AMENDED AND RESTATED
PRINCIPAL UNDERWRITING
AND
SERVICING AGREEMENT
BY AND BETWEEN
AAL CAPITAL MANAGEMENT CORPORATION
AND
AID ASSOCIATION FOR LUTHERANS
DATED NOVEMBER 23, 1994, AND AS AMENDED AND RESTATED MARCH 4, 1998
TABLE OF CONTENTS
1. Appointment of DISTRIBUTOR
2. Underwriting Responsibilities of DISTRIBUTOR
3. Additional Services to be Provided by DISTRIBUTOR
3.1 Preparation of Sales Literature and Advertising Materials
3.2 Licensing of Field and Home Office Staff
3.3 Regulatory Compliance
3.4 Field Training
3.5 Confirmations
4. Responsibilities of AAL
4.1 Sales Commissions
4.2 Sales Credits and Field Expenses
4.3 Registrations of Securities and Investment Adviser
4.4 Books and Records
4.5 Duty to Keep Informed
4.6 Transfer Agent and Management
5. Joint Procedures for Communications with the Public and with Registered
Representatives
6. Fees to be Paid to DISTRIBUTOR by AAL
6.1 Services
6.2 Determination of Charge/Expense Formulas for Services
6.3 Preparation and Negotiation of Final Annual Budget for Services
6.4 Accounting Procedures
7. Independent Contractor
8. Indemnification
8.1 Indemnification of AAL
8.2 Indemnification of DISTRIBUTOR
9. Authorized Representations
10. Amendment or Assignment of Agreement
11. Termination of Agreement
12. Miscellaneous
13. Definition of Terms
14. Compliance with Securities Laws
15. Regulatory Examinations
16. Notices
17. Governing Law
Schedule A: Variable Annuity Schedule of Sales Commissions
Schedule B: Variable Life Schedule of Sales Commissions
PRINCIPAL UNDERWRITING AND SERVICING AGREEMENT
This PRINCIPAL UNDERWRITING AND SERVICING AGREEMENT made and entered into this
23rd day of November, 1994, and amended and restated as of March 4, 1998, by and
between AAL CAPITAL MANAGEMENT CORPORATION, a corporation organized and existing
under the laws of the State of Delaware, ("DISTRIBUTOR" or "AALCMC") and AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized and existing
under the laws of the State of Wisconsin ("AAL"), on its own behalf and on
behalf of AAL VARIABLE ANNUITY ACCOUNT I ( "VARIABLE ANNUITY ACCOUNT") and AAL
VARIABLE LIFE ACCOUNT I ("VARIABLE LIFE ACCOUNT"), both collectively referred to
as "Account's."
RECITALS
AAL and its VARIABLE ANNUITY ACCOUNT and VARIABLE LIFE ACCOUNT, the latter
Account's registered as an unit investment trusts under the Investment Company
Act of 1940 (the " 1940 Act"), propose to offer for sale certain flexible
premium deferred variable annuity and variable universal life contracts (the
"Certificates"), interests in the Account's under the Certificates are
registered with the Securities and Exchange Commission (the "SEC") as securities
under the Securities Act of 1933 (the " 1933 Act").
Premiums received from owners of Certificates will be deposited at the owner's
designation in the respective Account's and/or the Fixed Account. The Account's
will invest solely in portfolio shares of the AAL Variable Product Series Fund,
Inc. "FUND."
DISTRIBUTOR is a wholly-owned indirect subsidiary of AAL, is registered as a
broker-dealer with the SEC under the Securities Exchange Act of 1934 (the " 1934
Act") and with state securities authorities in all 50 states, is a member of the
National Association of Securities Dealers, Inc. ("NASD"), is authorized to
offer and sell mutual funds and variable insurance products, and acts as
DISTRIBUTOR of The AA-L Mutual Funds, an investment company.
AAL and DISTRIBUTOR intend to enter into an agreement by which DISTRIBUTOR will
act as the principal underwriter in a continuous offering of the Certificates
for AAL, the offerings to begin no sooner than on the effective date of the
registration statements in connection with the Certificates under the 1933 Act,
and state securities and insurance registrations. This Agreement pertains to the
sale of Certificates by Registered Representatives licensed with DISTRIBUTOR,
and not to the sale of Certificates by any other party and/or broker-dealer who
may be authorized by AAL to sell Certificates or who may have a separate
Distribution or Selling Agreement with AAL or DISTRIBUTOR.
THEREFORE, in consideration of the covenants and mutual promises of the parties
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, DISTRIBUTOR and AAL agree as follows:
AGREEMENT
1. Appointment of DISTRIBUTOR
AAL hereby appoints DISTRIBUTOR as the principal securities underwriter for the
Certificates during the term of this Agreement in each state or other
jurisdiction where the Certificates may legally be sold. The-Certificates may
also be sold by representatives of other broker-dealer firms with which AALCMC
has executed a selling agreement. In addition, AAL may retain other firms to
serve as principal underwriters of the Certificates. Anything in this Agreement
to the contrary notwithstanding, AAL retains the ultimate right to suspend sales
in any jurisdiction or jurisdictions, or to refuse to sell a Certificate to any
applicant for any reason whatsoever.
2. Underwriting Responsibilities of DISTRIBUTOR
DISTRIBUTOR agrees to offer and sell the Certificates, as agent for AAL, from
time to time during the term of this Agreement upon the terms described in the
Certificate Prospectuses. As used in this Agreement, the term "Prospectuses"
shall mean the Prospectuses and the Statements of Additional Information
included as part of the Registration Statement for AAL and the Account's, as
such Prospectuses and Statements of Additional Information may be amended or
supplemented from time to time. The term "Registration Statement" shall mean the
Registration Statement, as amended from time to time and filed by AAL and the
respective Account's with the SEC, and effective under the 1933 Act and/or the
1940 Act.
After the effective date of the Registration Statement for the Certificates,
DISTRIBUTOR will hold itself out to receive applications, satisfactory to
DISTRIBUTOR, for the purchase of the Certificates and will promptly transmit
applications and premiums received for the Certificates which it accepts to AAL
or to its designee.
All purchases shall be deemed effective at the time and in the manner set forth
in the Prospectuses. All applications, when accepted by DISTRIBUTOR and by AAL,
shall designate the allocation of premiums by the purchaser among the separate
investment options represented in the Certificates, namely by the sub-ACCOUNTS
of the ACCOUNTS and the AAL Fixed Account, as defined and described in the
Certificate Prospectuses. All premiums from purchasers shall be deposited by AAL
in either the Account's, to be promptly allocated among the sub-ACCOUNTS, or to
the AA-L General Account; as designated by the purchaser and in accordance with
the 1940 Act and rules thereunder. Premiums allocated to the sub-ACCOUNTS of the
Account's shall be expressed as "accumulation units" of the Certificate as that
term is defined in the Prospectus. The above allocation statements are subject
to any specific allocation of premium requirements that may be set forth in the
Certificate.
DISTRIBUTOR agrees to be solely responsible for the operation of its business as
a registered broker-dealer in connection with all its underwriting activities
under this Agreement, and shall operate such business in accordance with all
applicable laws and regulations. All sales of the Certificates by DISTRIBUTOR
shall be made through Registered Representatives who are "Associated Persons"
("Associated Persons" as defined by the 0000 Xxx) of DISTRIBUTOR, and who are
also agents or District Representatives of AAL. DISTRIBUTOR shall be responsible
for selling only through Registered Representatives who are properly licensed to
sell Certificates in jurisdictions where offers and sales take place.
DISTRIBUTOR is responsible for certain services relating to the distribution of
all prospectus(es) of the Account's and Fund used by its Registered
Representatives in the marketing of the Certificates. These services include,
but are not limited to design, layout, printing, mailing or other delivery
services.
3. Additional Services to be Provided by DISTRIBUTOR
3.1 Preparation of Sales Literature and Advertising Materials
DISTRIBUTOR and AAL will cooperate in the initiation, preparation, printing
and distribution of all public sales literature and advertising materials, as
well as all training and marketing materials distributed to Registered
Representatives as "broker-dealer only" materials under rules, which are used
by DISTRIBUTOR and its Registered Representatives in connection with the sale
of the Certificates. AAL will, in a timely manner, provide DISTRIBUTOR with
any and all materials and information necessary to enable DISTRIBUTOR to
fulfill its obligations set forth in this section regarding sales literature
and advertising materials. AAL will provide DISTRIBUTOR with the names of AAL
employees who will review and approve the materials described in this
subsection. DISTRIBUTOR will coordinate and provide copies of such materials
to designated employees of AAL during the development process and all
advertising and sales literature will be approved by both AAL and DISTRIBUTOR
prior to use. DISTRIBUTOR will complete all of the necessary filings and
approvals with the NASD and state securities authorities prior to the public
use of such sales material and advertising. DISTRIBUTOR will provide copies of
all materials to AAL. AAL will file and obtain approval of all such sales
literature and advertising with State Insurance Commissioners where such
filing is required by state laws. AAL will promptly advise DISTRIBUTOR when
such filings and approvals are completed. Materials will only be made
available for public use or Registered Representative use after all securities
and insurance filings and approvals are completed and AAL has given approval
for materials to be used. DISTRIBUTOR will be responsible for maintaining an
inventory and approval history of all of its sales literature, advertising and
"broker-dealer only" materials, and for the distribution of such materials to
its Registered Representatives and to the public.
3.2 Licensing of Field and Home Office Staff
DISTRIBUTOR will be responsible for managing the securities licensing all of
its Registered Representatives in connection with the sale of the
Certificates, and will directly handle all licensing by the NASD and state
securities authorities that is necessary for the sale of the Certificates. AAL
will be responsible for obtaining the necessary insurance licenses with state
insurance authorities for the offer and sale of the Certificates. AAL and
DISTRIBUTOR shall develop data base(es) and reporting system(s) to consolidate
securities and insurance licensing information for their District
Representatives and Registered Representatives, respectively. The system(s)
will provide controls satisfactory to AAL and DISTRIBUTOR in the processing of
Certificate applications to assure that all of its Registered Representatives
are properly licensed when offering and selling the Certificates..
(i) DISTRIBUTOR providing securities licensing data to AAL;
(ii) AAL providing licensing data to a database that shall be maintained by
AAL
The system described herein shall be equally accessible to AAL and DISTRIBUTOR.
DISTRIBUTOR and AAL will cooperate to assure the appropriate licensing of AAL
and DISTRIBUTOR's home office employees (including DISTRIBUTOR's wholesalers)
who require securities or insurance licenses in connection with their work on
the Certificates. DISTRIBUTOR will arrange for pre-licensing study and training
to assist such persons in obtaining their securities licenses as requested by
AAL. All AAL employees who are Associated Persons of DISTRIBUTOR as a result of
being licensed as Registered Representatives will be subject to compliance
procedures and supervision of DISTRIBUTOR in connection with all work related to
the Certificates in the same manner as all other Associated Persons.
3.3 Regulatory Compliance
DISTRIBUTOR will supervise all of its Registered Representatives who are
Associated Persons of DISTRIBUTOR (including employees of AAL) with respect to
all securities laws and regulations in connection with the offer and sale of the
Certificates. Supervision shall include, but not be limited to, the following
matters: acceptance of new business; security suitability determinations (as
made in accordance with NASD rules, SEC or other regulatory authority's rules
and regulations); field training, supervision and sales practices; books and
records requirements; approval and use of all advertising, sales literature and
broker-dealer only materials; confirmation content and delivery; payment of
commissions; and compliance with the written supervisory procedures of
DISTRIBUTOR.
3.4 Field Training
Immediately after the effective date of the Registration Statement for the
Certificates, DISTRIBUTOR shall be responsible for conducting field training of
all of its associated Registered Representatives authorized to sell the
Certificates in those states where the Certificates are approved for sale. The
training program shall be developed and conducted by DISTRIBUTOR, although AAL
may also participate in training activities. DISTRIBUTOR will coordinate with
AAL concerning those AAL employees who will be involved in the development of
the training program and in its execution. The training program shall be
approved by both AAL and DISTRIBUTOR prior to implementation.
3.5 Confirmations
AAL shall be responsible to assure that all purchases, sales or other
transactions occurring in the account of an owner of a Certificate sold by its
Registered Representatives shall be confirmed to the owner in writing in a form
and manner which complies with the requirements of the 1934 Act, blue sky laws,
and NASD rules. Such confirmations will be furnished by AAL to all owners of
Certificates in accordance with securities laws, will reflect the facts of the
transaction, and will show that they are being sent by AAL on behalf of
DISTRIBUTOR acting in the capacity of agent for DISTRIBUTOR. The parties agree
that the form and the manner of use of confirmations in connection with
transactions occurring in such ACCOUNTS shall be supervised by DISTRIBUTOR. AAL
agrees AAL and its agent, if any, will prepare and distribute such confirmations
in accordance with DISTRIBUTOR's instructions. AAL represents that it will make
no changes or variations in either the form or the manner of distribution of
such Confirmations without the written approval of DISTRIBUTOR and shall cause
such confirmations to be issued as directed by DISTRIBUTOR and on behalf of
DISTRIBUTOR.
4. Responsibilities of AAL
4.1 Sales Commissions
AAL will pay DISTRIBUTOR a sales commission on Certificate sales pursuant to
Schedule A attached hereto. DISTRIBUTOR intends to reallocate commissions to its
Registered Representatives (including General Agent and General Manager
Registered Representatives) for the sale of Certificates in accordance with a
written fee schedule agreement between DISTRIBUTOR and its Registered
Representatives. DISTRIBUTOR, for its convenience, authorizes AAL, as agent for
DISTRIBUTOR, to make commission payments due to DISTRIBUTOR directly to its
Registered Representatives.
All commissions for the sale of the Certificates due to DISTRIBUTOR from AAL
shall be reflected on DISTRIBUTOR's financial records as a receipt from AAL and
a disbursement to DISTRIBUTOR's Registered Representatives, notwithstanding the
direct payment of such commissions by AAL to such Registered Representatives.
AAL agrees to pay commissions directly to such Registered Representatives as a
convenience to DISTRIBUTOR and recognizes that this agreement to pay is purely
ministerial in nature and not discretionary.
Notwithstanding the foregoing, it is agreed that AAL shall have the right in the
payment of such commissions to treat such commissions as part of AAL employee
compensation to such Registered Representatives for the purpose of calculation
of AAL benefits programs and withholding taxes.
AAL will maintain and provide records and reports reflecting the calculation of
all commissions paid to, and any other cash and non-cash compensation
(collectively "Commissions"), received by DISTRIBUTOR's Registered
Representatives and the details of the transactions upon which such Commissions
are based, and will respond to any inquiries about Commission payments, pursuant
to this paragraph. DISTRIBUTOR shall designate to AAL the records required and
such records shall be maintained subject to the provisions of Paragraph 4.3
below.
4.2 Sales Credits and Field Expenses
Any AAL field charges or expenses for the Certificates will be paid directly by
AAL. Sales credits for sales of the Certificates will be based on gross premiums
received for the Certificates, subject to any exceptions that may exist or be
developed with respect to internal transfers of funds among AAL and affiliated
companies.
4.3 Registrations of Securities and Investment Adviser
AAL shall be solely responsible, at its expense, for registration of the
Certificates, the Account's, and for the registration of AAL as an investment
adviser of the Fund, with all required state and federal authorities. AAL agrees
to maintain such registrations in effect at all times during the term of this
Agreement, and to file such amendments, reports and other documents as may be
necessary to assure that there will be no untrue statement of material fact in
any Registration Statement and that there shall be no omission to state a
material fact in the Registration Statement or Form ADV, which omission would
make the statements therein misleading. AAL may direct DISTRIBUTOR, and
DISTRIBUTOR shall perform, any or all of the services described in this
paragraph.
4.4 Books and Records
AAL agrees to maintain all books and records required and designated by
DISTRIBUTOR under the securities laws in connection with the offer and sale of
the Certificates by its Registered Representatives, as specifically required by
Section 17 of the 1934 Act, Rule 17a-3 and 17a-4 under the 1934 Act or as
required by the NASD, and such other or further books or records as may be
required by rule or regulation of any other federal or state regulatory
organization or self-regulatory organization, to the extent such requirements
are applicable to the variable product operations as determined for purposes of
this Agreement by DISTRIBUTOR. AAL shall maintain such books and records as
agent on behalf of DISTRIBUTOR who shall be the owner thereof. AAL agrees that
such books and records will be open and available to DISTRIBUTOR at all times,
shall be surrendered promptly on request, without charge, to DISTRIBUTOR, and
shall be subject to inspection by the SEC in accordance with Section 17 of the
1934 Act, and by the NASD or other regulatory authorities having jurisdiction
over the securities activities of the DISTRIBUTOR, at any time. The parties
represent and wan-ant that DISTRIBUTOR has provided a schedule to AAL that
describes the books and records to be maintained by AAL, on behalf of
DISTRIBUTOR.
4.5 Duty to Keep Informed
AAL shall at its expense keep DISTRIBUTOR fully informed on a current basis of
any changes or other material matters affecting the Certificates or the Fund.
AAL will use its best efforts to provide advance notice to DISTRIBUTOR of any
proposed chances in the Certificates or the Fund and to discuss such matters
with DISTRIBUTOR prior to taking any action. AAL shall furnish DISTRIBUTOR
copies of all information, financial statements, books and records and other
papers which DISTRIBUTOR may reasonably request in connection with its due
diligence inquiry or for use in connection with the distribution of
Certificates.
4.6 Transfer Agent and Management
AAL shall be solely responsible for the selection and supervision of a Transfer
Agent for the Certificates; management of all Certificate ACCOUNTS, including
the sub-ACCOUNTS, establishing and maintaining account records and processing;
and the receipt and disbursement of all monies related to the Certificates.
Notwithstanding its responsibility for these matters, AAL shall keep DISTRIBUTOR
currently informed, through reports requested by DISTRIBUTOR, of all activities
related to the Certificates and the Fund. AAL will also keep DISTRIBUTOR
informed and consult with DISTRIBUTOR in advance of any changes to the
procedures for the management or administration of the Certificates or to any of
the underlying records or documents related thereto. AAL recognizes that any
communications with Certificate owners, or prospective Certificate owners,
related to the Certificates sold by DISTRIBUTOR's Registered Representatives are
subject to securities regulations and must be approved in advance by AAL and
DISTRIBUTOR and may require filing with and approval by the NASD and state
securities authorities. Such communications include but are not limited to:
correspondence statement stuffers, newspaper or magazine articles, confirmation
messages and other similar written materials.
5. Joint Procedures for Communications with the Public and with Registered
Representatives
The parties recognize that all written materials which are provided to AAL
members or prospective members in connection with the Certificates sold by
DISTRIBUTOR's Registered Representatives are required to meet specific standards
established by securities and insurance regulatory authorities. Such materials
will include advertising and sales literature, correspondence, magazine
articles, newspaper articles, press releases and any other written public
communication. To assure compliance with all applicable rules and laws, it is
agreed that DISTRIBUTOR will manage and coordinate the distribution of all
public written materials related to the Certificates sold by DISTRIBUTOR's
Registered Representatives, including materials related to the Fund. No public
materials will be released without the prior written approval of both AAL and
DISTRIBUTOR, and both parties shall cooperate in the preparation and review of
such materials. AAL will provide DISTRIBUTOR with the names of its employees
designated to give approval for such written materials. All nonpublic written
communications with DISTRIBUTOR's Registered Representatives and to employees of
AAL or DISTRIBUTOR, related to the Certificates shall be reviewed and approved
by both AAL and DISTRIBUTOR prior to use. Such materials include, without
limitation, field updates, "broker-dealer only" materials, training materials,
and compliance information. AAL and DISTRIBUTOR will establish internal policies
to insure that all such materials are appropriately and timely reviewed and
shall cooperate with each other in establishing such procedures.
6. Fees to be Paid to DISTRIBUTOR by AAL
6.1 Services
DISTRIBUTOR shall perform certain services, as requested by AAL, in connection
with DISTRIBUTOR's role as principal underwriter in AAL's continuous offering of
the Certificates ("Services"). Services shall be initially designated as
"Marketing Services", "Broker-Dealer Administration", "Licensing", "Regulatory
Compliance", "Field Training", and "Consulting". The parties represent and
warrant that AAL and DISTRIBUTOR have mutually agreed to the definition and
composition of each of the foregoing Services. AAL and DISTRIBUTOR agree that
the definition and composition of each of the foregoing Services, and additional
services to be rendered in connection with the sale of the Certificates, shall
be reaffirmed or amended, as the case may be, on an annual basis in connection
with the preparation and negotiation of the "Final Annual Budget" (as that term
is defined in Paragraph 6.3) for Services for such year.
6.2 Determination of Charge/Expense Formulas for Services
The parties represent and warrant that DISTRIBUTOR and AAL agree on the methods
to determine and calculate the amount of Services to be charged by DISTRIBUTOR
as an expense to AAL (the "Charge/Expense Formulas"). Charge/Expense Formulas
shall be initially determined and defined as "Sales Credit Charges", "Direct
Expenses", and "Per Hour Charges". AAL and DISTRIBUTOR covenant and agree that:
(i) Charge/Expense Formulas shall be reaffirmed or amended, as the
case may be, on an annual basis in connection with the
preparation and negotiation of the Final Annual Budget for
Services for such year; and
(ii) Charge/Expense Formulas shall include a portion of DISTRIBUTOR's
general overhead expenses as specifically stated in the
underlying detail schedules for Charge/Expense Formulas ("Detail
Schedules").
DISTRIBUTOR and AAL affirm and agree that the Detail Schedules were reviewed by
representatives of both AAL and DISTRIBUTOR in the due diligence process. The
parties represent and warrant that DISTRIBUTOR and AAL agree on the allocation
of dollar amounts of Services to the various categories of Charge/Expense
Formulas (" Services Allocation"). Services Allocation shall be initially
determined as set forth in the Final Annual Budget for the 1995 calendar year.
AAL and DISTRIBUTOR covenant and agree that Services Allocation shall be
reaffirmed or amended, as the case may be, on an annual basis in connection with
the preparation and negotiation of the Final Annual Budget for Services for such
year.
6.3 Preparation and Negotiation of Final Annual Budget for Services
Each successive year that this Agreement is in effect, DISTRIBUTOR shall prepare
a projected annual budget for the successive year (the " Projected Annual
Budget") and deliver the Projected Annual Budget to a designated representative
of AAL. Each successive year that this Agreement is in effect, AAL shall provide
comments to DISTRIBUTOR on the content of the Projected Annual Budget. AAL and
DISTRIBUTOR covenant and agree that:
(i) a final, agreed form of the Projected Annual Budget (the "Final
Annual Budget") shall be determined on or before the deadline date set forth for
the submission of annual budgets pursuant to AAL budget policies; and
(ii) the policies, definitions and operating procedures (including but
not limited to "Billing Process", and "Billable Items") set forth in P.O.P. 251
"Subsidiary and Affiliate Billing", shall be followed in Connection with the
preparation and negotiation of the Projected Annual Budget and the Final Annual
Budget.
6.4 Accounting Procedures
DISTRIBUTOR and AAL, covenant and agree that:
(i) payroll & expense records and procedures,
(ii) invoicing procedures; and
(iii) the time and manner of charge/expense payment for the Services
set forth in this Agreement shall be determined by reference to certain AALCMC
accounting manuals and procedures. Notwithstanding the foregoing, the parties
covenant and agree that the provisions of this Agreement pertaining to books and
records (e.g. Paragraph 4.4 hereof) shall apply to all transactions relating to
Services and the offering and sale of Certificates by DISTRIBUTOR. The parties
agree that because of the sensitive and confidential nature of these records and
procedures, such records and procedures shall not be disclosed nor disseminated
except to authorized accounting and management personnel of AAL and DISTRIBUTOR.
DISTRIBUTOR and AAL acknowledge that unanticipated conditions may materially
change the Final Annual Budget. DISTRIBUTOR and AAL agree that the nature of
these unanticipated conditions can be characterized as either a "permanent
change" or a "temporary change". For example, a permanent change is the
elimination of a Service that DISTRIBUTOR provides pursuant to this Agreement
and a temporary change is AAL's assumption of a Service, pursuant to
DISTRIBUTOR's request. DISTRIBUTOR and AAL covenant and agree that the
accounting treatment for permanent changes shall be redetermined on an annual
basis and the accounting treatment for a temporary change shall be as set forth
herein. In the event a temporary change occurs, DISTRIBUTOR and AAL covenant and
agree that AAL shall be permitted a payment credit towards any outstanding
charges/expenses for Services performed by DISTRIBUTOR, for certain services
rendered by AAL employees and agents in connection with the offering and sale of
the Certificates (e.g. legal or accounting services) ("Services Offset") The
relevant terms and conditions of this Agreement shall apply to the Services
Offset (e.g. determination for Final Annual Budget, accounting procedures). On a
monthly basis during the term of this Agreement: DISTRIBUTOR shall provide
written documentation to AAL for Services rendered, and AAL shall provide
written documentation to DISTRIBUTOR for Services Offset rendered (collectively,
the "Accounting Statements")-
The Accounting Statements shall reasonably itemize and detail the Services and
Services Offset provided by each of the parties during the preceding, month. The
format for the Accounting Statements shall follow certain CMC accounting
procedures.
7. Independent Contractor
In performing its duties hereunder, DISTRIBUTOR shall be an independent
contractor and neither DISTRIBUTOR, nor any of its officers, directors,
employees, or Registered Representatives is, or shall be, an employee of AAL
solely because of this agreement. DISTRIBUTOR shall be responsible for the
employment, control, and conduct of its officers, agents and employees and for
injury to such agents or employees or to others through its agents or employees.
DISTRIBUTOR assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employee taxes thereunder.
8. Indemnification
8.1 Indemnification of AAL
DISTRIBUTOR agrees to indemnify and hold harmless AAL and each of its present or
future directors, officers, employees, representatives and each person, if any,
who controls or previously controlled AAL within the meaning of Section 15 of
the 1933 Act, against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claims or expense and reasonable legal counsel
fees incurred in connection therewith) to which AAL or any such person who may
become subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Certificate by any person which
may be based upon any wrongful act by DISTRIBUTOR or any of DISTRIBUTOR's
directors, officers, employees or representatives, or may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering the Certificates filed or made public by AAL or any amendment thereof
or supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to AAL by DISTRIBUTOR.
In no case is DISTRIBUTOR's indemnity in favor of AAL, or any person indemnified
to be deemed to protect AAL or such indemnified person against any liability to
which AAL or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement, or is DISTRIBUTOR to be liable under its indemnity agreement
contained in this Section with respect to any claim made against AAL or any
person indemnified unless AAL or such person, as the case may be, shall have
notified DISTRIBUTOR in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon AAL or upon such person (or after AAL or
such person shall have received notice to such service on any designated agent).
However, failure to notify DISTRIBUTOR of any such claim shall not relieve
DISTRIBUTOR from any liability which DISTRIBUTOR may have to AAL or any person
against whom such action is brought otherwise than on account of DISTRIBUTOR's
indemnity agreement contained in this Section. DISTRIBUTOR agrees to promptly
notify AAL of the commencement of any litigation or proceedings against it or
any of its officers, employees or representatives in connection with the issue
or sale of the Certificates.
8.2 Indemnification of DISTRIBUTOR
AAL agrees to indemnify and hold harmless DISTRIBUTOR and each of its present or
former directors, officers, employees, representatives and each person, if any,
who controls or previously controlled DISTRIBUTOR within the meaning of Section
15 of the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition, or with regard to the terms and conditions, of
any Certificates by any person that may be based upon any wrongful act by AAL or
any of AAL's directors, officers, employees or representatives (other than
DISTRIBUTOR) or any other broker/DISTRIBUTORs who are selling Certificates for
AAL, may be based upon any untrue statement or alleged untrue statement or a
material fact contained in a registration statement, prospectus, shareholder
report or other information covering the Certificates or Fund filed or made
public by AAL or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading unless such statement
or omission was made in reliance upon information furnished to AAL by
DISTRIBUTOR. In no case is AAL's indemnity in favor of DISTRIBUTOR, or any
person indemnified to be deemed to protect DISTRIBUTOR or such indemnified
person against any liability to which DISTRIBUTOR or such person would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement, or is AAL to be liable under its
indemnity agreement contained in this Paragraph with respect to any claim made
against DISTRIBUTOR or person indemnified unless DISTRIBUTOR, or such person, as
the case may be, shall have notified AAL in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon DISTRIBUTOR
or upon such person (or after DISTRIBUTOR or such person shall have received
notice of such service on any designated agent). However, failure to notify AAL
of any such claim shall not relieve AAL from any liability which AAL may have to
DISTRIBUTOR or any person against whom such action is brought otherwise than on
account of AAL's indemnity agreement contained in this Section. AAL shall be
entitled to participate, at its own expense, in the defense, or, if AAL so
elects, to assume the defense of any suit brought to enforce any such claim, but
if AAL elects to assume the defense, such defense shall be conducted by legal
counsel chosen by AAL. AAL agrees to promptly notify DISTRIBUTOR of the
commencement of any litigation or proceedings against it or any of its trustees,
officers, employees, or representatives in connection with the issue or sale of
the Certificates.
9. Authorized Representations
DISTRIBUTOR is not authorized by AAL to give on behalf of AAL any information or
to make any representations in connection with the sale of Certificates other
than the information and representations contained in a Registration Statement
filed with the SEC under the 1933 Act and/or the 1940 Act, covering the
Certificates, the Account's, or the FLJND, as such Registration Statements may
be amended or supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of AAL for
DISTRIBUTOR's use. This shall not be construed to prevent DISTRIBUTOR from
preparing and distributing advertising and sales literature or other material as
it may deem appropriate, subject to the requirements of Paragraph 5 above.
10. Amendment or Assignment of Agreement
This Agreement may not be amended or assigned except by written agreement of
both parties.
11. Termination of Agreement
This Agreement may be terminated by either party hereto, without the payment
of any penalty, on 90 days prior notice in writing to the other party.
12. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Nothing herein contained shall be deemed to require AAL to take any
action contrary to its Charter or by-laws, or any applicable statutory or
regulatory requirement to which it is subject or by which it is bound, or to
relieve or deprive the Board of Directors of AAL of responsibility for and
control of the conduct of the affairs of AAL.
13. Definition of Terms
Any questions of interpretation of any ten-n or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1933 Act the 1934 Act, the Advisers Act or the 1940 Act shall be resolved by
reference to such term or provision and to interpretation thereof, if any, by
the United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the SEC validly issued pursuant
to such Act.
14. Compliance with Securities Laws
AAL represents that it is registered as an investment adviser under the Advisers
Act and agrees that it will comply with all the provisions of the Act and of the
rules and regulations thereunder. AAL and DISTRIBUTOR each agree to comply with
all of the applicable terms and provisions of the 1933 Act, the 1934 Act, the
1940 Act, the Advisers Act, and all applicable state laws. Each party hereto
shall advise the other promptly of (a) any action of the SEC or any authorities
of any state or territory, of which it has knowledge, affecting the registration
or qualification of the Account's or the Certificates, or the right to offer the
Certificates for sale or (b) the happening of any event which makes untrue any
statement, or which requires the making of any change in any Registration
Statement or any current Prospectus or Statement of Additional Information, in
order to make the statements therein not materially misleading.
15. Regulatory Examinations
DISTRIBUTOR and AAL agree to cooperate fully in any insurance regulatory
examination, investigation, or proceeding or any judicial proceeding arising in
connection with the Certificates. DISTRIBUTOR and AAL further agree to cooperate
fully in any securities regulatory examination, investigation. or any judicial
proceeding with respect to AAL, DISTRIBUTOR, their affiliates and their agents,
to the extent that such examination, investigation or proceeding is in
connection with Certificates under this Agreement. DISTRIBUTOR and AAL shall
furnish applicable federal and state regulatory authorities information or
reports in connection with its services under this Agreement which such
authorities request in order to ascertain whether AAL's operations are being
conducted in a manner consistent applicable laws or regulations.
16. Notices
Any notice required to be given pursuant to this Agreement shall be deemed duly
given if delivered or mailed by registered mail, postage prepaid, to DISTRIBUTOR
or to AAL at 000 Xxxx Xxxxxxx Xxxxxxxx, Xxxxxxxxx, 00000-0000.
17. Governing Law
This Agreement shall be governed and construed in accordance with the laws of
the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized representatives and their respective corporate seals to
be hereunto affixed, as of the day and year first above written.
AID ASSOCIATION FOR LUTHERANS AAL CAPITAL
MANAGEMENT CORPORATION
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. Same
-------------------------------- ---------------------------
Xxxx 0. Xxxxxxx Xxxxxx G. Same
President and Executive Vice
Chief Executive Officer President and
Chief Operating
Officer
By: /s/ Xxxxxxx X. Xxx
--------------------------------
Xxxxxxx X. Xxx
Senior Vice President
Secretary and General Counsel
