MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT
AGREEMENT dated as of the _____ day of _________, 1998,
between AMERICAN FIDELITY ASSURANCE COMPANY, an insurance
corporation organized under the laws of the State of Oklahoma and
having its principal place of business in Oklahoma City, Oklahoma
(the "Manager"), and AMERICAN FIDELITY DUAL STRATEGY FUND, INC.,
a Maryland corporation, having its principal place of business in
Oklahoma City, Oklahoma (the "Fund").
WHEREAS, the Fund proposes to engage in business as an
open-end management investment company and has applied for
registration under the Investment Company Act of 1940;
WHEREAS, the Manager proposes to engage in the business
of acting as manager and investment adviser for one or more
investment companies;
WHEREAS, the Fund desires to retain the Manager to
render such services in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, the Manager desires to perform such services
in the manner and on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the foregoing and of the mutual
covenants hereinafter contained, it is agreed as follows:
1. The Fund hereby employs the Manager to provide
investment advisory, statistical and research facilities and
services, to supervise the composition of the Fund's portfolio
and to determine the nature and timing of changes therein and the
manner of effectuating such changes, subject to supervision of
the Fund's Board of Directors and for the period and on the terms
set forth in this agreement. The Manager hereby accepts such
employment and agrees to render the services and to assume the
obligations herein set forth, for the compensation herein
provided.
2. The Manager shall:
(a) Furnish to the Fund research and statistical
and other factual information and reports
with respect to securities held by the Fund
or which the Fund might purchase. It will
also furnish to the Fund such information as
may be appropriate concerning developments
which may affect issuers of securities held
by the Fund or which the Fund might purchase
or the business in which such issuers may be
engage. Such statistical and other factual
information and reports shall include
information and reports on industries,
business, corporations and all types of
securities, whether or not the Fund has at
any time any holdings in such industries,
business, corporations or securities. The
Manager reserves the right, in its
discretion, to purchase statistical
information and other services from other
sources, including affiliated persons of the
Manager.
(b) Furnish to the Fund, from time to time,
advice, information and recommendations with
respect to the acquisition, holding, or
disposal by the Fund of securities.
(c) Furnish to the Fund necessary assistance in:
(i) The preparation of all reports now or
hereafter required by Federal or other
laws.
(ii) The preparation of prospectuses,
registration statements and amendments
thereto that may be required by Federal
or other laws of by the rules or
regulations of any duly authorized
commission or administrative body.
(d) Furnish to the Fund at the Manager's expense,
office space in the offices of the Manger or
in such other place or places as may be
agreed upon from time to time, and all
necessary office facilities, business
equipment, supplies, utilities and telephone
service for managing the affairs and
investments and keeping the general accounts
of the Fund (exclusive of the necessary
records of any dividend disbursing agent,
transfer agent, registrar or custodian).
Manager shall compensate all personnel,
officers, and directors of the Fund if such
persons are also employees of the Manager or
its affiliates. The Manager agrees to pay
those legal and other expenses, incident to
organization of the Fund and to registration
with Federal and state authorities of the
initial offering of the Fund's shares.
Registration fees and legal and accounting
expenses incurred in connection with
subsequent Federal and other registrations of
Fund shares and all amendments and
supplements to the initial registration of
Fund shares shall be paid by the Fund and all
other costs and expenses incurred in such
connection shall be paid by the Manager.
(e) Provide and maintain a bond issued by a
reputable insurance company authorized to do
business in the place where the bond is
issued, against larceny and embezzlement
covering each offer and employee of the Fund,
who may singly or jointly with others have
access to securities of the Fund, with direct
or indirect authority to draw upon such funds
or to direct generally the disposition of
such funds. The bond shall be in such
reasonable amount as a majority of the Board
of Directors of the Fund who are not officers
or employees of the Fund shall determine with
due consideration to the aggregate assets of
the Fund to which any such officer or
employee may have access.
3. In connection with the management of the
investment and reinvestment of the assets of the Fund, the
Manager acting by its own officers, directors or employees or by
duly authorized subcontractor is authorized to select the brokers
or dealers that will execute purchase and sale transactions for
the Fund and is directed to use its best efforts to obtain the
best available price and most favorable execution with respect to
all such purchases and sales of portfolio securities for the
Fund. Subject to this primary requirement, and maintaining as
its first consideration the benefits to the Fund and its
shareholders, the Manager shall have the right, subject to the
control of the Board of Directors, to follow a policy of
selecting brokers and dealers who furnish statistical, research
and other services to the Fund or to the Manager.
4. For the services to be rendered and the charges
and expenses assumed and to be paid by the Manager, the Fund
shall pay the Manager as a basic advisory and service fee as soon
as practical after the last day of each week and at the close of
each calendar week an amount equal to .0013698% (.50% on an
annual basis) of the current value of the Fund for each day of
the valuation period for investment services.
5. The Fund shall cause its books and accounts to be
audited at least once each year by a reputable, independent
public accountant or organization of public accountants who shall
render a report to the Fund.
6. This Agreement shall continue in full force and
effect from year to year, provided that it shall not continue for
more than two years from the date hereof unless such continuance
is specifically approved, at least annually by the Board of
Directors of the Fund, which affirmative vote shall include a
majority of the members of the Board of Directors of the Fund who
are not interested persons of the Manager or of the Fund.
"Interested Persons" are those persons defined in Section
2(a)(19) of the Investment Company Act of 1940.
7. This Agreement shall automatically terminate in
the event of its assignment, within the meaning of the Investment
Company Act of 1940, as amended, unless an order of the
Securities and Exchange Commission is issued exempting such
assignment. This Agreement may be terminated at any time, on 60
days' written notice to the Manager, without payment of any
penalty, by the Board of Directors of the Fund or by shareholders
casting a majority of the votes which may be cast by all
shareholders. This Agreement may not be terminated by the
Manager without the approval of a new investment advisory
agreement by the shareholders casting a majority of the votes
which may be cast by all shareholders.
8. This Agreement may be amended at any time by
mutual consent of the parties provided that such consent on the
part of the Fund shall have been approved by the shareholders
casting a majority of the votes which may be cast by all
shareholders.
9. No provision of this Agreement shall be deemed to
protect the Manager against any liability to the Fund or its
shareholders to which it might otherwise be subject by reason of
any willful misfeasance, bad faith or gross negligence in the
performance of its duties or the reckless disregard of its
obligations under this Agreement. Nor shall any provision hereof
be deemed to protect any director or officer of the Fund against
any such liability to which he or she might otherwise be subject
by reason of any willful misfeasance, bad faith or gross
negligence in the performance of his or her duties or the
reckless disregard of his or her obligations. If any provision
of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
AMERICAN FIDELITY DUAL
STRATEGY FUND, INC.
By
Xxxx X. Xxx, President
AMERICAN FIDELITY ASSURANCE
COMPANY
By
Xxxx X. Xxx, President
