received in the
marketplace. If a new class of Contract is developed, the parties anticipate
a period of three (3) months from the time specifications are approved by
both parties until a filing can be made with necessary regulatory
authorities.
3.3.2 SALES AND MARKETING SERVICES. ALIAC shall provide the following
sales and marketing services:
A. DISTRIBUTORS. Following the signing of a Selling Agreement,
ALIAC shall develop, with Nicholas-Applegate's assistance, relationships with
Distributors through identification of key contacts and firm organizations.
ALIAC will use its reasonable best efforts to enable current Distributors to
sell the Contracts and to assist Nicholas-Applegate in recruiting prospective
distributors.
B. APPOINTMENTS. ALIAC shall initiate the process for obtaining
the appointment of wholesalers, the Distributors and their licensed
registered representatives as
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Agents of ALIAC. ALIAC shall provide Nicholas-Applegate at least monthly or
bi-weekly, if reasonably practicable, reports concerning appointment activity.
C. TRAINING. ALIAC shall provide Nicholas-Applegate with
appropriate introductory training and follow-up training, if necessary,
concerning the Contracts to enable Nicholas-Applegate to provide the training
described in Section 3.2.2.D. and Section 3.2.3. ALIAC shall also maintain a
"producer support team" to provide assistance to Nicholas-Applegate's
"producer support team" to answer questions concerning the Contracts.
3.3.3. DESIGN AND PREPARE MATERIALS. ALIAC shall design and prepare
all Contract forms, application and enrollment and other necessary forms in
support of the Contracts, and prospectuses for the Contracts and the Funds.
The agreed-upon expense to be assumed by ALIAC in designing, preparing and
producing these materials will be in accordance with the pricing specified on
Schedule 4.
3.3.4 MARKETING AND ADMINISTRATIVE SUPPORT. ALIAC shall provide the
following marketing and administrative support services:
A. "800" SERVICE DESK. ALIAC shall maintain an "800" service desk
for customers to provide answers to all inquiries and to provide forms for
processing changes, withdrawals, etc.
B. DISTRIBUTORS AND AGENTS. ALIAC shall provide to
Nicholas-Applegate, the Distributors and/or their Agents information
concerning customers, current account values, fund transfers, fund
performance, status of any pending new business or 1035 exchanges.
3.3.5 GUARANTEED ACCOUNT OPTION. ALIAC shall provide
Nicholas-Applegate with appropriate introductory training and follow-up
training, if necessary, concerning the Contracts and the guaranteed account
options available under the Contracts to enable Nicholas-Applegate to provide
the training described in Section 3.2.4.
3.3.6 OTHER SERVICES.
A. GENERAL. ALIAC shall provide Nicholas-Applegate with such
sales activity, producer and initial and subsequent asset allocation or other
investment election information as is reasonably necessary for
Nicholas-Applegate to perform the services required of it by this Agreement.
ALIAC shall provide such other related services as requested by
Nicholas-Applegate and agreed to in writing by ALIAC.
B. INSURANCE SERVICES. To the extent that Nicholas-Applegate in
unusual circumstances and for a limited period of time requires the
reasonable services of an Agent to perform certain activities requiring
insurance licensing, ALIAC or an Affiliate will use its reasonable best
efforts to assist Nicholas-Applegate in providing such services.
C. REGULATORY FILINGS. ALIAC shall, with any necessary
assistance from
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Nicholas-Applegate, and in accordance with all applicable laws, rules and
regulations: (i) annually prepare, print and file with all appropriate
regulatory authorities registration statements for the Contracts, including
the prospectuses and statements of additional information; (ii) if necessary,
prepare, print and file with all appropriate regulatory authorities any
amendments to the registration statements for the Contracts, including the
prospectuses and statements of additional information to reflect any changes
in the Contracts or the Fund(s); (iii) provide to all Contract owners all
proxy solicitation or voting instruction materials after receiving from
Nicholas-Applegate all necessary proxy solicitation or voting instruction
materials required under the federal securities laws to be provided to
Contract owners; and (iv) prepare (as appropriate), file, as required, with
all appropriate regulatory authorities, and provide to all Contract owners
all semi-annual and annual reports required by Rule 30d-2 under the 1940 Act
to be provided to Contract owners, after receiving from Nicholas-Applegate
all semi-annual and annual reports required by Rule 30d-1 under the 1940 Act
to be provided to ALIAC as a shareholder of the Funds.
D. CUSTOMER REPORTS. ALIAC, in accordance with all applicable
laws, rules and regulations, shall provide to all Contract owners: (i)
confirmation of all financial transactions with Contract owners; (ii)
quarterly statements; (iii) appropriate federal and state tax forms; and (iv)
annual amendments to the prospectuses and statements of additional
information for the Contracts and the Funds, if required, and shall mail all
necessary proxy solicitation or voting instructions materials, and all
semi-annual and annual reports required by Rule 30d-2 under the 1940 Act.
E. CUSTOMER SERVICES. ALIAC, in accordance with all applicable
laws, rules and regulations, shall: (i) prepare and provide to all Contract
owners confirmations and all other necessary Contract owner communications,
and (ii) provide an "800" number and voice response system for Contract
owners. ALIAC also shall provide the following services in support of the
Contracts: (i) process all new account applications (including mailing of all
issue documents to the Distributor); (ii) apply initial and subsequent
premiums as specified by Contract owners; (iii) process all financial
transactions with respect to the Contracts, such as withdrawals, death
claims, cancellations, transactions under the systematic withdrawal program
and any bank plans; (iv) support elections for asset allocation and annual
rebalancing elections under the Contracts; and (v) provide general support
services for the Contracts.
F. DISTRIBUTOR SUPPORT SERVICES. ALIAC shall: (i) develop
procedures and appropriate documentation with respect to commission
processing; (ii) provide bi-weekly commission statements and checks for
delivery by ALIAC to the appropriate Distributor, assuming net commission
arrangements are not in place; (iii) develop procedures to receive and
respond to Distributor and Agent inquiries concerning commission payments;
(iv) provide appropriate federal and state tax forms to each Distributor in
compliance with applicable federal and state laws, rules and regulations and
(v) with the necessary assistance of Nicholas-Applegate, provide, within a
reasonable period of time, statement, asset allocation and other service
upgrades designed to meet competitive industry standards. For purposes of
this Section 3.3.6.F., "competitive industry standards" means standards
applicable to variable annuities sold through wirehouses and broker-dealers.
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3.4 SELLING AGREEMENTS.
ALIAC shall act as the Underwriter of the Contracts in the Territory of
the Contracts. ALIAC shall, using its reasonable best judgment, enter into
separate written Selling Agreements with Distributors that ALIAC considers
capable and appropriate in order to authorize them to sell the Contracts.
Distributors that have already executed Selling Agreements with ALIAC that do
not include the Contracts in the Selling Agreements, will not be considered
authorized distributors for purposes of this Agreement until an
acknowledgement letter is sent to them by ALIAC. ALIAC will provide
Nicholas-Applegate, on a monthly basis, a list of all Distributors that have
entered into a Selling Agreement with ALIAC with respect to the Contracts.
3.5 MARKETING MATERIALS.
The parties recognize that the following general rules shall apply to
promotional, sales, advertising and training material; provided, however,
that the following general rules shall not prohibit a party from taking
action required by applicable federal or state law, or require a party to
take action prohibited by applicable federal or state law.
3.5.1 RESPONSIBLE PARTIES. Nicholas-Applegate shall be primarily
responsible for the design and preparation of promotional, sales, advertising
and training material. It is understood that, as a general matter,
Nicholas-Applegate shall initiate and design all forms of promotional, sales
advertising and training material relating to the Contracts, although ALIAC
also may do so. Such promotional, sales, advertising and training material
shall be prepared and reviewed in light of all applicable laws, rules and
regulations. All such material shall be approved in writing by each party
and the parties agree to respond to requests for such approval on a prompt
and timely basis, not exceeding ten (10) business days for the initial review
of such materials, and five (5) business days for any subsequent review of
such materials.
3.5.2 PROCEDURES. Prior to any distribution of such materials to
Distributors or members of the public, the following procedures shall be
observed:
A. Each party shall provide the other with copies of all
promotional, sales, advertising and training material developed by each party
for the other party's prompt review and written approval. Each party shall
provide the other with all "final" versions of such materials.
B. If any such promotional, sales, advertising or training
material names a Fund or a Fund's investment adviser or sub-adviser,
Nicholas-Applegate, with respect to materials it prepares and those materials
prepared by ALIAC and its Affiliate (once such materials are received by
Nicholas-Applegate), shall furnish such material to such Fund's investment
adviser or sub-adviser or its designee and shall obtain written approval from
each Fund or such Fund's investment adviser or sub-adviser or its designee
before use.
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C. Nicholas-Applegate shall be responsible for filing all
promotional, sales and advertising material, whether developed by
Nicholas-Applegate or ALIAC, with the NASD only. It is anticipated that
training materials provided to Distributors and Agents will not be filed with
the NASD or any state securities or insurance regulatory authorities,
although such materials will be prepared in accordance with applicable laws,
as stated above.
D. ALIAC shall be responsible for filing all promotional, sales
and advertising materials, whether developed by Nicholas-Applegate or ALIAC,
with all appropriate state securities or insurance regulatory authorities.
E. Each party shall assist the other, as necessary, in filing
such promotional, sales, or advertising materials, as required, with all
appropriate regulatory authorities in accordance with the rules and
regulations of such regulatory authorities.
F. Each party shall notify the other expeditiously of any comments
provided by any regulatory authority on materials filed by them and will
cooperate expeditiously in resolving and implementing any comments, as
necessary. Each party will provide the other with any written responses
prepared in response to such comments.
3.6 EXPENSES.
Other than as specifically provided in this Agreement, ALIAC shall pay
all expenses that it incurs in connection with this Agreement and
Nicholas-Applegate shall pay all expenses that it incurs in connection with
this Agreement. Specifically, with regard to the activities described in
Section 3.2.5, Nicholas-Applegate shall bear all printing expenses in
connection with printing a sufficient number of copies for all Contract
owners with respect to proxy solicitation materials, voting instruction
materials, and semi-annual reports and annual reports required to be provided
to Contract owners. In the event ALIAC, at the request of
Nicholas-Applegate, prints such materials and reports, Nicholas-Applegate
shall reimburse ALIAC for all reasonable printing expenses. With regard to
the activities described in Section 3.3.6.C, ALIAC shall bear all postage and
mailing expenses incurred in connection with providing Contract owners with
such materials and reports, provided if Nicholas-Applegate is printing such
materials ALIAC receives such materials in a timely manner from
Nicholas-Applegate.
SECTION 4
TRADEMARKS AND CONFIDENTIALITY
4.1 TRADEMARKS.
The rights and obligations of the parties with respect to certain names,
trademarks or service marks to be used in connection with the Contracts are
set forth in a License Agreement between Nicholas-Applegate and Aetna Life
and Casualty Company dated November 30, 1995
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attached hereto as Schedule 5.
4.2 OWNERSHIP OF PROSPECTS; CONFIDENTIALITY.
4.2.1 PROSPECTS. The names, addresses and other information
relating to prospects or leads for the Contracts acquired by a Distributor or
an agent or representative of a Distributor in connection with their
solicitation activities shall be the exclusive property of, and shall be
exclusively owned by, such Distributor, unless such information is provided
directly by ALIAC or Nicholas-Applegate or is already in the possession of
ALIAC or Nicholas-Applegate. The records created and maintained by ALIAC, or
by any subcontractor on behalf of ALIAC, that pertain to Contract owners and
the servicing and administration of the Contracts shall be the exclusive
property of, and shall be exclusively owned by ALIAC. Information concerning
the names, addresses and other information with respect to Contract owners
contained in such records may be used by ALIAC or its Affiliates or
Nicholas-Applegate or its Affiliates only to the extent necessary for the
issuance or maintenance of the Contracts or for other required regulatory
purposes. No party or its Affiliates shall use or make public the names,
addresses or other information with respect to Contract owners ("Contract
owner Information") contained in such records for any purpose except in
connection with the performance of such party's duties and responsibilities
under this Agreement, unless such Contract owner Information was (i) provided
directly by such party to the Distributors or the Underwriter, or (ii) in the
possession of the party wishing to use the Contract owner Information before
the entity or individual became a Contract owner, or (iii) obtained by the
party through a means or method having no relationship whatsoever with the
duties or responsibilities of such party or its Affiliates, Agents or
employees under this Agreement.
4.2.2 CONFIDENTIALITY. ALIAC and its Affiliates and
Nicholas-Applegate and its Affiliates each shall keep confidential the terms
and provisions of this Agreement (except as required by law or regulation),
each other's methods of doing business, the names, addresses and other
personal information relating to customers or prospective customers for the
Contracts, the names, addresses and other personal information relating to
Contract owners, and any other information proprietary to the other and shall
not reproduce, disseminate or otherwise publish or make available the same
directly or indirectly to any person not affiliated with a party to this
Agreement without the prior written approval of the other, except as required
by applicable law or regulation or any regulatory body, administrative agency
or other governmental instrumentality with jurisdiction over such party's
attorneys, accountants and other representatives involved in the services and
activities contemplated by this Agreement.
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SECTION 5
REGULATION
5.1 RECORDS.
ALIAC and Nicholas-Applegate each shall maintain such accounts, books
and other documents as are required to be maintained by each of them by
applicable laws and regulations and shall preserve such accounts, books and
other documents for the periods prescribed by such laws and regulations. The
accounts, books and records of ALIAC, the Separate Account(s) and
Nicholas-Applegate as to all transactions hereunder shall be maintained so as
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 paid by ALIAC hereunder or pursuant to any
Selling Agreement with Distributors with respect to the Contracts. Each
party shall have the right to inspect and audit such accounts, books and
records of the other party during normal business hours upon reasonable
written notice to the other party. Each party shall keep confidential all
information obtained pursuant to such an inspection or audit, and shall
disclose such information to third parties only upon receipt of written
authorization from the other party, except as required by applicable law or
regulation or any regulatory body, administrative agency or other
governmental instrumentality with jurisdiction over such party's attorneys,
accountants and other representatives involved in the services and activities
contemplated by this Agreement.
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5.2 INVESTIGATIONS AND PROCEEDINGS; COOPERATION.
Nicholas-Applegate and ALIAC shall cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the offering, sale or distribution of the Contracts subject
to this Agreement. Further, Nicholas-Applegate and ALIAC shall cooperate
fully in any securities regulatory investigation or proceeding or judicial
proceeding with respect to ALIAC, Nicholas-Applegate, their Affiliates and
their Agents, representatives or employees to the extent that such
investigation or proceeding is in connection with the offering, sale or
distribution of the Contracts (including the Funds) subject to this
Agreement. Without limiting the foregoing, ALIAC and Nicholas-Applegate
shall promptly notify each other of any customer complaint, correspondence
from or on behalf of Contract owners, or notice of any regulatory
investigation or proceeding or judicial proceeding received by either party
with respect to ALIAC, Nicholas-Applegate or any of their Affiliates, Agents,
representatives or employees or which may affect ALIAC's issuance of any
Contract (and the offering of Funds as investment options) subject to this
Agreement.
Nicholas-Applegate shall send by facsimile and by express mail copies of
all correspondence from or on behalf of Contract owners or any regulatory
authority concerning the Contracts, the Funds, Nicholas-Applegate or ALIAC as
soon as is reasonably possible. ALIAC shall be responsible for either
responding to all correspondence, or coordinating such response with the
Distributor or Nicholas-Applegate, if appropriate. Any response relating to
Nicholas-Applegate or the Funds must be approved in writing by
Nicholas-Applegate prior to it being sent to the Contract owner or any
regulatory authority. Nicholas-Applegate agrees to review any such response
prepared by ALIAC within three (3) business days of its receipt by
Nicholas-Applegate, except if a more prompt response is required
Nicholas-Applegate will respond by facsimile transmission.
Nicholas-Applegate and ALIAC shall cooperate in investigating any complaint.
Any response by ALIAC which relates to the Contracts, ALIAC or its Affiliates
or any Distributor, shall be provided to Nicholas-Applegate no later than the
time it is provided to the Contract owner or any regulatory authority.
SECTION 6
AUTHORITY
6.1 AUTHORITY TO EXECUTE.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate action by each of the parties, and when so executed and delivered
this Agreement shall be the valid and binding obligation of each of the
parties enforceable in accordance with its terms.
6.2 NO CONFLICTS.
The consummation of the transactions contemplated by this Agreement, and
the fulfillment of the terms of this Agreement, shall not, in any material
way, conflict with, result
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in any breach of the terms and provision of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation,
charter, or bylaws, or any amendment thereto, of any of the parties, or any
indenture, agreement, mortgage, deed of trust, or other instrument to which
Nicholas-Applegate or ALIAC is a party or by which Nicholas-Applegate or
ALIAC is bound, or violate any law, or, to the best of ALIAC's or
Nicholas-Applegate's knowledge, any order, rule or regulation applicable to
ALIAC or Nicholas-Applegate of any court or of any federal or state
regulatory body, administrative agency or any other governmental
instrumentality having jurisdiction over ALIAC or Nicholas-Applegate or any
of their properties.
No consent, approval, authorization or order of any court or
governmental authority or agency is required for the issuance or sale of the
Contracts or for the consummation of the transactions contemplated by this
Agreement that has not been obtained, except for the approvals of the SEC and
certain states securities regulatory authorities with regard to the
securities to be issued by the Funds and Separate Accounts regarding the
Contracts and certain insurance regulatory authorities regarding the
Contracts.
SECTION 7
RIGHTS AND REMEDIES
7.1 INDEMNIFICATION.
7.1.1 ALIAC. ALIAC shall indemnify and hold harmless
Nicholas-Applegate and its Affiliates and any officer, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of any action, suit or proceeding or any claim asserted), to which
Nicholas-Applegate and its Affiliates and/or any such person may become
subject, under any statute, regulation, promulgation or any NASD rule or
interpretation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities result from any breach by ALIAC or any representative
of ALIAC of any provision of this Agreement, or by violation by ALIAC or any
representative of ALIAC of any law or regulation.
This indemnification agreement shall be in addition to any liability
that ALIAC may otherwise have; provided, however, that no person shall be
entitled to indemnification pursuant to this provision if such loss, claim,
damage or liability is due to the willful misfeasance, bad faith, gross
negligence or reckless disregard of duty by the person seeking
indemnification.
7.1.2 NICHOLAS-APPLEGATE. Nicholas-Applegate shall indemnify and
hold harmless ALIAC and its Affiliates and any officer, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claims asserted), to
which an ALIAC and
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its Affiliates and/or any such person may become subject under any statute,
regulation, promulgation or any NASD rule or interpretation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities result from
any breach by Nicholas-Applegate or an Affiliate or any representative of
Nicholas-Applegate of any provision of this Agreement, or by violation by
Nicholas-Applegate or an Affiliate or any representative of
Nicholas-Applegate of any law or regulation.
This indemnification shall be in addition to any liability that
Nicholas-Applegate may otherwise have; provided, however, that no person
shall be entitled to indemnification pursuant to this provision if such loss,
claim, damage or liability is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the person seeking
indemnification.
7.1.3 GENERAL. After receipt by a party entitled to indemnification
("indemnified party") under this Section 7 of notice of the commencement of
any action, if a claim in respect thereof is to be made against any person
obligated to provide indemnification under this Section 7 ("indemnifying
party"), such indemnified party shall notify the indemnifying party in
writing of the commencement thereof as soon as practicable thereafter;
provided that the omission to so notify the indemnifying party shall not
relieve the indemnifying party from any liability under this Section 7,
except to the extent that the omission results in a failure of actual notice
to the indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give such notice. The indemnifying party, upon the
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such proceeding and shall
pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless: (1) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel; or (2) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party
shall indemnify the indemnified party from and against any loss or liability
by reason of such settlement or judgment.
The indemnification provisions contained in this Section 7 shall remain
operative in full force and effect, regardless of any termination of this
Agreement. A successor by law of ALIAC or Nicholas-Applegate, as the case
may be, shall be entitled to the benefits of the indemnification provisions
contained in this Section 7.
7.2 RIGHTS, BENEFITS, ETC., ARE CUMULATIVE.
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the
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parties hereto are entitled to under federal and state laws. Failure of
either party to insist upon strict compliance with any of the conditions of
this Agreement shall not be construed as a waiver of any of the conditions,
but the same shall remain in full force and effect. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver
of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
7.3. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement,
or the breach hereof, shall be settled by arbitration in the forum jointly
selected by ALIAC and Nicholas-Applegate (but if applicable law requires some
other forum, then such other forum) in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
SECTION 8
TERMINATION
8.1 TERM OF AGREEMENT.
Unless otherwise terminated pursuant to this Section 8, this Agreement
shall remain in effect until December 31, 1998, and shall continue thereafter
until terminated. After the initial term, this Agreement may be terminated
by either party for any reason or for no reason upon six (6) months prior
written notice by the terminating party to the other party without the
payment of any penalty.
8.2 TERMINATION BY ASSIGNMENT.
This Agreement shall not be assignable by a party without the prior
written consent of the other party. The term "assignment" shall for purposes
of this Agreement be construed in accordance with Rule 2a-6 under the 1940
Act and the interpretations thereunder, so long any such assignee is capable
of performing its obligations under this Agreement.
8.3 TERMINATION FOR MATERIAL BREACH.
This Agreement may be terminated at the option of either party to this
Agreement upon the other party's material breach of any provision of this
Agreement, unless such breach has been cured within 10 days after receipt of
written notice of breach from the non-breaching party.
8.4 SURVIVABILITY.
Upon termination of this Agreement all authorizations, rights and
obligations shall
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Page 20
cease except: (1) ALIAC's obligation to service any then existing Contracts;
(2) Nicholas-Applegate's obligation to continue its services with regard to
the Funds; and (3) the obligations contained in Sections 4.2, 5, 7 and 9 and
Schedules 4 and 6 hereof.
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Page 21
SECTION 9
COMPENSATION
9.1 FEES AND CHARGEBACKS. Fees and chargebacks shall be determined in
accordance with Schedule 6 hereof.
SECTION 10
MISCELLANEOUS
10.1 INTERPRETATION; JURISDICTION.
This Agreement constitutes the whole agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior
oral or written understandings, agreements or negotiations between the
parties with respect to such subject matter, except as otherwise agreed to in
writing by the parties. No prior writings by or between the parties with
respect to the subject matter hereof shall be used by either party in
connection with the interpretation of any provision of this Agreement. This
Agreement shall be construed and its provisions interpreted under and in
accordance with the laws of the State of Connecticut without giving effect to
principles of conflict of laws.
10.2 NOTICES.
All notices hereunder are to be made in writing and shall be given:
if to ALIAC, to:
Michael J. Gilotti, Vice President
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, YFFN
Hartford, Connecticut 06156
with a simultaneous copy to:
Maria F. McKeon, Esq.
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4C
Hartford, CT 06156
if to Nicholas-Applegate, to:
Nicholas-Applegate Capital Management
600 West Broadway, 30th Floor
San Diego, California 92101
Attention: General Counsel
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Page 22
with a simultaneous copy to:
Jane A. Kanter, Esq.
Katten Muchin & Zavis
1025 Thomas Jefferson St., N.W.
Suite 700, East Lobby
Washington, DC 20007
or such other address as such party may hereafter specify in writing. Each
such notice to a party shall be either hand delivered or transmitted by
registered or certified United States mail with return receipt requested, and
shall be effective upon delivery.
10.3 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all previous oral or
written agreements between the parties.
10.4 SCHEDULES.
The Schedules referred to in this Agreement are hereby incorporated
herein and made a part of this Agreement. To the extent the language in the
"Statement of Intent" portion of Schedule 4 contradicts a provision of this
Agreement, the language of this Agreement shall be controlling.
10.5 SEVERABILITY.
This is a severable Agreement. In the event that any provision of this
Agreement would require a party to take action prohibited by applicable
federal or state law or prohibit a party from taking action required by
applicable federal or state law, then it is the intention of the parties
hereto that such provision shall be enforced to the extent permitted under
the law, and, in any event, that all other provisions of this Agreement shall
remain valid and duly enforceable as if the provision at issue had never been
a part hereof.
10.6 SECTION AND OTHER HEADINGS.
The headings 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.
10.7 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, which when
taken together shall constitute one and the same instrument.
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Page 25
10.8 REGULATIONS.
This Agreement is subject to all state and federal laws, regulations and
promulgations relating to the sale of the Contracts. This Agreement shall be
subject to the provisions of the 1933 Act, the Securities and Exchange Act of
1934 and the 1940 Act and the rules and regulations thereunder and the rules
and regulations of the National Association of Securities Dealers, Inc., from
time to time in effect, including such exemptions from the 1940 Act as the
SEC may grant, and the terms hereof shall be interpreted and construed in
accordance therewith.
IN WITNESS WHEREOF, each party hereto represents that the officer
signing this Agreement on the party's behalf is duly authorized to execute
this Agreement; and the parties hereto have caused this Agreement to be duly
executed by such authorized officers on the date specified below.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
BY:___________________________________
NAME:_________________________________
TITLE:________________________________
DATE:_________________________________
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
BY:_________________________________
NAME: E. BLAKE MOORE, JR.
TITLE: GENERAL COUNSEL
DATE:_______________________________
NICHOLAS-APPLEGATE SECURITIES
BY:_________________________________
NAME: E. BLAKE MOORE, JR.
TITLE: GENERAL COUNSEL
DATE:_______________________________
<PAGE>
EXHIBIT 99-B.9
151 Farmington Avenue SUSAN E. BRYANT
Hartford, CT 06156 Counsel
Law & Regulatory Affairs, RE4C
(860) 273-7834
Fax: (860) 273-8340
February 29, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Filing Desk
Re: Variable Annuity Account B of Aetna Life Insurance
and Annuity Company
Pre-Effective Amendment No. 2 to
Registration Statement on Form N-4
File Nos. 33-62473 and 811-2512
Gentlemen:
The undersigned has acted as counsel to Aetna Life Insurance and Annuity
Company a Connecticut life insurance company (the "Company") in connection
with the registration on Form N-4 of interests in Variable Annuity Account B
of the Company. It is my understanding that the Company, as depositor, has
registered an indefinite amount of securities (the Securities) under the
Securities Act of 1933, as amended ("Securities Act") as provided in Rule
24f-2 under the Investment Company Act of 1940 (the "Investment Company Act").
In connection with such representation, I have reviewed the N-4 Registration
Statement filed on September 8, 1995, the Pre-Effective Amendment No. 1 filed
on February 16, 1996 and this Pre- Effective Amendment No. 2. I have also
examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, trust records and other instruments I have
deemed necessary or appropriate for the purpose of rendering this opinion.
For purposes of such examination, I have assumed the genuineness of all
signatures on original documents and the conformity to the original of all
copies.
I am admitted to practice law in Connecticut, New York and Oklahoma, and do
not purport to be an expert on the laws of any other state. My opinion herein
as to any other law is based upon a limited inquiry thereof which I have
deemed appropriate under the circumstances.
<PAGE>
Page 2
Securities and Exchange Commission
February 29, 1996
Based upon the foregoing, I am of the opinion that the Securities have been
duly and validly authorized and, assuming the securities will be issued and
sold in accordance with the provisions of the prospectus, will constitute
legal and binding obligations of the Company.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to my being named under the caption "Legal Matters" in the
prospectus contained therein.
Sincerely,
/s/ Susan E. Bryant
Susan E. Bryant
Counsel
<PAGE>
EXHIBIT 99-B-10.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors of Aetna Life Insurance and Annuity Company
and Contract Owners of Aetna Variable Annuity Account B:
We consent to the use of our reports dated January 31, 1995 and February 7, 1995
included herein and to the reference to our Firm under the caption "INDEPENDENT
AUDITORS" in the Statement of Additional Information.
Our report dated February 7, 1995 refers to a change in 1993 in the Company's
methods of accounting for certain investments in debt and equity securities and
reinsurance contracts, and a change in 1992 in the Company's methods of
accounting for income taxes and post retirement benefits other than pensions.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Hartford, Connecticut
February 29, 1996
