PARTICIPATION AGREEMENT
BY AND AMONG
AID ASSOCIATION FOR LUTHERANS
AND
THE AID ASSOCIATION FOR LUTHERANS SAVINGS PLAN
AND
AAL VARIABLE PRODUCT SERIES FUND, INC.,
DATED MARCH 15, 1999
TABLE OF CONTENTS
Page
1. Sale of FUND Shares.......................................................3
2. Representations and Warranties............................................4
3. Prospectus and Proxy Statements: Voting...................................5
4. Sales Material and Information............................................5
5. Monitoring of Material Irreconcilable Conflicts...........................6
6. Fees and Expenses.........................................................7
7. Diversification...........................................................8
8. Indemnification...........................................................9
9. Term and Termination of This Agreement...................................12
10. Notices..................................................................13
11. Miscellaneous............................................................13
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT, is made and entered into as of this 15th day
of March, 1999, by and among AID ASSOCIATION FOR LUTHERANS ("AAL"), on its own
behalf and as plan sponsor of the Aid Association for Lutherans Savings Plan and
AID ASSOCIATION FOR LUTHERANS SAVINGS PLAN (the "PLAN"), and AAL VARIABLE
PRODUCT SERIES FUND, INC. (the "FUND"), (collectively the "Parties").
WITNESSETH:
WHEREAS, AAL is a fraternal benefit society organized under the laws of the
State of Wisconsin engaged in the writing of life insurance, annuity contracts,
and other insurance products, and serves as plan sponsor of the PLAN and as
investment adviser of the FUND registered under the Investment Advisers Act of
1940;
WHEREAS, the PLAN is a qualified retirement plan established under Section
401(k) of the Internal Revenue Code by AAL for the benefit of its employees and
the employees of its subsidiaries and affiliates;
WHEREAS, the FUND, is registered with the Securities and Exchange
Commission (the "SEC"), as a diversified, open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act"), and its shares are
registered with the SEC under the Securities Act of 1933 (the "1933 Act");
WHEREAS, the FUND is a series company, meaning its Board of Directors may
designate various series ("Portfolios") into which the FUND's authorized shares
are to be divided from time to time, with each such Portfolio consisting of a
specific number of the FUND's authorized shares, representing an interest in a
separate portfolio of securities and other assets, and having its own investment
objectives, policies and restrictions (the Board of Directors currently has
designated seven such Portfolios);
WHEREAS, to the extent permitted by applicable insurance, tax, ERISA, and
other laws and regulations, the PLAN intends to purchase shares in the FUND on
behalf of the PLAN's participants, and the FUND is authorized to sell such
shares to the PLAN at net asset value;
WHEREAS, the FUND has entered into an Investment Advisory Agreement with
AAL, dated the twenty-seventh day of September, 1994, as amended, wherein AAL
has agreed to serve as investment adviser to the FUND, and to accept certain
obligations of the FUND as set forth herein, i.e., to compute the daily net
asset value and the net asset value per share for each Portfolio and to comply
with Subchapter M and Section 817(h) of the Internal Revenue Code of 1986 (the
"Code");
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the Parties agree as follows:
1. Sale of FUND Shares
1.1 The PLAN will provide for the allocation of net amounts among certain
Portfolios as may be offered from time to time in the PLAN's document.
The selection of the particular Portfolio is to be made by the Plan
Participant, and such selection may be changed in accordance with the
terms of the PLAN's document.
1.2 The FUND will sell to the PLAN those shares of each available
Portfolio that the PLAN administrator or its delegate orders based on
authorizations from its participants, effecting such orders on a daily
basis at the Portfolio's net asset value per share next computed as
provided in the FUND prospectus.
1.3 The Board of Directors of the FUND (the "Board") may refuse to sell
shares of any Portfolio to the PLAN, or suspend or terminate the
offering of shares of any Portfolio, if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Board, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of the FUND.
1.4 The FUND agrees that its shares will be sold only to: AAL, on its own
behalf and on behalf of separate accounts that it maintains to fund
variable annuity contracts and variable life insurance contracts of
AAL; (b) other life insurance companies; whether affiliated or
unaffiliated with AAL, on behalf of separate accounts funding variable
annuity contracts and variable life insurance contracts of such other
insurance companies; (c) the PLAN; and (d) other qualified pension or
retirement plans. AAL separate accounts and separate accounts of other
life insurance companies eligible to purchase shares of the FUND are
referred to in this Agreement as "Separate Accounts," and the PLAN and
other qualified pension and or retirement plans eligible to purchase
shares of the FUND are referred to together in this Agreement as
"Qualified Plans." No shares of any Portfolio will be sold to the
general public or to any life insurance company on its own behalf (as
opposed to a Separate Account it maintains) other than AAL.
1.5 The FUND will redeem for cash from the PLAN those full or fractional
shares of each Portfolio that the PLAN requests based on transactions
of the PLAN's participants, effecting such requests on a daily basis
at the Portfolio's net asset value per share next computed as provided
in the FUND prospectus.
1.6 Issuance and transfer of the FUND's shares will be by book entry only.
Stock certificates will not be issued to the PLAN. Shares ordered from
the FUND will be recorded in an appropriate title for the PLAN.
1.7 The FUND shall furnish notice promptly to the PLAN administrator or
its delegate of any income, dividends or capital gain distributions
payable on the shares of any Portfolio. The PLAN hereby elects to
receive all such income, dividends and capital gain distributions as
are payable on FUND shares in additional shares of that Portfolio. The
PLAN reserves the right to revoke this election and to receive all
such income, dividends and capital gain distributions in cash. The
FUND shall notify the PLAN administrator or its delegate of the number
of shares so issued as payment of such income, dividends and
distributions.
1.8 The FUND shall make the net asset value per share for each applicable
Portfolio available to PLAN on a daily basis, as soon as reasonably
practical after the net asset value per share is calculated.
1.9 The FUND may establish additional Portfolios to provide additional
funding media for the PLAN, or delete, combine, or modify existing
Portfolios. The shares of any additional Portfolio may be made
available to the PLAN by the FUND, pursuant to the terms of this
Agreement, and any applicable reference to any Portfolio, the FUND or
its shares herein shall include a reference to any such Portfolio.
2. Representations and Warranties
2.1 AAL represents and warrants that it is a fraternal benefit society
organized under the laws of the State of Wisconsin and engaged in the
writing of life insurance, annuity contracts, and other insurance
products; that it has legally and validly established its PLAN as a
qualified retirement plan under section 401(k) of the Internal Revenue
Code of 1986, as amended. AAL has applied for and received a valid
determination letter from the Internal Revenue Service for the PLAN.
The PLAN complies with the Employee Retirement Income Security Act of
1974 and all relevant federal and state statutory provisions.
2.2 The FUND represents and warrants that its shares sold pursuant to this
Agreement are or will be registered under the 1933 Act to the extent
required by the 1933 Act, duly authorized for issuance and sold in
compliance with the laws of the state of Maryland and all applicable
federal securities laws and that the FUND is or will be registered
under the 1940 Act to the extent required by the 1940 Act. The FUND
will amend the registration statement for its shares under the 1933
Act, as well as its registration statement under the 1940 Act, as
required in order to effect the continuous offering of its shares. The
FUND will register or qualify the shares for sale in accordance with
the laws of the various states only if and to the extent deemed
advisable by the FUND.
2.3 The FUND represents and warrants that each of its Portfolios will
qualify as a regulated investment company under Subchapter M of the
Code and that the investments of each of its Portfolios will comply
with the diversification requirements of Section 817(h) of the Code
and the regulations thereunder, and that it will notify the PLAN
immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
3. Prospectus and Proxy Statements: Voting
3.1 The FUND will provide the PLAN administrator or its delegate with
current FUND prospectus, statement of additional information and any
supplement thereto in a manner so as to allow the PLAN administrator
or its delegate to timely distribute the current FUND prospectus, SAI
and any supplement thereto, to each current and prospective PLAN
participant.
3.2 The FUND will provide a final copy of any proxy material, report to
shareholders, and other communication to shareholders to the PLAN
administrator or its delegate in a timely manner.
3.3 The FUND reserves the right to take all actions, including but not
limited to the dissolution, merger, and sale of all assets of the FUND
solely upon the authorization of its Board and/or shareholders as
required by the 0000 Xxx.
3.4 The PLAN will vote Portfolio shares in accordance with the terms of
the PLAN documents.
4. Sales Material and Information
4.1 The PLAN administrator or its delegate will furnish, or will cause to
be furnished, to the FUND or its designee, each piece of sales
literature or other promotional material in which the FUND, or the
PLAN is named, at least fifteen (15) days prior to its intended use.
No such material will be used if the FUND or its designee objects to
such intended use within fifteen (15) days after receipt of such
material.
4.2 The PLAN will not give any information or make any representation or
statement, or cause such information to be given or representation to
be made, on behalf of the FUND or concerning any Portfolio in
connection with the sale of FUND shares other than the information or
representations contained in the registration statement, prospectus,
and SAI for FUND shares, as such registration statement, prospectus,
and SAI may be amended or supplemented from time to time, or in
reports or proxy materials for the FUND, or in sales literature or
other promotional material approved by the FUND or its designee,
except with the permission of the FUND or its designee.
4.3 The FUND or its designee will furnish, or will cause to be furnished,
to the PLAN administrator or its delegate, each piece of sales
literature or other promotional material of the FUND in which the PLAN
is named, at least fifteen (15) days prior to its intended use. No
such material will be used if the PLAN administrator or its delegate
objects to such intended use within fifteen (15) days after receipt of
such material.
4.4 The FUND will not give any information or make any representations or
statements, or cause such information to be given or representations
to be made, on behalf of or concerning the PLAN other than the
information or representations contained in a registration statement
or prospectus, as such registration statement and prospectus may be
amended or supplemented from time to time, or in published reports for
the PLAN that are in the public domain or approved by the PLAN
administrator or its delegate for distribution to PLAN Participants,
or in sales literature or other promotional material approved by the
PLAN administrator or its delegate, except with the permission of the
PLAN administrator or its delegate.
4.5 The FUND will provide to the PLAN one complete copy of all
registration statements, prospectuses, SAI's, reports, proxy material,
sales literature and other promotional material, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the FUND or its shares, contemporaneously
with the filing of such document with the SEC or other regulatory
authorities.
4.6 The PLAN will provide to the FUND one complete copy of all reports,
sales literature and other promotional material, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the PLAN and the FUND, contemporaneously
with the filing of such document with the SEC, IRS or other regulatory
authorities.
5. Monitoring of Material Irreconcilable Conflicts
5.1 The FUND's Board of Directors will monitor the FUND for the existence
of any materials irreconcilable conflict between and among the
interests of the Certificateholders of the Separate Accounts investing
in the FUND and the participants of the PLAN, and any other Qualified
Plans investing in the FUND. A material irreconcilable conflict may
arise for a variety of reasons, including: (a) action by any state
insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretive letter, or
any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investment of the
FUND are being managed; (e) a difference in voting instructions given
by variable annuity Certificateholders and variable universal life
Certificateholders of the Separate Accounts vis-a-vis voting
instructions provided by the trustees of the Qualified Plans; (f) a
decision by AAL or another life insurance company to disregard the
voting instructions of Certificateholders in one or more of the
Separate Accounts; or (g) if applicable, a decision by the trustee of
a Qualified Plan to disregard the voting instructions of the
participants of such Qualified Plan. A determination by the FUND's
Board that a material irreconcilable conflict exists will be a final
determination.
5.2 If it is determined by a majority of the FUND's Board, or by a
majority of its disinterested directors, that a material
irreconcilable conflict exists, the PLAN shall, at its expense and to
the extent reasonably practicable (as determined by a majority of the
disinterested directors of the FUND), take whatever steps are
necessary to remedy or eliminate the material irreconcilable conflict.
Such steps could include withdrawing the assets allocable to the PLAN
from the FUND or any Portfolio of the FUND (but no charge or penalty
shall be imposed as a result of withdrawal) and reinvesting such
assets in a different investment medium, which could include another
Portfolio of the FUND.
5.3 The PLAN is responsible, to the extent permitted by applicable law,
for taking remedial action in the event that the FUND's Board
determines a material irreconcilable conflict exists. The PLAN will
take remedial action only as it pertains to PLAN assets and in
accordance with its fiduciary responsibility to the PLAN participants.
The PLAN will be responsible for the cost of any such remedial action.
For the purposes of this Section, a majority of the disinterested
members of the FUND's Board will determine whether or not any proposed
action adequately remedies any material irreconcilable conflict. In no
event shall the FUND or AAL be required to establish a new Portfolio
or new funding medium for any variable annuity or variable universal
life contract. The PLAN will not be required by this Section to
establish a new funding medium if (a) a majority of its participants
materially and adversely affected by the irreconcilable material
conflict vote to decline such offer or (b) pursuant to the PLAN's
documents and applicable law, the PLAN makes such decision without a
vote of its participants.
5.4 The FUND's Board determination of the existence of a material
irreconcilable conflict and its implications will be made known
promptly and in writing to the PLAN administrator.
5.5 All reports of potential or existing conflicts received by the FUND's
Board and all Board actions with regard to, or determining the
existence of, a conflict of interest, notifying the PLAN of a
conflict, and determining whether any proposed action adequately
remedies a conflict, will be properly recorded in the minutes of the
FUND's Board or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.6 The FUND will disclose in its prospectus that (a) shares of the FUND
may be offered to both Separate Accounts and to Qualified Plans; (b)
material irreconcilable conflicts may arise between the interest of
various Certificateholders investing in the Separate Accounts and the
interests of Qualified Plans participants investing in the FUND; and
(c) the FUND's Board will monitor events in order to identify the
existence of any material conflict and determine what action, if any,
should be taken in response to such material irreconcilable conflict.
5.7 No less than annually, the PLAN will submit to the FUND's Board such
reports, materials and data as the Board may reasonably request so
that the Board may carry out fully its obligations under this Section.
Such reports, materials and data will be submitted more frequently if
deemed appropriate by the FUND's Board. In any event, the PLAN
promptly will notify the FUND's Board in writing if it becomes aware
of any facts or circumstances that could give rise to a material
irreconcilable conflict between the interests of various
Certificateholders in the Separate Accounts and the interests of the
Qualified Plan participants investing in the FUND. All reports
submitted to the FUND's Board under this Section 5.7 shall include all
information reasonably necessary for the Board to consider the
conflict issues raised. In this regard, if the PLAN documents ever
permit pass-through voting to plan participants, the PLAN promptly
shall notify the FUND's Board whenever the PLAN trustee has determined
to disregard PLAN participant voting instructions on any matter
submitted to a vote of shareholders of the FUND.
6. Fees and Expenses
6.1 The FUND will pay all expenses incident to the FUND's performance
under this Agreement. In addition to the investment advisory fee,
subject to the expense reimbursement arrangement discussed below, each
Portfolio will bear all of its operating expenses that are not
specifically assumed by AAL, including the following: (i) interest and
taxes (ii) brokerage commissions; (iii) insurance premiums; (iv)
compensation and expenses for those Directors who are not "interested"
persons under Section 2(a)(19) of the Act; (v) independent legal and
audit expenses; (vi) fees and expenses of the FUND's custodian,
shareholder servicing or transfer agent and accounting services agent;
(vii) expenses incident to the issuance of its shares, including stock
certificates and issuance of shares on the payment of, or reinvestment
of dividends; (viii) fees and expenses incident to the registration
under Federal or state securities laws of the FUND or its shares; (ix)
FUND or portfolio organizational expenses; (x) FUND expenses of
preparing, printing and mailing reports and notices, proxy material
and prospectuses to shareholders of the FUND; (xi) all other expenses
incidental to holding meetings of the FUND's shareholders; (xii) dues
or assessments of or contributions to the Investment Company Institute
or any successor or other industry association; (xiii) such
non-recurring expenses as may arise, including litigation affecting
the FUND and the legal obligations which the FUND may have to
indemnify its officers and Directors with respect thereto; and (xiv)
cost of daily valuation of each of the Portfolio's securities and net
asset value per share.
6.2 AAL will pay all expenses incident to AAL's performance under this
Agreement. In addition, AAL will pay for all expenses for the printing
and distribution to the PLAN administrator or its delegate the FUND
proxy materials, proxy cards and voting instructions forms
(collectively "proxy information"), tabulating the results of proxy
solicitations, printing and distributing to the PLAN administrator or
its delegate the FUND prospectus, SAI, supplements, proxy materials,
report to shareholders and other communication to shareholders.
6.3 The PLAN will pay all expenses incident to the PLAN's performance
under this Agreement. In addition, the PLAN will bear any expenses
associated with administration of the PLAN.
7. Diversification
7.1 The Portfolios will at all times invest money from the PLAN in
accordance with the terms of the FUND's prospectus and the PLAN
document. Without limiting the scope of the foregoing, the Portfolios
will at all times comply with Section 817(h) of the Code and Treasury
Regulations Section 1.817-5 relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations.
7.2 The FUND shall furnish to the PLAN, on a regular basis, reports of all
of the investments of each Portfolio in a form sufficient to permit
the PLAN to determine whether each Portfolio is in compliance with the
diversification requirements of Section 817(h) of the Code and the
Regulations thereunder and shall take immediate action, on learning
through its own monitoring, or on advice from AAL or the PLAN, that
any Portfolio is not in compliance with such requirements, to return
to compliance with such requirements.
7.3 If any Portfolio is found not to comply with the diversification
requirements at the end of a calendar quarter and the 30-day grace
period allowed under the Regulations, the FUND shall take all
appropriate efforts immediately to restore any such Portfolio to
compliance and shall fully cooperate with the PLAN in any effort to
correct such diversification failure under procedures established by
the Internal Revenue Service, including those set forth in Revenue
Procedure 92-25.
8. Indemnification
8.1 Indemnification by AAL, as PLAN Sponsor
(a) AAL, as PLAN sponsor, will indemnify and hold harmless the FUND
and each of its Directors, officers, and employees and each
person, if any, who controls the FUND (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against
any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of AAL and
the PLAN), or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, and which:
(i) arise out of or are based upon any failure by the PLAN or
AAL to perform the duties or assume the general business
responsibilities of the PLAN with respect to the design,
drafting, federal approvals, issuance, servicing and
administration of the PLAN, or the establishment and
maintenance of the PLAN; or
(ii)arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement, prospectus, or SAI regarding the
PLAN, or contained in the sales literature for the PLAN (or
any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading, provided that this Agreement to indemnify
will not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished in writing to AAL or the PLAN by or on behalf of
the FUND for use in the registration statement, prospectus,
or SAI for the PLAN or in the PLAN or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the FUND shares to PLAN
participants; or
(iii)arise out of or are based upon statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI, or
sales literature of the FUND not supplied by the PLAN, or
persons under its control), or wrongful conduct of the PLAN
or persons under its control, or failure to supervise
persons under AAL's or the PLAN's control or entities or
individuals with which the PLAN contracts, with respect to
the sale or distribution of the FUND shares to PLAN
participants; or
(iv)arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of the FUND or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in
reliance upon information furnished in writing to the FUND
by or on behalf of AAL; or
(v) arise out of or result from any failure by AAL or the PLAN
to provide the services and furnish the materials
contemplated by this Agreement; or
(vi)arise out of or result from any material breach of any
representation and/or warranty made by AAL: in this
Agreement or arise out of or result from any other material
breach of this Agreement by AAL or the PLAN, as limited by
and in accordance with the provisions of Sections 8.1(b).
and 8.1(c) hereof.
(b) AAL will not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to the FUND,
whichever is applicable.
(c) AAL will not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the AAL in writing
within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify AAL of any such
claim will not relieve AAL from any liability that it may have to
the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties,
the AAL and or the PLAN shall be entitled to participate, at its
own expense, in the defense thereof. AAL also will be entitled to
assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from AAL to such party of
the AAL's election to assume the defense thereof, the Indemnified
Party will bear the fees and expenses of any additional counsel
retained by it, and AAL will not be liable to such party under
this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
(d) The Indemnified Party will promptly notify the AAL of the
commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with
transactions that are the subject of this Agreement whether or
not indemnification is being sought hereunder.
8.2 Indemnification by the FUND
(a) The FUND will indemnify and hold harmless the PLAN and each of
its directors, officers and employees and each person, if any,
who controls the PLAN (collectively, the "Indemnified Parties"
for purposes of this Section 8.2) against any and all losses,
claims, damages, liabilities (including amounts paid in
settlement with the written consent of FUND) or litigation
(including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, regulation, at
common law or otherwise, which:
(i) arise out of or are based upon any failure by the FUND to
perform the duties or assume the general business
responsibilities required by this Agreement with respect to
the sale of shares of the FUND to the PLAN; or
(ii)arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the sales literature for the FUND and/or the Certificates,
or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify will not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished in writing to the FUND by or on behalf of the PLAN
for use in the registration statement, prospectus, or SAI
for use in the sales literature or otherwise for use in
connection with the sale of Portfolio shares; or
(iii)arise out of or are based upon statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI, or
sales literature of the FUND not supplied by the FUND, or
persons under its control) or wrongful conduct of the FUND
or persons under its control, or failure to supervise
persons under the FUND's control or entities or individuals
with which the FUND contracts, with respect to the sale or
distribution of the Certificates or FUND shares; or
(iv)arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of the FUND or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in
reliance upon information furnished in writing to the PLAN
by or on behalf of the PLAN; or
(v) arise out of or result from any failure by the FUND to
provide the services and furnish the materials contemplated
by this Agreement; or
(vi)arise out of or result from any material breach of any
representation and/or warranty made by the FUND in this
Agreement or arise out of or result from any other material
breach of this Agreement by the FUND, except to the extent
provided in Section 8.2(b) and 8.2(c) hereof.
(b) The FUND will not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would be subject by
reason of such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the
FUND, whichever is applicable.
(c) The FUND will not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the FUND in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify the FUND of any such
claim will not relieve the FUND from any liability that it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties,
the FUND shall be entitled to participate, at its own expense, in
the defense thereof. The FUND also will be entitled to assume the
defense thereof, with counsel satisfactory to the party named in
the action. After notice from the FUND to such party of the
FUND's election to assume the defense thereof, the Indemnified
Party will bear the fees and expenses of any additional counsel
retained by it, and the FUND will not be liable to such party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
(d) The Indemnified Party will promptly notify the FUND of the
commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with
transactions that are the subject of this Agreement whether or
not indemnification is being sought hereunder.
9. Term and Termination of this Agreement
9.1 This Agreement will Terminate:
(a) as to any party hereto, at the option of that party, upon prior
written notice to the other party as provided in Section 9.3
herein; or
(b) at the option of the FUND in the event that formal administrative
proceedings are instituted against the PLAN by the IRS, DOL or
any other regulatory body regarding the PLAN's duties under this
Agreement or related to the sale of shares to PLAN participants,
the operation of the PLAN, provided, however, that the FUND
determines, in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material adverse
effect upon the ability of the PLAN to perform its obligations
under this Agreement; or
(c) at the option of the PLAN in the event that formal administrative
proceedings are instituted against the FUND by the NASD, the SEC,
or any state securities or insurance commission or any other
regulatory body, regarding the FUND's duties under this Agreement
or related to the sale of FUND shares or the operation of the
FUND, provided, however, that the PLAN determines, in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability
of the FUND to perform its obligations under this Agreement; or
(d) at the option of the PLAN, upon requisite authority to substitute
the shares of another investment company for shares of the FUND
in accordance with the PLAN investment policy or standards of
conduct; or
(e) at the option of the PLAN, in the event any of the FUND's shares
are not registered, issued, or sold in accordance with applicable
federal and any state law or such law precludes the use of such
shares as an investment of the PLAN; or
(f) at the option of the PLAN, if the FUND fails to meet the
requirements specified in Section 2.2 or 2.3 hereof; or
(g) at the option of the FUND, if the investments of the PLAN fail to
satisfy the diversification requirements of the Code and the
regulations thereunder, or
(h) at the option of the PLAN, if the FUND dissolves or becomes
otherwise unable to sell shares to fund the PLAN.
9.2 It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 9.1(a) may be exercised
for any reason or for no reason.
9.3 Notice Requirement for Termination. No termination of this Agreement
will be effective unless and until the party terminating this
Agreement gives prior written notice to the other party to this
Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore,
(a) in the event that any termination is based upon the provisions of
Section 9.1(a) hereof, such prior written notice shall be given
at least sixty (60) days in advance of the effective date of
termination as required by such provision;
(b) in the event that any termination is based upon the provisions of
Section 9.1(b) or Section 9.1(c) hereof, such prior written
notice shall be given at least sixty (60) days in advance of the
effective date of termination;
(c) in the event that any termination is based upon the provisions of
Section 9.1(d) hereof, the PLAN will give at least sixty (60)
days prior written notice to the FUND of the date of any proposed
action to substitute FUND shares, including the filing of any
applicable exemptive application under the 1940 Act relating to
the PLAN; and the PLAN will provide the FUND with a copy of any
such exemptive application; and
(d) in the event that any termination is based upon the provisions of
Section 9.1(e), Section 9.1(f), or Section 9.1(g) hereof, such
prior written notice shall be given as soon as possible within
twenty-four (24) hours after the terminating party learns of the
event causing termination to be required.
9.4 Partial Termination. It is also understood that this Agreement may be
terminated with regard to a specific Portfolio or Portfolios of the
FUND, or the entire FUND at the discretion of the terminating party.
Notwithstanding any termination of this Agreement, the FUND, or any
Portfolio, provided its shares are then available for sale to any
persons, shall at the option of the PLAN, continue to make available
additional shares of the FUND pursuant to the terms and conditions of
this Agreement, for all PLAN participants who own FUND shares on the
effective date of termination of this Agreement (hereinafter referred
to as "Existing Shares"). Specifically, without limitation, the owners
of Existing Shares shall be permitted to transfer or reallocate
investments under terms of the PLAN, redeem investments in the FUND
and/or invest in the FUND upon the making of additional purchase
payments under the Existing Shares.
10. Notices
Any notice will be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to AAL or the PLAN: 0000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx Xxxx
If to the FUND: 0000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
11. Miscellaneous
11.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Maryland, where the
sale of any FUND share shall be deemed to have been made; provided,
however, that if such laws or any of the provisions of this Agreement
conflict with applicable Provisions of the 1940 Act, the latter shall
control.
11.2 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
will not be effected thereby.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the 15th day of March, 1999.
AID ASSOCIATION FOR LUTHERANS AID ASSOCIATION FOR LUTHERANS
SAVINGS PLAN
By: /s/ Xx Xxxxxxxxxxxx By: /s/Xxxx X. Xxxxxxx
------------------------------------ ------------------------------
De Xxxxxxxxxxxx Xxxx X. Xxxxxxx
Benefit Plans Administrative Officer President and Chief Executive
Officer
By: /s/Xxxxxxx X. Xxx
------------------------------
Xxxxxxx X. Xxx
Senior Vice-President,
Secretary and General Counsel
AAL VARIABLE PRODUCT SERIES FUND, INC.
By: /s/Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
President
By: /s/Xxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxxx
Secretary
