ITEM 77.Q.1.G
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this 12th day of November,
2003, by and between The Lutheran Brotherhood Family of Funds ("LB Trust"), a series of separate mutual fund
portfolios within a single Delaware statutory trust acting on behalf of each series listed on Schedule A attached
hereto (each an "Acquired Fund") with its principal place of business at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX
00000, and The AAL Mutual Funds ("AAL Trust"), a series of separate mutual fund portfolios within a single
Massachusetts business trust acting on behalf of each fund listed on Schedule A attached hereto (each an
"Acquiring Fund") with its principal place of business at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000.
This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the
meaning of the Treasury Regulations under Section 368(a) of the United States Internal Revenue Code of 1986, as
amended (the "Code"), with each Acquiring Fund and the corresponding Acquired Fund each being a "party to a
reorganization" within the meaning of Section 368(b) of the Code. The reorganization with respect to each
Acquiring Fund and the corresponding Acquired Fund (each a "Reorganization") will consist of (a) the transfer of
all of the assets of the Acquired Fund in exchange for shares of the corresponding class of the Acquiring Fund
(the "Acquiring Fund Shares") and the assumption by the Acquiring Fund of the stated accrued and unpaid
liabilities of the corresponding Acquired Fund, and (b) the distribution, after the Closing Date herein referred
to, of Acquiring Fund Shares to the shareholders of the corresponding Acquired Fund in liquidation and the
subsequent dissolution of such Acquired Fund, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Acquiring Fund and the Acquired Fund are series of registered investment companies of the
management type and the Acquired Fund owns securities that generally are assets of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue shares of common stock in multiple classes;
WHEREAS, the Board of Trustees of the Acquired Fund has determined that the exchange of all of the
assets of the Acquired Fund for Acquiring Fund Shares is in the best interests of the Acquired Fund and its
shareholders and that the shares of the existing shareholders of the Acquired Fund would not be diluted as a
result of this transaction;
WHEREAS, the Board of Trustees of the Acquiring Fund has determined that the exchange of all the assets
of the Acquired Fund for Acquiring Fund Shares is in the best interests of the Acquiring Fund and its
shareholders;
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set
forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND SHARES AND LIQUIDATION OF THE
ACQUIRED FUND
1.1. The Acquired Fund will transfer all of its assets (consisting, without limitation, of portfolio
securities and instruments, dividends and interest receivables, cash and other assets), as set forth in the
statement of assets and liabilities referred to in Paragraph 7.2 hereof (the "Statement of Assets and
Liabilities"), to the Acquiring Fund free and clear of all liens and encumbrances, except as otherwise provided
herein, in exchange for (i) the assumption by the Acquiring Fund of the stated accrued and unpaid liabilities of
the Acquired Fund, which liabilities shall be assigned and transferred to the Acquiring Fund by the Acquired Fund
(the "Assumed Liabilities") and assumed by the Acquiring Fund, and (ii) delivery by the Acquiring Fund to the
Acquired Fund, for distribution pro rata by the Acquired Fund to its shareholders in proportion to their
respective ownership of shares of beneficial interest in the Acquired Fund, as of the close of business on April
25, 2003 (the "Closing Date"), of a number of the corresponding class of Acquiring Fund Shares having an
aggregate net asset value equal to the value of the assets, less such liabilities assumed, assigned and delivered
(herein referred to as the "net value of the assets"), all determined as provided in Paragraph 2.1 hereof and as
of a date and time as specified therein. Such transactions shall take place at the closing provided for in
Paragraph 3.1 hereof (the "Closing"). All computations shall be provided by Thrivent Investment Management Inc.
(the "Pricing Agent") for the Acquiring Fund and the Acquired Fund.
1.2. (a) The assets of the Acquired Fund to be acquired by the Acquiring Fund shall consist of all
property, including, without limitation, all cash, securities and dividends or interest receivables which are
owned by the Acquired Fund and any deferred or prepaid expenses shown as an asset on the books of the Acquired
Fund on the Closing Date; and
(b) The Acquired Fund has provided the Acquiring Fund with a list of the Acquired Fund's assets as of the
date of execution of this Agreement. The Acquired Fund reserves the right to sell any securities but will not,
without the prior approval of the Acquiring Fund, acquire any additional securities other than securities of the
type in which the Acquiring Fund is permitted to invest. The Acquiring Fund will, within a reasonable time prior
to the Closing Date, furnish the Acquired Fund with a statement of the Acquiring Fund's investment objectives,
policies and restrictions and a list of the securities, if any, on the Acquired Fund's list referred to in the
first sentence of this paragraph which do not conform to the Acquiring Fund's investment objectives, policies and
restrictions. In the event that the Acquired Fund holds any investments which the Acquiring Fund may not hold,
the Acquired Fund will dispose of such securities prior to the Closing Date. In addition, if it is determined
that the portfolios of the Acquired Fund and the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments, the
Acquired Fund, if requested by the Acquiring Fund, will dispose of and/or reinvest a sufficient amount of such
investments as may be necessary to avoid violating such limitations as of the Closing Date.
1.3. The Acquired Fund will endeavor to discharge all the Acquired Fund's known liabilities and obligations
prior to the Closing Date. The Acquired Fund shall assume only the Assumed Liabilities, and shall not assume any
other debts, liabilities or obligations of the Acquired Fund.
1.4. The Acquiring Fund shall assume the right to assert all legal claims against third parties as would have
been available to the Acquired Fund as of the Valuation Date (as defined in Section 2.1).
1.5. As provided in Section 3.3, either on or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Fund will liquidate by distributing pro rata to the Acquired Fund's
shareholders of record determined as of the close of business on the Closing Date (the "Acquired Fund
Shareholders"), the corresponding classes of Acquiring Fund Shares it receives pursuant to Section 1.1. Such
liquidation and distribution will be accomplished by the transfer of the Acquiring Fund Shares then credited to
the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the name of the Acquired Fund Shareholders and representing the respective pro rata number of
the Acquiring Fund Shares due such shareholders. All issued and outstanding shares of the Acquired Fund will
simultaneously be canceled on the books of the Acquired Fund.
1.6. The Acquired Fund shareholders holding physical certificates representing their ownership of shares of
beneficial interest of the Acquired Fund shall surrender such certificates or deliver an affidavit with respect
to lost certificates in such form and accompanied by such surety bonds as the Acquired Fund may require
(collectively, an "Affidavit"), to Thrivent Financial for Lutherans prior to the Closing Date. Any Acquired Fund
share certificate which remains outstanding on the Closing Date shall be deemed to be canceled, shall no longer
evidence ownership of shares of beneficial interest of the Acquired Fund and shall evidence ownership of
Acquiring Fund Shares. Unless and until any such certificate shall be so surrendered or an Affidavit relating
thereto shall be delivered, dividends and other distributions payable by the Acquiring Fund subsequent to the
Liquidation Date with respect to Acquiring Fund Shares shall be paid to the holder of such certificate(s), but
the Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares unless the Acquired Fund
share certificates are first surrendered to the Acquiring Fund or an Affidavit relating thereto shall be
delivered.
1.7. Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a name other than the
registered holder of the Acquired Fund shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.8. Any reporting responsibility of the Acquired Fund is and shall remain the responsibility of the Acquired
Fund up to and including the Closing Date and such later date on which the Acquired Fund is terminated.
1.9. The Acquired Fund shall, following the Closing Date and the making of all distributions pursuant to
Section 1.4, be dissolved under the laws of the State of Maryland and in accordance with its governing documents.
2. VALUATION
2.1. The net asset values of the corresponding classes of Acquiring Fund Shares and the values of the assets
of the Acquired Fund to be transferred and the Assumed Liabilities shall, in each case, be determined as of the
close of business (4:00 p.m. Eastern time) on the Closing Date. The net asset values of the Acquiring Fund Shares
shall be computed by the Pricing Agent in the manner set forth in the AAL Trust's Declaration of Trust or Bylaws
and the Acquiring Fund's then-current prospectus and statement of additional information and shall be computed in
each case to not fewer than two decimal places. The net values of the assets of the Acquired Fund to be
transferred shall be computed by the Pricing Agent by calculating the value of the assets transferred by the
Acquired Fund and by subtracting therefrom the amount of the liabilities assigned and transferred to and assumed
by the Acquiring Fund on the Closing Date, said assets and liabilities to be valued in the manner set forth in
the Acquired Fund's then current prospectus and statement of additional information and shall be computed in each
case to not fewer than two decimal places.
2.2. The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for
the Acquired Fund's assets shall be determined by dividing the value of the Acquired Fund's assets less the
liabilities assumed by the Acquiring Fund, by the Acquiring Fund's net asset value per share, all as determined
in accordance with Section 2.1 hereof.
2.3. All computations of value shall be made by the Pricing Agent, in accordance with its regular practice as
pricing agent for the Acquired Fund and the Acquiring Fund, respectively.
3. CLOSING
3.1. The Closing Date shall be June 25, 2004, or such later date as the parties may agree to in writing. All
acts taking place at the Closing shall be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00 p.m. (Central time) at the offices
of Thrivent Financial for Lutherans, 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or at such other time
and/or place as the parties may agree.
3.2. In the event that on the Valuation Date (a) the New York Stock Exchange ("NYSE") or another primary
trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or
trading thereon shall be restricted or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Acquired Fund is
impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall
have been fully resumed and reporting shall have been restored.
3.3. Portfolio securities that are not held in book-entry form in the name of State Street Bank (the
"Custodian") as record holder for the Acquired Fund shall be presented by the Acquired Fund to the Custodian for
examination no later than three business days preceding the Closing Date. Portfolio securities which are not held
in book-entry form shall be delivered by the Acquired Fund to the Custodian for the account of the Acquiring Fund
on the Closing Date, duly endorsed in proper form for transfer, in such condition as to constitute good delivery
thereof in accordance with the custom of brokers, and shall be accompanied by all necessary federal and state
stock transfer stamps or a check for the appropriate purchase price thereof. Portfolio securities held of record
by the Custodian in book-entry form on behalf of the Acquired Fund shall be delivered to the Acquiring Fund by
the Custodian by recording the transfer of beneficial ownership thereof on its records. The cash delivered shall
be in the form of currency or by the Custodian crediting the Acquiring Fund's account maintained with the
Custodian with immediately available funds.
3.4. The Acquired Fund shall deliver at the Closing a list of the names, addresses, federal taxpayer
identification numbers and backup withholding and nonresident alien withholding status of the corresponding
classes of Acquired Fund shareholders and the number of outstanding shares of beneficial interest of the Acquired
Fund owned by each such shareholder, all as of the close of business on the Closing Date, certified by its
Treasurer, Secretary or other authorized officer (the "Shareholder List"). The Acquiring Fund shall issue and
deliver to the Acquired Fund a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date, or provide evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to
the Acquired Fund's account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, stock certificates, receipts or other documents as such other
party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. The LB Trust and Acquired Fund represent and warrant to the AAL Trust and Acquiring Fund as follows:
(a) The Acquired Fund is a series of the LB Trust, a statutory trust which is duly organized, validly
existing and in good standing under the laws of the State of Delaware. The LB Trust is a registered investment
company classified as a management company of the open-end type, and its registration with the Securities and
Exchange Commission (the "Commission") as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), is in full force and effect;
(b) The LB Trust, on behalf of the Acquired Fund, has the power and all necessary federal, state and local
qualifications and authorizations to own all its assets, to carry on its business as now being conducted, to
enter into and carry out this Agreement, and to consummate the transactions contemplated herein;
(c) The execution, delivery and performance of this Agreement will not result in a material violation of the
Declaration of Trust or Bylaws of the LB Trust or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the LB Trust or the Acquired Fund is a party or by which it is bound;
(d) Except as disclosed in writing in the Registration Statement on Form 4-14 of the LB Trust (the
"Registration Statement") the Acquired Fund has no material contracts or other commitments (other than this
Agreement) which will be terminated with liability to the Acquired Fund prior to the Closing Date;
(e) No litigation or administrative proceeding or investigation of or before any court or governmental body
is presently pending or to the Acquired Fund's knowledge threatened against the Acquired Fund or any of the
Acquired Fund's properties or assets (other than that previously disclosed to the other party to the Agreement)
which, if adversely determined, would materially and adversely affect its financial condition or the conduct of
its business. The Acquired Fund knows of no facts which might form the basis for the institution of such
proceedings and is not party to or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the Acquired Fund's business or the ability of the
Acquired Fund to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities of the Acquired Fund for each of the fiscal years in the five
year period ended October 31, 2003, have been audited by PricewaterhouseCoopers LLP, independent auditors, and
are in accordance with generally accepted accounting principles consistently applied, and such statements (copies
of which have been furnished to the Acquiring Fund) fairly reflect the financial condition of the Acquired Fund
as of such dates, and there are no known contingent liabilities of the Acquired Fund as of such dates not
disclosed therein;
(g) The Acquired Fund will file its final federal and other tax returns for the period ending on the Closing
Date in accordance with the Code. At the Closing Date, all federal and other tax returns and reports of the
Acquired Fund required by law then to have been filed prior to the Closing Date shall have been filed, and all
federal and other taxes due shall have been paid so far as due, or provision shall have been made for the payment
thereof and, to the best of the Acquired Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(h) For each taxable year of its operation and for the taxable year that will end on the Closing Date, the
Acquired Fund has met and will have met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company, has elected to be treated as such and has computed (or will compute)
its federal income tax under Section 852 of the Code;
(i) All issued and outstanding shares of beneficial interest of the Acquired Fund are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid and nonassessable by the LB Trust. All of the
issued and outstanding shares of beneficial interest of the Acquired Fund will, at the time of Closing, be held
by the persons and in the amounts set forth in the Shareholder List submitted to the Acquiring Fund pursuant to
Section 3.4 hereof. The Acquired Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of its shares of beneficial interest, nor is there outstanding any security
convertible into any of its shares of beneficial interest;
(j) At the Closing Date, the Acquired Fund will have good and marketable title to its assets to be
transferred to the Acquiring Fund pursuant to Section 1.2 and full right, power and authority to sell, assign,
transfer and deliver such assets hereunder and, upon delivery and payment for such assets, the Acquiring Fund
will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the Securities Act of 1933, as amended (the "1933 Act"), other
than as disclosed to the Acquiring Fund;
(k) The execution, delivery and performance of this Agreement have been duly authorized by all necessary
action on the part of the Acquired Fund's Board of Trustees, and subject to the approval of the Acquired Fund's
shareholders, this Agreement, assuming due authorization, execution and delivery by the Acquiring Fund, will
constitute a valid and binding obligation of the Acquired Fund, enforceable in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(l) The information to be furnished by the Acquired Fund for use in no-action letters, applications for
exemptive orders, registration statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and regulations thereunder
applicable thereto;
(m) The proxy statement of the Acquired Fund (the "Proxy Statement") to be included in the Registration
Statement (other than information therein that relates to the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements are made, not misleading;
(n) Since October 31, 2003, there has not been any material adverse change in the Acquired Fund's financial
condition, assets, liabilities, or business other than changes occurring in the ordinary course of business
(including declines in the net asset value of the Acquired Fund and/or its shares of common stock), or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to the Acquiring Fund;
(o) All of the issued and outstanding shares of beneficial interest of the Acquired Fund have been offered
for sale and sold in conformity with all applicable federal and state securities laws;
(p) The prospectus of the Acquired Fund, dated December 30, 2003, (the "Acquired Fund Prospectus"),
furnished to the Acquiring Fund, does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(q) The Acquired Fund Tax Representation Certificate to be delivered by the Acquired Fund to the Acquiring
Fund at Closing pursuant to Section 7.5 (the "Acquired Fund Tax Representation Certificate") will not on the
Closing Date contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading; and
(r) The books and records of the Acquired Fund made available to the Acquiring Fund and/or its counsel are
substantially true and correct and contain no material misstatements or omissions with respect to the operations
of the Acquired Fund.
4.2. The AAL Trust and the Acquiring Fund represent and warrant to the LB Trust and Acquired Fund as follows:
(a) The Acquiring Fund is a series of the AAL Trust, a business trust organized and validly existing under
the laws of the Commonwealth of Massachusetts. The AAL Trust is a registered investment company classified as a
management company of the open-end type and its registration with the Commission as an investment company under
the 1940 Act is in full force and effect;
(b) The AAL Trust, on behalf of the Acquiring Fund has the power and all necessary federal, state and local
qualifications and authorizations to own all its assets, to carry on its business as now being conducted, to
enter into and carry out this Agreement, and to consummate the transactions contemplated herein;
(c) The then current prospectus (the "Acquiring Fund Prospectus") and statement of additional information of
the Acquiring Fund, and any amendments or supplements thereto on or prior to the Closing Date, and the
Registration Statement on Form N-14 filed in connection with this Agreement (other than written information
furnished by the Acquired Fund for inclusion therein, as covered by the Acquired Fund's warranty in Section
4.1(m) hereof) will conform in all material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder. The Acquiring Fund Prospectus does not include
any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made, not
misleading and the Registration Statement will not include any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(d) The execution, delivery and performance of this Agreement will not result, in a material violation of
the Declaration of Trust or Bylaws of the AAL Trust or of any agreement, indenture, instrument, contract, lease
or other undertaking to which the AAL Trust or the Acquiring Fund is a party or by which it is bound;
(e) No litigation or administrative proceeding or investigation of or before any court or governmental body
is presently pending or threatened against the Acquiring Fund or any of the Acquiring Fund's properties or
assets. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings
and the Acquiring Fund is not a party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects the Acquiring Fund's business or ability to
consummate the transactions contemplated herein;
(f) The Statement of Assets and Liabilities of the Acquiring Fund for the fiscal year ended April 30, 2003,
have been audited by PricewaterhouseCoopers LLP, independent auditors, and are in accordance with generally
accepted accounting principles consistently applied, and such statements (copies of which have been furnished to
the Acquired Fund) fairly reflect the financial condition of the Acquiring Fund as of such dates, and there are
no known contingent liabilities of the Acquiring Fund as of such dates not disclosed therein;
(g) Since October 31, 2003, there has not been any material adverse change in the Acquiring Fund's financial
condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or
any incurrence of the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness
was incurred, except as disclosed to and accepted by the Acquired Fund;
(h) The Acquiring Fund has qualified as a regulated investment company for each taxable year of its
operation and the Acquiring Fund will qualify as such as of the Closing Date;
(i) At the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law
then to have been filed by such date shall have been filed, and all federal and other taxes due shall have been
paid so far as due, or provision shall have been made for the payment thereof and, to the best of the Acquiring
Fund's knowledge, no such return is currently under audit and no assessment has been asserted with respect to
such returns;
(j) For each taxable year of its operation, the Acquiring Fund has met the requirements of Subchapter M of
the Code for qualification and treatment as a regulated investment company, the Acquiring Fund will qualify as
such on the Closing Date and the Acquiring Fund intends to so qualify in the future. The Acquiring Fund has
elected to be treated as a regulated investment company and has computed and will continue to compute its federal
income tax under Section 852 of the Code;
(k) At the date hereof, all issued and outstanding shares of the Acquiring Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid and non-assessable. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase any shares of the Acquiring Fund,
nor is there outstanding any security convertible into shares of the Acquiring Fund;
(l) The execution, delivery and performance of this Agreement have been duly authorized by all necessary
action, if any, on the part of the Acquiring Fund's Board of Trustees, and this Agreement, assuming due
authorization, execution and delivery by the Acquired Fund, constitutes a valid and binding obligation of the
Acquiring Fund, enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors' rights and to general equity
principles;
(m) The corresponding classes of Acquiring Fund Shares to be issued and delivered to the Acquired Fund, for
the accounts of the Acquired Fund Shareholders, pursuant to the terms of this Agreement, will at the Closing Date
have been duly authorized and, when so issued and delivered, will be duly and validly issued Acquiring Fund
Shares, and will be fully paid and non-assessable with no personal liability attaching to the ownership thereof;
(n) The information to be furnished by the Acquiring Fund for use in no-action letters, applications for
exemptive orders, registration statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and regulations applicable thereto;
(o) The Proxy Statement to be included in the Registration Statement (only insofar as it relates to the
Acquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which such statements were made,
not misleading;
(p) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations
required by the 1933 Act, the 1940 Act and such of the state Blue Sky or securities laws as it may deem
appropriate in order to continue the Acquiring Fund's operations after the Closing Date;
(q) The Acquiring Fund Tax Representation Certificate to be delivered by the Acquiring Fund to the Acquired
Fund at Closing pursuant to Section 6.3 (the "Acquiring Fund Tax Representation Certificate") will not on the
Closing Date contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading; and
(r) All of the issued and outstanding shares of beneficial interest of the Acquired Fund have been offered
for sale and sold in conformity with all applicable federal and state securities laws.
5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRING FUND
5.1. The Acquiring Fund and the Acquired Fund each will operate its business in the ordinary course between
the date hereof and the Closing Date. It is understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions and any other dividends and distributions deemed
advisable, in each case payable either in cash or in additional shares.
5.2. As soon as practicable after the effective date of the Registration Statement, the Acquired Fund shall
hold a shareholder meeting to consider and approve this Agreement and such other matters as the Board of Trustees
of the LB Trust may determine. Such approval by the shareholders of the Acquired Fund shall, to the extent
necessary to permit the consummation of the transactions contemplated herein without violating any investment
objective, policy or restriction of the Acquired Fund, be deemed to constitute approval by the shareholders of a
temporary amendment of any investment objective, policy or restriction that would otherwise be inconsistent with
or violate upon the consummation of such transactions solely for the purpose of consummating such transactions.
5.3. The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired
for the purpose of making any distribution thereof other than in accordance with the terms of this Agreement.
5.4. The Acquired Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund
reasonably requests concerning the beneficial ownership of the Acquired Fund's shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and the Acquired Fund each will take, or
cause to be taken, all actions, and do or cause to be done, all things reasonably necessary, proper or advisable
to consummate and make effective the transactions contemplated by this Agreement.
5.6. The Acquired Fund shall furnish to the Acquiring Fund on the Closing Date the Statement of Assets and
Liabilities of the Acquired Fund as of the Closing Date, which statement shall be prepared in accordance with
generally accepted accounting principles consistently applied and shall be certified by the Acquired Fund's
Treasurer or Assistant Treasurer. As promptly as practicable but in any case within 60 days after the Closing
Date, the Acquired Fund shall furnish to the Acquiring Fund, in such form as is reasonably satisfactory to the
AAL Trust, a statement of the earnings and profits of the Acquired Fund for federal income tax purposes and of
any capital loss carryovers and other items that will be carried over to the Acquiring Fund as a result of
Section 381 of the Code, and which statement will be certified by the President of the Acquired Fund.
5.7. The AAL Trust shall promptly prepare and file the Registration Statement with the SEC, and the AAL Trust
and the LB Trust shall each make any other required or appropriate filings with respect to the actions
contemplated hereby.
5.8. The Acquired Fund will provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus (the "Prospectus") which will include the Proxy Statement, referred to in Section
4.1(m), all to be included in the Registration Statement, in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the 1940 Act in connection with the meeting of the Acquired
Fund's shareholders to consider approval of this Agreement and the transactions contemplated herein.
5.9. Neither the Acquired Fund nor the Acquiring Fund shall take any action that would prevent the
Reorganization from qualifying as a "reorganization" under Section 368(a) of the Code.
5.10. The Acquired Fund will pay or cause to be paid to the Acquiring Fund any interest or proceeds it
receives on or after the Closing Date with respect to its assets.
5.11. The Acquiring Fund agrees, as soon as practicable after the Valuation Date, to open shareholder accounts
on its share ledger records for the shareholders of the Acquired Fund in connection with the distribution of
shares by the Acquired Fund to such shareholders in accordance with Section 1.5.
5.12. Each party hereto covenants and agrees to provide the other party hereto and its agents and counsel with
any and all documentation, information, assistance and cooperation that may become necessary from time to time
with respect to the transactions contemplated by this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions provided for herein shall be
subject, at its election, to the performance by the Acquiring Fund of all of the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, to the following further conditions:
6.1. All representations and warranties of the Acquiring Fund contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the
Closing Date.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund a certificate executed in its name by its
Chairman of the Board, President or Vice President and its Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Acquired Fund and dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Fund made in this Agreement are true and correct in all material respects at and as
of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement.
6.3. The Acquiring Fund shall have delivered to Xxxxxxx Procter LLP, in form and substance reasonably
satisfactory to it, an Acquiring Fund Tax Representation Certificate for purposes of the opinion described in
Section 8.6.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions provided for herein shall be subject,
at its election, to the performance by the Acquired Fund of all the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, to the following conditions:
7.1. All representations and warranties of the Acquired Fund contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the
Closing Date.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a statement of the Acquired Fund's assets
and liabilities, together with a list of the Acquired Fund's portfolio securities showing the tax basis of such
securities by lot and the holding periods of such securities, as of the Closing Date, certified by the Treasurer
or Assistant Treasurer of the Acquired Fund.
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate executed
in its name by its Chairman of the Board, President or Vice President and its Treasurer or Assistant Treasurer,
in form and substance satisfactory to the Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Fund made in this Agreement are true and correct in all material
respects at and as of the Closing Date, except as they may be affected by the transactions contemplated by this
Agreement.
7.4. At or prior to the Closing Date, the Acquired Fund's investment adviser, or an affiliate thereof, shall
have made all payments, or applied all credits, to the Acquired Fund required by any applicable contractual
expense limitation.
7.5. The Acquired Fund shall have delivered to Xxxxxxx Procter LLP, in form and substance reasonably
satisfactory to it, an Acquired Fund Tax Representation Certificate for purposes of the opinion described in
Section 8.6.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND AND THE ACQUIRING FUND
The obligations hereunder of the AAL Trust on behalf of the Acquired Fund and the LB Trust on behalf of
the Acquiring Fund are each subject to the satisfaction of the following further conditions on or before the
Closing Date.
8.1. This Agreement and the transactions contemplated herein shall have been approved by the requisite vote
of the holders of the outstanding shares of the Acquired Fund in accordance with the provisions of the
Declaration of Trust and Bylaws of the LB Trust and certified copies of the votes evidencing such approval shall
have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Acquired Fund may waive the conditions set forth in this Section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and permits of federal, state and local
regulatory authorities (including those of the Commission and of state Blue Sky and securities authorities,
including "no-action" positions of and exemptive orders from such federal and state authorities) (and including
the filing of Articles of Transfer with the Delaware State Department of Assessments and Taxation) deemed
necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund
or the Acquired Fund, provided that either party hereto may for itself waive any of such conditions.
8.4. The Registration Statement shall have become effective under the 1933 Act and the 1940 Act and no stop
orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties
hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act or the 1940 Act.
8.5. The Acquired Fund shall have distributed to its shareholders, in a distribution or distributions
qualifying for the deduction for dividends paid under Section 561 of the Code,
(a) all of its investment company taxable income (as defined in Section 852(b)(2) of the Code determined without
regard to any deductions for dividends paid under Section 852(b)(2)(D) of the Code) for its taxable year ending
on the Closing Date, (b) all of the excess of (i) its interest income excludable from gross income under Section
103(a) of the Code over (ii) its deductions disallowed under Sections 265 and 171(a)(2) of the Code for its
taxable year ending on the Closing Date, and (c) all of its net capital gain (as such term is used in Sections
852(b)(3)(A) and (C) of the Code), after reduction by any available capital loss carryforward, for its taxable
year ending on the Closing Date.
8.6. The parties shall have received a favorable opinion of Xxxxxxx Procter LLP, addressed to the Acquiring
Fund and the Acquired Fund and satisfactory to Xxxxx X. Xxxxx and Xxxx X. Xxxxx, as Secretary of the LB Trust and
AAL Trust, respectively, substantially to the effect that for federal income tax purposes:
(a) The transfer of all of the Acquired Fund's assets in exchange for Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Assumed Liabilities will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund are each a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Acquired
Fund in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the Assumed
Liabilities;
(c) No gain or loss will be recognized by the Acquired Fund upon the transfer of the Acquired Fund's assets
to the Acquiring Fund in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Assumed Liabilities or upon the distribution (whether actual or constructive) of Acquiring Fund Shares to
Acquired Fund's shareholders;
(d) No gain or loss will be recognized by shareholders of the Acquired Fund upon the exchange of their
Acquired Fund shares for the Acquiring Fund Shares;
(e) The aggregate tax basis for the Acquiring Fund Shares received by each of the Acquired Fund's
shareholders pursuant to the Reorganization will be the same as the aggregate tax basis of the Acquired Fund
shares held by such shareholder immediately prior to the Reorganization, and the holding period of Acquiring Fund
Shares to be received by each Acquired Fund shareholder will include the period during which the Acquired Fund
shares exchanged therefor were held by such shareholder (provided that such Acquired Fund shares were held as
capital assets on the date of the Reorganization);
(f) The tax basis to the Acquiring Fund of the Acquired Fund's assets acquired by the Acquiring Fund will be
the same as the tax basis of such assets to the Acquired Fund immediately prior to the Reorganization, and the
holding period of the assets of the Acquired Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Fund; and
(g) The Acquiring Fund will succeed to and take into account as of the date of the Reorganization the items
of the Acquired Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified
in Sections 381(b) and (c), 382, 383 and 384 of the Code.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this paragraph 8.6.
9. BROKERAGE FEES AND EXPENSES
9.1. The Acquiring Fund represents and warrants to the Acquired Fund, and the Acquired Fund represents and
warrants to the Acquiring Fund, that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2. (a) Except as may be otherwise provided herein, the Acquired Fund shall be liable for the expenses
(Thrivent Financial for Lutherans and/or one or more of its affiliates has agreed to assume said expenses by
separate agreement) incurred in connection with entering into and carrying out the provisions of this Agreement,
including the expenses of:
(i) counsel and independent accountants associated with the Reorganization;
(ii) printing and mailing the Prospectus/Proxy Statement and soliciting proxies in connection with the
meeting of shareholders of the Acquired Fund referred to in Section 5.2 hereof,
(iii) any special pricing fees associated with the valuation of the Acquired Fund's or the Acquiring Fund's
portfolio on the Closing Date;
(iv) expenses associated with preparing this Agreement and preparing and filing the Registration Statement
under the 1933 Act covering the Acquiring Fund Shares to be issued in the Reorganization; and
(v) registration or qualification fees and expenses of preparing and filing such forms, if any, necessary
under applicable state securities laws to qualify the Acquiring Fund Shares to be issued in connection
with the Reorganization. The Acquiring Fund and the Acquired Fund shall each be liable solely for its
own expenses incurred in connection with entering into and carrying out the provisions of this Agreement
whether or not the transactions contemplated hereby are consummated.
(b) Consistent with the provisions of Section 1.1, the Acquired Fund, prior to the Closing, shall pay for or
include in the Statement of Assets and Liabilities prepared pursuant to Section 4.1(f) all of its known and
reasonably estimated expenses associated with the transactions contemplated by this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the parties.
11. TERMINATION
11.1. This Agreement may be terminated by the mutual agreement of the LB Trust on behalf of the Acquiring Fund
and the AAL Trust on behalf of the Acquired Fund. In addition, either party may at its option terminate this
Agreement at or prior to the Closing Date:
(a) because of a condition herein expressed to be precedent to the obligations of the terminating party
which has not been met and which reasonably appears will not or cannot be met;
(b) by resolution of the LB Trust's Board of Trustees if circumstances should develop that, in the good
faith opinion of such Board, make proceeding with the Agreement not in the best interests of the Acquired Fund's
shareholders; or
(c) by resolution of the AAL Trust's Board of Trustees if circumstances should develop that, in the good
faith opinion of such Board, make proceeding with the Agreement not in the best interests of the Acquiring Fund's
shareholders.
11.2. In the event of any such termination, there shall be no liability for damages on the part of either the
Acquired Fund or the Acquiring Fund or the respective Trustees or officers of the LB Trust or the AAL Trust to
the other party, but each shall bear the expenses incurred by it incidental to the preparation and carrying out
of this Agreement as provided in Section 9.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in
writing by the authorized officers of the Acquired Fund and the Acquiring Fund; provided, however, that following
the meeting of the Acquired Fund shareholders called by the Acquired Fund pursuant to Section 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for determining the number of
Acquiring Fund Shares to be issued to the Acquired Fund's shareholders under this Agreement to the detriment of
such shareholders without their further approval.
12.2. At any time prior to the Closing Date either party hereto may by written instrument signed by it (i)
waive any inaccuracies in the representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions (other than those contained in any of Section 8.1, Section 8.4
or Section 8.6 of this Agreement) made for its benefit contained herein.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall
be in writing and shall be given by hand delivery, fax, or certified mail addressed to the The AAL Mutual Funds
000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxx; or to The Lutheran Brotherhood Family
of Funds, 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000, Attention: Xxxx X. Xxxxx, respectively.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1. The section and subsection headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.
14.4. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors
and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm, corporation or other entity, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its President
and attested by its Secretary.
Attest:
/s/ Xxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
------------------------------ ---------------------------------
Xxxxx X. Xxxxx, Secretary Xxxxxx X. Xxxxx, President
The AAL Mutual Funds The AAL Mutual Funds
Attest:
/s/ Xxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
------------------------------ ---------------------------------
Xxxx X. Xxxxx, Secretary Xxxxxx X. Xxxxx, President
The Lutheran Brotherhood Family of Funds The Lutheran Brotherhood Family of Funds
SCHEDULE A
Acquired Fund Acquiring Fund
Lutheran Brotherhood World Growth Fund AAL International Fund (to be renamed Thrivent
Partner International Stock Fund in
connection with the Reorganization)
Lutheran Brotherhood Growth Fund AAL Aggressive Growth Fund (to be renamed Thrivent
Large Cap Growth Fund in connection with the
Reorganization)
Lutheran Brotherhood Fund AAL Capital Growth Fund (to be renamed Thrivent Large
Cap Stock Fund in connection with the Reorganization)
Lutheran Brotherhood Value Fund AAL Equity Income Fund (to be renamed Thrivent Large
Cap Value Fund in connection with the Reorganization)
Lutheran Brotherhood Municipal Bond Fund AAL Municipal Bond Fund (to be renamed Thrivent
Municipal Bond Fund in connection with the
Reorganization)
Lutheran Brotherhood Money Market Fund AAL Money Market Fund (to be renamed Thrivent Money
Market Fund in connection with the Reorganization)
