AMENDED AND RESTATED
PRINCIPAL UNDERWRITING
AND
SERVICING AGREEMENT
BY AND BETWEEN
AAL CAPITAL MANAGEMENT CORPORATION
AND
AID ASSOCIATION FOR LUTHERANS
DATED
JANUARY 1, 2000
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: Schedule of Sales Commissions
PRINCIPAL UNDERWRITING AND SERVICING AGREEMENT
This PRINCIPAL UNDERWRITING AND SERVICING AGREEMENT (the "Agreement")
made and entered into this 1ST day of January, 2000, by and between AAL CAPITAL
MANAGEMENT CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, ("DISTRIBUTOR" or "AAL CMC") and AID ASSOCIATION FOR
LUTHERANS ("AAL), a fraternal benefit society organized and existing under the
laws of the State of Wisconsin, on its own behalf and on behalf of AAL Variable
Annuity Accounts I & II and AAL Variable Life Account I, all collectively
referred to as "ACCOUNTS."
RECITALS
AAL and all its ACCOUNTS are registered as unit investment trusts under
the Investment Company Act of 1940 (the "1940 Act"), propose to offer for sale
certain flexible premium deferred variable annuity, single premium immediate
variable annuity and variable universal life certificates (the "Certificates"),
interests in the ACCOUNTS 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 ACCOUNTS and/or in the AAL General
Account. The ACCOUNTS will invest solely in portfolio shares of the AAL Variable
Product Series Fund, Inc. (the "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 AAL 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 underwriter for the
Certificates during the term of this Agreement in each state or other
jurisdiction where the Certificates may legally be sold. Representatives of
other broker-dealer firms with which AAL CMC has executed a selling agreement
may also sell the Certificates. 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 Prospectus and the statement of additional
information included as part of the Registration Statement for AAL and the
ACCOUNTS, 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 ACCOUNTS 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
subaccounts of the ACCOUNTS and the AAL General Account, as defined and
described in the Certificate Prospectuses. All premiums from purchasers shall be
deposited by AAL in either the ACCOUNTS, to be promptly allocated among the
subaccounts, or to the AAL General Account; as designated by the purchaser and
in accordance with the 1940 Act and rules thereunder. Premiums allocated to the
subaccounts of the ACCOUNTS 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 ACCOUNTS 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 its
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 a joint electronic data base and reporting system to
consolidate securities and insurance licensing information for their District
Representatives and registered representatives, respectively. The system will
provide controls satisfactory to DISTRIBUTOR in the processing of Certificate
applications to ensure that all of its registered representatives are properly
licensed when offering and selling the Certificates. The system shall be kept
current by: (i) DISTRIBUTOR providing securities licensing data to AAL; and (ii)
AAL providing insurance 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 ensure 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 with 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; 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 ensure 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 Agents) 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 section. DISTRIBUTOR shall designate to AAL the records required and
such records shall be maintained subject to the provisions of Section 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
AAL shall be solely responsible, at its expense, for registration of
the Certificates and the ACCOUNTS 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 ensure 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, 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 section.
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 mutually determined for
purposes of this Agreement by DISTRIBUTOR and AAL. 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 warrant 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 that 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 subaccounts, 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 ensure 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 Section 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 AAL CMC 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. Section 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 in
the performance of DISTRIBUTOR's duties hereunder. 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. LNDEMNIFICATION
8.1 INDEMNIFICATION OF AAL
DISTRIBUTOR agrees to indemnify and hold harmless AAL and each of its
present or former 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 Section 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 ACCOUNTS, or the FUND, 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 Section 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 or
immediately if agreed upon by both parties.
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 term 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 CMC 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 CMC ,as investment adviser
to the Fund and as DISTRIBUTOR, agrees 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 to the Agreement 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 ACCOUNTS 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
proceeding or any judicial proceeding with respect to AAL, DISTRIBUTOR, their
affiliates and their agents or representatives, to the extent that such
examination, investigation or proceeding is in connection with Certificates
distributed under this Agreement. DISTRIBUTOR shall furnish applicable federal
and state regulatory authorities with any information or reports in connection
with its services under this Agreement which such authorities may request in
order to ascertain whether AAL's operations are being conducted in a manner
consistent with any 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 Xxxxxx, 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 dates first above written.
AID ASSOCIATION FOR LUTHERANS AAL CAPITAL MANAGEMENT CORPORATION
By: /s/Xxxx X. Xxxxxxx By: /s/Xxxxxx X. Same
-------------------------- -----------------------------
Xxxx X. Xxxxxxx Xxxxxx X. Same
President and President
Chief Executive Officer
By: /s/Xxxxxxx X. Xxx By: /s/Xxxxxxxxx X. Xxxxxxx
-------------------------- -----------------------------
Xxxxxxx X. Xxx Xxxxxxxxx X. Xxxxxxx
Senior Vice President, Secretary
Secretary and General Counsel
SCHEDULE A: SCHEDULE OF SALES COMMISSIONS
To the Principal Underwriting and Servicing Agreement
dated January 1, 2000
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CERTIFICATES
AND
SINGLE PREMIUM IMMEDIATE VARIABLE ANNUITY CERTIFICATES
AMOUNT OF PREMIUM DEPOSIT* COMMISSION
First $100,000 2.25%
Next $150,000 1.50%
Next $250,000 1.00%
Amounts in excess of $500,000 0.50%
AGE 80 AND ABOVE*
First $500,000 1.00%
Amounts in excess of $500,000 0.50%
- Commission rate based on size of the individual premium applied. It is not
based on cumulative premiums.
- An AUM service fee is payable quarterly.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CERTIFICATES
COMMISSIONS FOR: Initial issue with NO exchange of other AAL certificate.
ISSUE AGE 1ST AMOUNT EQUAL TO MFYP 2ND AMOUNT EQUAL TO MFYP
0-44 47.5% 20.5%
45. 43.5 18.5
46. 43.0 18.0
47. 42.0 17.5
48. 41.0 17.0
49. 40.0 16.5
50. 39.0 16.0
51. 38.0 15.5
52. 37.0 15.0
53. 36.0 14.5
54. 35.0 14.0
55. 34.5 13.5
56. 34.0 13.5
57. 33.5 13.5
58. 32.5 13.5
59. 31.5 13.5
60. 30.5 13.5
61. 29.5 13.5
62. 28.5 13.5
63. 27.5 13.5
64. 26.5 13.5
65. 25.5 13.5
66. 25.5 13.5
67. 25.5 13.5
68. 24.5 13.5
69. 24.5 13.5
70. 23.5 13.5
71. 23.5 13.5
72. 22.5 13.5
73. 22.5 13.5
74. 21.5 13.5
75. 21.5 13.5
76. 21.5 13.5
77. 21.5 13.5
78. 20.5 13.5
79. 20.5 13.5
80. 20.5 13.5
COMMISSIONS FOR: Special class rating for certificate issue, certificate or
benefit increase, or addition of benefits.
ISSUE AGE MFYP FOR RATING
All 70%
COMMISSIONS FOR: Disability Waiver, Accidental Death, Guaranteed Purchase
Option, or Applicant Waiver included at initial issue,
benefit increase or addition of benefit.
ISSUE AGE MFYP FOR BENEFIT/INCREASE
All 70%
SERVICE COMMISSIONS: The servicing registered representative, as determined by
AAL, will be paid service commissions at the rate of 2.5
percent on all premiums applied on the certificate.
