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 (or 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, for 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 written.
AMERICAN FIDELITY ASSURANCE COMPANY
By: XXXX X. XXX
Name: Xxxx X. Xxx
Title: President
AMERICAN FIDELITY DUAL STRATEGY FUND, INC.
By: 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 January 1, 1999
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
