FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of the ____ day of
__________, 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 American Fidelity
Variable Annuity Fund A ("Account A") and 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 New York Stock Exchange is open for trading 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 2.10 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 Fund shall bear the costs of registration and
qualification of its 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, free of charge, 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 shall bear
the expense of providing the prospectus in such format (e.g.,
typesetting expenses), 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 its
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 prospective
purchaser who requests such statement.
2.4 The Fund or its designee shall provide the Company
free of charge 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
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 all fifty states, the
District of Columbia, Virgin Islands and Puerto Rico and such
other jurisdictions reasonably requested by the Company.
3.7 The Fund represents and warrants that the
investments of each Portfolio 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;
(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 or 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: Xxxxxxx X. Xxxxxxx, Senior Vice President,
Law and Government Affairs
If to the Company:
American Fidelity Assurance Company
0000 Xxxxxxx Xxxxxxxxx, 0 Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Marketing Director
American Fidelity Educational Services 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:
Name: Xxxx X. Xxx
Title: President
AMERICAN FIDELITY DUAL STRATEGY FUND, INC.
By:
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 Date Established
Separate Account A May 11, 1968
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
