Exhibit 8.6
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of the 22nd day of December, 1998, between
AMERICAN FIDELITY DUAL STRATEGY FUND, INC., an open-end management investment
company organized as a Maryland corporation (the "Fund"), and AMERICAN FIDELITY
ASSURANCE COMPANY, a life insurance company organized and domiciled under the
laws of the State of Oklahoma (the "Company"), on its own behalf and on behalf
of each segregated asset account of the Company which may be set forth on
Schedule A as attached hereto, as amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Fund has filed a registration statement with the
Securities and Exchange Commission to register itself as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and to register the offer and sale of its shares under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires to act as an investment vehicle for separate
accounts established for variable annuity contracts to be offered by insurance
companies that have entered into participation agreements with the Fund (the
"Participating Insurance Companies"); and
WHEREAS, American Fidelity Securities, Inc. (the "Underwriter") is
registered as a broker-dealer with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
is a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD") and acts as principal underwriter of the shares of the Fund;
and
WHEREAS, the Company is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities law, and acts as the Fund's investment adviser; and
WHEREAS, the Company has registered or will register under the 1933
Act certain variable annuity contracts funded or to be funded through one or
more of the Accounts (the "Contracts"); and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Fund (the "Shares")
on behalf of the Accounts to fund the Contracts, and the Fund intends to sell
such Shares to the relevant Accounts at such Shares' net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE 1
SALE OF THE FUND SHARES
1.1 Subject to Section 1.3 of this Agreement, the Fund shall cause the
Underwriter to make Shares available to the Accounts at such Shares' most recent
net asset value provided to the Company prior to receipt of such purchase order
by the Fund (or the Underwriter as its agent), in accordance with the
operational procedures mutually agreed to by the Underwriter and the Company
from time to time and the provisions of the then-current prospectus of the Fund.
Shares of the Fund shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of the
Contracts. The Directors of the Fund (the "Directors") may refuse to sell Shares
of the Fund to any person (including the Company and the Accounts), or suspend
or terminate the offering of Shares if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of the Fund.
1.2 Subject to Section 1.3 of this Agreement, the Fund will redeem any
full or fractional Shares when requested by the Company on behalf of an Account
at such Shares' most recent net asset value provided to the Company prior to
receipt by the Fund (or the Underwriter as its agent) of the request for
redemption, as established in accordance with the operational procedures
mutually agreed to by the Underwriter and the Company from time to time and the
provisions of the then-current prospectus of the Fund. The Fund shall make
payment for such Shares in the manner established from time to time by the Fund,
but in no event shall payment be delayed for a greater period than is permitted
by the 1940 Act (including any rule or order of the SEC thereunder).
1.3 The Fund shall accept purchase and redemption orders resulting
from investment in and payments under the Contracts on each Business Day,
provided that such orders are received prior to 9:00 a.m. on such Business Day
and reflect instructions received by the Company from Contract holders in good
order prior to the time the net asset value of the Fund is priced in accordance
with its prospectus (the "valuation time") on the prior Business Day. Any
purchase or redemption order for Shares received, on any Business Day, after the
valuation time on such `Business Day shall be deemed received prior to 9:00 a.m.
on the next succeeding Business Day. "Business Day" shall mean any day on which
the Company is open for business and on which the Fund calculates its net asset
value pursuant to the rules of the SEC. Purchase and redemption orders shall be
provided by the Company to the Underwriter as agent for the Fund in such written
or electronic form (including facsimile) as may be mutually acceptable to the
Company and the Underwriter. The Underwriter may reject purchase and redemption
orders that are not in proper form. In the event that the Company and the
Underwriter agree to use a form of written or electronic communication which is
not capable of recording the time, date and recipient of any communication and
confirming good transmission, the Company agrees that it shall be responsible
(i) for confirming with the Underwriter that any communication sent by the
Company was in fact received by the Underwriter in proper form, and (ii) for the
effect of any delay in the Underwriter's receipt of such communication in proper
form. The Fund and its agents shall be entitled to rely, and shall be fully
protected from all liability in acting, upon the instructions of the persons
named in the list of authorized individuals attached hereto as Schedule B, or
any subsequent list of authorized individuals provided to the Fund or its agents
by the Company in such form, without being required to determine the
authenticity of the authorization or the authority of the persons named therein.
1.4 Purchase orders that are transmitted to the Fund in accordance
with Section 1.3 of this Agreement shall be paid for no later than 12:00 noon on
the same Business Day that the Fund receives notice of the order. Payments shall
be made in federal funds transmitted by wire and/or a credit for any Shares
purchased the same day as a redemption. In the event that the Company shall fail
to pay in a timely manner for any purchase order validly received by the
Underwriter on behalf of the Fund pursuant to Section 1.3 of this Agreement
(whether or not such failure is the fault of the Company), the Company shall
hold the Fund harmless from any losses reasonably sustained by the Fund as the
result of acting in reliance on such purchase order.
1.5 Issuance and transfer of the Fund's Shares will be by book entry
only. Stock certificates will not be issued to the Company or to any Account.
Shares ordered from the Fund will be recorded in the appropriate title for each
Account.
1.6 The Fund shall furnish prompt notice to the Company of any income,
dividends or capital gain distribution payable on Shares. The Company hereby
elects to receive all such income, dividends and capital gain distributions as
are payable on Shares in additional Shares of the Fund. The Fund shall notify
the Company of the number of Shares so issued as payment of such dividends and
distributions.
1.7 The Fund shall make the net asset value per share for the Fund
available to the Company on a daily basis as soon as reasonably practical after
such net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6:30 p.m., New York time.
1.8 The Company agrees that it will not take any action to operate any
Account as a management investment company under the 1940 Act without the Fund's
and the Underwriter's prior written consent.
1.9 The Fund agrees that its Shares will be sold only to Participating
Insurance Companies and their separate accounts. No Shares will be sold directly
to the general public. The Company agrees that Fund Shares will be used only for
the purposes of funding the Contracts and Accounts listed in Schedule A, as such
schedule may be amended from time to time.
1.10 The Fund agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.9 and
Article 4 of this Agreement.
ARTICLE 2
OBLIGATION OF THE PARTIES
2.1 The Fund shall prepare and be responsible for filing with the SEC
and any state securities regulators requiring such filing, all shareholder
reports, notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of additional
information of the Fund. Except as the Company and the Fund have otherwise
agreed, the Company shall bear the costs of registration and qualification of
the Fund's Shares, preparation and filing of the documents listed in this
Section 2.1 and all taxes to which an issuer is subject on the issuance and
transfer of its shares.
2.2 At least annually, the Fund or its designee shall provide the
Company, at the Company's expense, with as many copies of the current prospectus
for the Shares as the Company may reasonably request for distribution to
existing Contract owners whose Contracts are funded by such Shares. The Fund or
its designee shall provide the Company, at the Company's expense, with as many
copies of the current prospectus for the Shares as the Company may reasonably
request for distribution to prospective purchasers of Contracts. If requested by
the Company in lieu thereof, the Fund or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as set in
type) and other assistance as is reasonably necessary in order for the parties
hereto once each year for more frequently if the prospectus for the Shares is
supplemented or amended) to have the prospectus for the Contracts and the
prospectus for the Shares printed together in one document; the expenses of such
printing to be borne by the Company. In the event that the Company requests that
the Fund or its designee provide the Fund's prospectus in a "camera ready"
format, the Fund shall be responsible solely for providing the prospectus in the
format in which it is accustomed to formatting prospectuses, and the Company
shall bear the expense of adjusting or changing the format to conform with any
of its prospectuses.
2.3 The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Fund or its
designee. The Fund or its designee, at the Company's expense, shall print and
provide such statement of additional information to the Company (or a master of
such statement suitable for duplication by the Company) for distribution to any
owner of a Contract funded by the Shares. The Fund or its designee, at the
Company's expense, shall print and provide such statement to the Company (or a
master of such statement suitable for duplication by the Company) for
distribution to any prospective purchaser who requests such statement.
2.4 The Fund or its designee shall provide the Company, at the
Company's expense, copies, if and to the extent applicable to the Shares, of the
Fund's proxy materials, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to Contract owners.
2.5 The Company shall furnish, or cause to be furnished, to the Fund
or its designee, a copy of each prospectus for the Contracts or statement of
additional information for the Contracts in which the Fund or its investment
adviser is named prior to the filing of such document with the SEC. The Company
shall furnish, or shall cause to be furnished, to the Fund or its designee, each
piece of sales literature or other promotional material in which the Fund or its
investment adviser is named, at least five Business Days prior to its use. No
such prospectus, statement of additional information or material shall be used
if the Fund or its designee reasonably objects to such use within five Business
Days after receipt of such material.
2.6 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
its investment adviser in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Fund Shares (as such registration
statement and prospectus may be amended or supplemented from time to time),
reports of the Fund, Fund-sponsored proxy statement, or in sales literature or
other promotional material approved by the Fund or its designee, except with the
written permission of the Fund or its designee.
2.7 The Fund shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
by amended or supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other promotional
materials, except with the written permission of the Company.
2.8 The Company shall amend the registration statement of the
Contracts under the 1933 Act and registration statement for each Account under
the 1940 Act from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sale to the extent required
by applicable securities laws and insurance laws of the various states.
2.9 Solely with respect to Contracts and Accounts that are subject to
the 1940 Act, so long as, and to the extent that, the SEC interprets the 1940
Act to require pass-through voting privileges: (a) the Company will provide
pass-through voting privileges to owners of Contracts, through the Accounts, in
Shares of the Fund; (b) the Fund shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Fund; (c) with respect to each Account, the
Company will vote Shares of the Fund held by the Account and for which no timely
voting instructions from Contract owners are received, as well as Shares held by
the Account that are owned by the Company for its general account, in the same
proportion as the Company votes Shares held by the Account for which timely
voting instructions are received from Contract owners; and (d) the Company and
its agents will in no way recommend or oppose or interfere with the solicitation
of proxies for Fund Shares held by Contract owners without the prior written
consent of the Fund, which consent may be withheld in the Fund's sole
discretion.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of
Oklahoma and has established each Account as a segregated asset account under
such law.
3.2 The Company represents and warrants that it has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts.
3.3 The Company represents and warrants that the issuance of the
Contracts will be registered under the 1933 Act prior to any issuance or sale of
the Contracts; the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws; and the sale of
the Contracts shall comply in all material respects with state insurance
suitability requirements.
3.4 The Company represents and warrants that the Contracts are
currently and at the time of issuance will be treated as annuity contracts under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company shall make every effort to maintain such treatment and
shall notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to `be so treated or that
they might not be so treated in the future.
3.5 The Fund represents and warrants that it is duly organized and
validly existing under the laws of the State of Maryland.
3.6 The Fund represents and warrants that the sale of the Fund Shares
offered and sold pursuant to this Agreement will be registered under the 1933
Act and that the Fund is registered under the 1940 Act. The Fund shall use its
best efforts to amend its registration statement under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its shares. The Company shall advise the Fund of any state requirements to
register Shares for sale in such states. If the Fund determines registration is
appropriate, the Fund shall use its best efforts to register and qualify its
Shares for sale in accordance with the laws of such jurisdictions reasonably
requested by the Company.
3.7 The Fund represents and warrants that its investments will comply
with the diversification requirements set forth in section 817(h) of the Code
and the rules and regulations thereunder.
ARTICLE 4
POTENTIAL CONFLICTS
4.1 The parties acknowledge that the Fund's Shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Directors will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities decision in any relevant proceeding; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of the Fund are being managed; (e) a difference in voting
instructions given by variable annuity contract; or (f) a decision by an insurer
to disregard the voting instructions of contract owners. The Directors shall
promptly inform the Company if they determine that an irreconcilable material
conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. The Company will assist the
Directors in carrying out their responsibilities by providing the Directors
with' all information reasonably necessary for the Directors to consider any
issues raised including, but not limited to, information as to a decision by the
Company to disregard Contract owner voting instructions.
4.3 If it is determined by a majority of the Directors, or a majority
of the Fund's Directors who are not affiliated with the Company or the
Underwriter (the "Disinterested Directors"), that a material irreconcilable
conflict exists that affects the interests of Contract owners, the Company
shall, in cooperation with other Participating Insurance Companies whose
contract owners are also affected, at its expense and to the extent reasonably
practicable (as determined by the Directors) take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, which steps could
include: (a) withdrawing the assets allocable to some or all of the Accounts
from the Fund and reinvesting such assets in a different investment medium, or
submitting the question of whether or not such segregation should be implemented
to a vote of all affected Contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners or variable
contract owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; and (b) establishing a new registered management
investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's (or
Accounts') investment in the Fund and terminate this Agreement with respect to
such Account (s); provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the Disinterested Directors. Any such
withdrawal and termination must take place within 30 days after the Fund gives
written notice that this provision is being implemented. Until the end of such
30 day-period, the Fund shall continue to accept and implement orders by the
Company for the purchase and redemption of Shares of the Fund.
4.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's (or Accounts') investment in the Fund and terminate this
Agreement with respect to such Account(s) within 30 days after the Fund informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Disinterested
Directors. Until the end of such 30-day period, the Fund shall continue to
accept and implement orders by the Company for the purchase and redemption of
Shares of the Fund.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the Disinterested Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Directors determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
affected Account's (or Accounts') investment in the Fund and terminate this
Agreement with respect to such Account(s) within 30 days after the Directors
inform the Company in writing of the foregoing determination; provided, however,
that such withdrawal and termination shall be limited to the extent required by
any such material irreconcilable conflict as determined by a majority of the
Disinterested Directors.
ARTICLE 5
INDEMNIFICATION
5.1 Indemnification by the Company. The Company agrees to indemnify
and hold harmless the Fund and each of its Directors, officers, employees and
agents and each person, if any, who controls the Fund within the meaning of
Section 15 of the 1933 Act (collectively the "Indemnified Parties" for purposes
of this Article 5) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which such
Indemnified Parties may become subject under any statute or regulation, or
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts
themselves or in sales literature generated or approved by the Company
on behalf of the Contracts or Accounts (or any amendment or supplement
to any of the foregoing) (collectively, "Company Documents" for the
purposes of this Article 5), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Company
by or on behalf of the Fund for use in Company Documents or otherwise
for use in connection with the sale of the Contracts or Shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived
from Fund Documents (as defined in Section 5.2 (a) below) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or acquisition of the Contracts or Shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Fund Documents 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 and
accurately derived from written information furnished to the Fund by
or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide
the services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company.
5.2 Indemnification by the Fund. The Fund agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Article 5) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which such Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statement" of any material fact contained in the registration
statement or prospectus for the Fund (or any amendment or supplement
thereto) or in sales literature approved by the Fund (but solely with
respect to statements regarding the Fund), (collectively, "Fund
Documents" for the purposes of this Article 5), or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this indemnity shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Fund by
or on behalf of the Company for use in Fund Documents or otherwise for
use in connection with the sale of the Contracts or Shares; or
(b) arise out of or result from statement or representations (other
than statements or representations contained in and accurately derived
from Company Documents) or wrongful conduct of the Fund or persons
under its control, with respect to the sale or acquisition of the
Contracts or Shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents 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 and
accurately derived from written information furnished to the Company
by or on behalf of the Fund; or
(d) arise out of or result from any failure by the Fund to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund.
5.3 Neither the Company nor the Fund shall be liable under the
indemnification provisions of Section 5.1 or 5.2, as applicable, with respect to
any Losses incurred or assessed against any Indemnified Party to the extent such
Losses arise out of or result from such Indemnified Party's willful misfeasance,
bad faith or negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement.
5.4 Neither the Company nor the Fund shall be liable under the
indemnification provisions of Section 5.1 or 5.2, as applicable, with respect to
any claim made against an Indemnified Party unless such Indemnified Party shall
have notified the party against whom indemnification is sought in writing within
five business days after the summons, or other first written notification,
giving information of the nature of the claim shall have been served upon or
otherwise received by such Indemnified Party (or after such Indemnified Party
shall have received notice of service upon or other notification to any
designated agent), but failure to notify the party against whom indemnification
is sought of any such claim shall not relieve that party from any liability that
it may have to the Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified
Parties, the indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such defense, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof other
than reasonable costs of investigation.
ARTICLE 6
TERMINATION
6.1 This Agreement may be terminated by either party for any reason by
six (6) months' advance written notice to the other party, and may be terminated
by the Fund pursuant to Sections 6.2 through 6.4 below upon written notice to
the Company.
6.2 This Agreement may be terminated at the option of the Fund upon
any finding or ruling against the Company by a court or the NASD, the SEC, the
insurance department of any state, or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the Contracts,
the operation of the Account, the administration of the Contracts or the
purchase of the Shares, or any settlement of any proceedings or undertaking to
any regulatory body that would, in the Fund's reasonable judgment, materially
impair the Company's ability to meet and perform the Company's obligations and
duties hereunder.
6.3 This Agreement may be terminated at the option of the Fund if the
Contracts cease to qualify as annuity contracts under the Code, or if the Fund
reasonably believes that the Contracts may fail to so qualify.
6.4 This Agreement may be terminated by the Fund, at its option, if
the Fund shall reasonably determine, in its sole judgment exercised in good
faith, that either (1) the Company shall have suffered a material adverse change
in its business or financial condition or (2) the Company shall have been the
subject of material adverse publicity that is likely to have a material adverse
impact upon the business and operations of either the Fund or the Underwriter.
6.5 This Agreement may be terminated at the option of the Company if
(A) the Internal Revenue Service determines that the Fund fails to qualify as a
"Regulated Investment Company" under the Code or fails to comply with the
diversification requirements of Section 817(h) of the Code, or (B) the Company
shall reasonably determine, in its sole judgment exercised in good faith, that
either (1) the Fund or the Underwriter shall have been the subject of material
adverse publicity which is likely to have a material adverse impact upon the
business and operations of the Company, or (2) the Fund breaches any obligation
under this Agreement in a material respect and such breach shall continue
unremedied for thirty (30) days after receipt of notice from the Company of such
breach.
6.6 Notwithstanding any termination of this Agreement pursuant to this
Article 6, the Fund and the Underwriter may, at the option of the Fund, continue
to make available additional Fund Shares for so long after the termination of
this Agreement as the Fund desires pursuant to the terms and conditions of this
Agreement as provided in Section 6.7 below, fog` all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, if the Fund or
Underwriter so elects to make additional Shares available, the owners of the
Existing Contracts or the Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in the Fund, redeem investments
in the Fund and/or invest in the Fund upon the making of additional purchase
payments under the Existing Contracts.
6.7 In the event of a termination of this Agreement pursuant to this
Article 6, the Fund and the Underwriter shall promptly notify the Company
whether the Underwriter and the Fund will continue to make Shares available
after such termination; if the Underwriter and the Fund will continue to make
Shares so available, the provisions of this Agreement shall remain in effect
except for Section 6.1 hereof and thereafter either the Fund or the Company may
terminate the Agreement, as so continued pursuant to this Section 6.7, upon
prior written notice to the other party, such notice to be for a period that is
reasonable under the circumstances but, if given by the Fund, need not be
greater than six months.
6.8 The provisions of Article 5 shall survive the termination of this
Agreement, and the provisions of Article 4 and Sections 2.4 and 2.9 shall
survive the termination of this Agreement so long as Shares of the Fund are held
on behalf of Contract owners in accordance with Section 6.6.
ARTICLE 7
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
American Fidelity Dual Strategy Fund, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention:
Xxxxxx X. Xxxxx, Secretary
If to the Company:
American Fidelity Assurance Company
0000 Xxxxxxx Xxxxxxxxx, 0 Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Annuity Product Manager
Strategic Development Division
ARTICLE 8
MISCELLANEOUS
8.1 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.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Oklahoma,
shall be subject to the provisions of the 1933, 1934, and 1940 Acts, and the
rules, regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant and the terms hereof shall
be interpreted and construed in accordance therewith.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Fund and that no Director, officer, agent, or holder of shares of
beneficial interest of the Fund shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Each party shall use its best efforts to provide the other party with reasonable
notice of any governmental investigation or inquiry relating to this Agreement
or the transactions contemplated hereby of which it has knowledge.
8.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party..
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
8.11 No failure or delay by a party in exercising any right or remedy
under this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above
AMERICAN FIDELITY ASSURANCE COMPANY
By: /s/ XXXX X. XXX
Name: Xxxx X. Xxx
Title: President
AMERICAN FIDELITY DUAL STRATEGY FUND,
INC.
By: /s/ XXXX X. XXX
Name: Xxxx X. Xxx
Title: Chairman of the Board and President
SCHEDULE A
Segregated Accounts of American Fidelity Assurance Company Participating in
American Fidelity Dual Strategy Fund, Inc.
Name of Separate Account Effective Date of Participation
American Fidelity
Separate Account A
SCHEDULE B
Persons Authorized to Act on Behalf of American Fidelity
Assurance Company
The Fund, the Underwriter and their respective agents are authorized to
rely on instructions from the following individuals on behalf of American
Fidelity Assurance Company on its own behalf and on behalf of each Account:
Name Signature
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