MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT
AGREEMENT dated as of the 22nd day of December, 1998, between
AMERICAN FIDELITY ASSURANCE COMPANY, an insurance corporation organized
under the laws of the State of Oklahoma and having its principal place of
business in Oklahoma City, Oklahoma (the "Manager"), and AMERICAN FIDELITY
DUAL STRATEGY FUND, INC., a Maryland corporation, having its principal
place of business in Oklahoma City, Oklahoma (the "Fund").
WHEREAS, the Fund proposes to engage in business as an open-end
management investment company registered under the Investment Company Act
of 1940;
WHEREAS, the Manager proposes to engage in the business of acting
as manager and investment adviser for one or more investment companies;
WHEREAS, the Fund desires to retain the Manager to render such
services in the manner and on the terms and conditions hereinafter set
forth; and
WHEREAS, the Manager desires to perform such services in the
manner and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the foregoing and of the mutual covenants
hereinafter contained, it is agreed as follows:
1. The Fund hereby employs the Manager to provide investment
advisory, statistical and research facilities and services, to supervise
the composition of the Fund's portfolio and to determine the nature and
timing of changes therein and the manner of effectuating such changes,
subject to supervision of the Fund's Board of Directors and for the period
and on the terms set forth in this agreement. The Manager hereby accepts
such employment and agrees to render the services and to assume the
obligations herein set forth, for the compensation herein provided.
2. The Manager shall:
(a) Furnish to the Fund research and statistical and other
factual information and reports with respect to
securities held by the Fund or which the Fund might
purchase. It will also furnish to the Fund such
information as may be appropriate concerning
developments which may affect issuers of securities
held by the Fund or which the Fund might purchase or
the business in which such issuers may be engage. Such
statistical and other factual information and reports
shall include information and reports on industries,
business, corporations and all types of securities,
whether or not the Fund has at any time any holdings in
such industries, business, corporations or securities.
The Manager reserves the right, in its discretion, to
purchase statistical information and other services
from other sources, including affiliated persons of the
Manager.
(b) Furnish to the Fund, from time to time, advice,
information and recommendations with respect to the
acquisition, holding, or disposal by the Fund of
securities.
(c) Furnish to the Fund necessary assistance in:
(i) The preparation of all reports now or hereafter
required by Federal or other laws.
(ii) The preparation of prospectuses, registration
statements and amendments thereto that may be
required by Federal or other laws or by the rules
or regulations of any duly authorized commission
or administrative body.
(d) Furnish to the Fund at the Manager's expense, office
space in the offices of the manager or in such other
place or places as may be agreed upon from time to
time, and all necessary office facilities, business
equipment, supplies, utilities and telephone service
for managing the affairs and investments and keeping
the general accounts of the Fund (exclusive of the
necessary records of any dividend disbursing agent,
transfer agent, registrar or custodian). Manager shall
compensate all personnel, officers, and directors of
the Fund if such persons are also employees of the
Manager or its affiliates. The Manager agrees to pay
those legal and other expenses incident to organization
of the Fund and to registration with Federal and state
authorities of the initial offering of the Fund's
shares. Registration fees, legal and accounting fees
and other costs and expenses incurred in connection
with subsequent Federal and other registrations of Fund
shares and all amendments and supplements to the
initial registration of Fund shares shall be paid by
the Manager.
(e) Provide and maintain a bond issued by a reputable
insurance company authorized to do business in the
place where the bond is issued, against larceny and
embezzlement covering each officer and employee of the
Fund, who may singly or jointly with others have access
to securities of the Fund, with direct or indirect
authority to draw upon such funds or to direct
generally the disposition of such funds. The bond
shall be in such reasonable amount as a majority of the
Board of Directors of the Fund who are not officers or
employees of the Fund shall determine with due
consideration to the aggregate assets of the Fund to
which any such officer or employee may have access.
3. In connection with the management of the investment and
reinvestment of the assets of the Fund, the Manager acting by its own
officers, directors or employees or by duly authorized subcontractor is
authorized to select the brokers or dealers that will execute purchase and
sale transactions for the Fund and is directed to use its best efforts to
obtain the best available price and most favorable execution with respect
to all such purchases and sales of portfolio securities for the Fund.
Subject to this primary requirement, and maintaining as its first
consideration the benefits to the Fund and its shareholders, the Manager
shall have the right, subject to the control of the Board of Directors, to
follow a policy of selecting brokers and dealers who furnish statistical,
research and other services to the Fund or to the Manager.
4. For the services to be rendered and the charges and expenses
assumed and to be paid by the Manager, the Fund shall pay the Manager as a
basic advisory and service fee as soon as practical after the last day of
each week and at the close of each calendar week an amount equal to
.0013698% (.50% on an annual basis) of the current value of the Fund for
each day of the valuation period for investment services.
5. The Fund shall cause its books and accounts to be audited at
least once each year by a reputable, independent public accountant or
organization of public accountants who shall render a report to the Fund.
6. This Agreement shall continue in full force and effect from
year to year, provided that it shall not continue for more than two years
from the date hereof unless such continuance is specifically approved, at
least annually by the Board of Directors of the Fund, which affirmative
vote shall include a majority of the members of the Board of Directors of
the Fund who are not interested persons of the Manager or of the Fund.
"Interested persons" are those persons defined in Section 2(a)(19) of the
Investment Company Act of 1940.
7. This Agreement shall automatically terminate in the event of
its assignment, within the meaning of the Investment Company Act of 1940,
as amended, unless an order of the Securities and Exchange Commission is
issued exempting such assignment. This Agreement may be terminated at any
time, on 60 days' written notice to the Manager, without payment of any
penalty, by the Board of Directors of the Fund or by shareholders casting a
majority of the votes which may be cast by all shareholders. This
Agreement may not be terminated by the Manager without the approval of a
new investment advisory agreement by the shareholders casting a majority of
the votes which may be cast by all shareholders.
8. This Agreement may be amended at any time by mutual consent
of the parties provided that such consent on the part of the Fund shall
have been approved by the shareholders casting a majority of the votes
which may be cast by all shareholders.
9. No provision of this Agreement shall be deemed to protect
the Manager against any liability to the Fund or its shareholders to which
it might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of its duties or the reckless
disregard of its obligations under this Agreement. Nor shall any provision
hereof be deemed to protect any director or officer of the Fund against any
such liability to which he or she might otherwise be subject by reason of
any willful misfeasance, bad faith or gross negligence in the performance
of his or her duties or the reckless disregard of his or her obligations.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed on the day and year first above written.
AMERICAN FIDELITY DUAL AMERICAN FIDELITY ASSURANCE
STRATEGY FUND, INC. COMPANY
By XXXX X. XXX By XXXX X. XXX
Xxxx X. Xxx, President Xxxx X. Xxx, President
