UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT ("Agreement") is hereby entered into on this
day of April, 1998, between AMERICAN FOUNDATION LIFE INSURANCE COMPANY
("AMERICAN FOUNDATION"), a life insurance company organized and existing under
the laws of the State of Alabama, for itself or on behalf of American Foundation
Modified Guaranteed Annuity Account, a separate account established by AMERICAN
FOUNDATION in accordance with the laws of the State of Alabama, and INVESTMENT
DISTRIBUTORS, INC. ("IDI"), a broker-dealer organized and existing under the
laws of the State of Tennessee.
WITNESSETH:
WHEREAS, the Board of Directors of AMERICAN FOUNDATION has registered
interests in a modified guaranteed annuity contract, ("Contracts") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the Investment Company Act
of 1940, as amended;
WHEREAS, IDI is a broker-dealer registered as such under the Securities
Exchange Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. ("NASD");
WHEREAS, IDI has agreed to act as principal underwriter in connection with
offers and sales of the Contracts under the terms and conditions set forth in
this Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions set forth herein, AMERICAN FOUNDATION and IDI agree as
follows:
I.
IDI DUTIES
1. AMERICAN FOUNDATION hereby appoints IDI as its principal underwriter
of the Contracts. AMERICAN FOUNDATION reserves the right to appoint additional
underwriters.
2. IDI hereby accepts such appointment as principal underwriter. IDI
shall offer the Contracts only on the terms set forth in AMERICAN FOUNDATION's
currently effective registration statements.
3. IDI as principal underwriter for the Contracts will use its best
efforts to effect offers and sales of the Contracts through broker-dealers that
are members of the National Association of Securities Dealers, Inc. and whose
registered representatives are duly licensed as insurance agents of AMERICAN
FOUNDATION. IDI is responsible for
compliance with all applicable requirements of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder,
and all other applicable laws, rules and regulations relating to the sales
and distribution of the Contracts, the need for which arises out of its
duties as principal underwriter of said Contracts.
4. IDI agrees that it will not use any prospectus, sales literature, or
any other printed matter or material or offer for sale or sell the Contracts if
any of the foregoing in any way represent the duties, obligations, or
liabilities of AMERICAN FOUNDATION as being greater than, or different from,
such duties, obligations and liabilities as are set forth in this Agreement, and
in the Contracts, as it or they may be amended from time to time.
5. IDI agrees that it will only utilize the then currently effective
prospectus relating to the Contracts in connection with its selling efforts.
As to the other types of sales materials, IDI agrees that it will use only
sales materials which conform to the requirements of federal and state
securities and insurance laws and regulations and which have been filed, where
necessary, with the appropriate regulatory authorities.
6. IDI agrees that it or its duly designated agent shall maintain records
as required by the Securities Exchange Act of 1934, as amended, the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, as amended.
7. IDI's services pursuant to this Agreement shall not be deemed to be
exclusive, and it is understood by the parties hereto that IDI may also render
similar services and act as underwriter, distributor, or dealer for other
companies in the offering of their securities.
8. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the terms of this
Agreement, IDI shall not be subject to liability to any contract owner or party
in interest under the Contracts for any acts or omissions to act in the course
of, or connected with, rendering services hereunder.
9. IDI shall remain fully responsible for its own conduct and that of its
agents, representatives and employees under applicable law.
10. IDI shall at all times, conform with the requirements of any federal
and state laws and regulations and the rules of the NASD, relating to the sales
of the Contracts.
II.
AMERICAN FOUNDATION'S DUTIES
1. AMERICAN FOUNDATION reserves the right at any time to suspend or limit
the offering of the Contracts upon thirty days written notice to IDI, except
where the notice period may be shortened because of legal action taken by any
regulatory agency.
AMERICAN FOUNDATION agrees to advise IDI immediately:
(a) Of any request by the Securities and Exchange Commission for amendment
of its registration for additional information;
(b) Of the issuance by the Securities and Exchange Commission of any stop
order suspending the effectiveness of the registration statements relating to
the Contracts or of the initiation of any proceedings for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said registration statements or which requires change therein
in order to make any statement therein not misleading.
3. AMERICAN FOUNDATION will furnish to IDI such information with respect
to the Contracts in such form and signed by such of its officers and directors
as IDI may reasonably request and will warrant that the statements therein
contained when so signed will be true and correct. AMERICAN FOUNDATION will
also furnish, from time to time, such additional information regarding AMERICAN
FOUNDATION'S financial condition as IDI may reasonably request.
III.
COMPENSATION
For providing the principal underwriting functions on behalf of AMERICAN
FOUNDATION, IDI shall be entitled to receive compensation as agreed upon from
time to time in writing by AMERICAN FOUNDATION and IDI.
IV.
RESIGNATION AND REMOVAL OF
PRINCIPAL UNDERWRITER
ID may resign as Principal Underwriter upon 120 days prior written notice
to AMERICAN FOUNDATION. However, such resignation shall not become effective
until a successor Principal Underwriter has been designated and has accepted its
duties. AMERICAN FOUNDATION may remove IDI as Principal Underwriter at any time
by written notice.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by either of the parties hereto
without the written consent of the other party.
2. All notices and other communications provided for hereunder shall be
in writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
(a) If to AMERICAN FOUNDATION -
American Foundation Life Insurance Company
P. O. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, President
(b) If to IDI -
Investment Distributors, Inc.
0000 Xxxxxxx 000 Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx, Secretary
or to such other address as IDI or AMERICAN FOUNDATION shall designate by
written notice to the other.
3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one
instrument, and an executed copy of this Agreement and all amendments hereto
shall be kept on file by AMERICAN FOUNDATION and shall be open to inspection at
any time during the business hours of AMERICAN FOUNDATION.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the
laws of the State of Alabama.
6. This Agreement may be amended from time to time by the mutual
agreement and consent of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed this ____________ day of April, 1998.
AMERICAN FOUNDATION LIFE INSURANCE COMPANY
By:---------------------------------------------------------
Xxxxx Xxxxxxxx
Title: President
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INVESTMENT DISTRIBUTORS, INC.
By:---------------------------------------------------------
Xxxxxxx Xxxx
Title: Secretary
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