EXHIBIT (4)(a)
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FORM OF
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT
FDC Financial Printing Group
MANAGEMENT AGREEMENT
July 1, 1999
Endeavor Management Co.
Suite 300
0000 Xxxx Xxxxx Xxxxxxx
Xxxxxx xxx Xxx, XX 00000
Dear Sirs:
AUSA Endeavor Target Account (the "Account"), a managed separate account
created under the laws of the State of New York, herewith confirms its agreement
with Endeavor Management Co., a California corporation, (the "Manager") as
follows:
1. Investment Description; Appointment
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The Account desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Rules and Regulations as amended from time to time, and in its registration
statement filed with the Securities and Exchange Commission ("SEC") on Form N-3,
as amended from time to time (the "Registration Statement"), and in such manner
and to such extent as may from time to time be approved by the Board of Managers
of the Account. The Account is currently divided into two subaccounts: Dow
Target 10 Subaccount and Dow Target 5 Subaccount. The Account may in the future
be divided into additional subaccounts. Such existing and future subaccounts
are hereinafter referred to as the "Subaccounts." Copies of the Registration
Statement and the Account's Rules and Regulations have been or will be submitted
to the Manager. The Account desires to employ the Manager to act as its
investment manager. The Account acknowledges and agrees that the Manager
intends to appoint a person to act as investment adviser ("Adviser") to render
investment advice to each of the Subaccounts. Such Adviser shall make all
determinations with respect to the Subaccount's assets for which it has
responsibility. The Manager accepts this appointment and agrees to furnish the
services for the compensation set forth below.
2. Services as Investment Manager
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(a) Subject to the supervision and direction of the Board of Managers of
the Account, the Manager will have (i) overall supervisory responsibility for
the general management and investment of the Subaccounts' assets, and (ii) full
investment discretion to make all determinations with respect to the investment
of a Subaccount's assets not then managed by an Adviser. In connection with its
responsibilities set forth under (i) above, the Account acknowledges and agrees
that the Manager will select an Adviser to render investment advice to each of
the Subaccounts. Each such Adviser shall make all determinations with respect
to the Subaccount's assets for which it has responsibility. In addition, the
Manager will conduct a program of evaluations of the Advisers' performance,
review the activities of the Advisers for compliance with the Subaccounts'
investment objectives and policies and will keep the Account informed of
developments materially affecting the Subaccounts and shall, on its own
initiative, furnish, or cause the Adviser to furnish, to the Account from time
to time whatever information the Manager believes appropriate for this purpose.
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(b) The Manager will also furnish to the Account, at its own expense and
without renumeration from or other cost to the Account, the following:
(i) Office Space. The Manager will provide office space in the offices
of the Manager or in such other place as may be agreed upon by the parties
hereto from time to time, and all necessary office facilities and equipment;
(ii) Personnel. The Manager will provide necessary executive and other
personnel, including personnel for the performance of clerical and other office
functions, exclusive of those functions: (A) related to and to be performed
under the Account's contract or contracts for administration, custodial,
accounting, bookkeeping, transfer or similar services by the entity selected to
perform such services; and (B) related to the investment advisory services to be
provided by the Adviser pursuant to an investment advisory agreement; and
(iii) Preparation of Prospectus and Other Documents. The Manager will
provide other information and services, other than services of outside counsel
or independent accountants or investment advisory services to be provided by the
Adviser under an investment advisory agreement, required in connection with the
preparation of all registration statements and prospectuses, prospectus
supplements, statements of additional information, all annual, semiannual, and
periodic reports to policy owners of the Account, regulatory authorities, or
others, and all notices and proxy solicitation materials, furnished to policy
owners of the Account or regulatory authorities, and all tax returns.
(c) The records relating to the services provided under the Agreement shall
be the property of the Account and shall be under its control; however, the
Account shall furnish to the Manager such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
an order to carry out its duties or to satisfy applicable regulatory
requirements. In the event of the termination of this Agreement, such records
shall promptly be returned to the Account by the Manager free from any claim or
retention of rights therein.
(d) The services of the Manager to the Account hereunder are not to be
deemed exclusive, and the Manager shall be free to render similar services to
others and to engage in other activities, so long as the services rendered to
the Account are not impaired.
3. Compensation
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In consideration of services rendered pursuant to this Agreement, the
Account will pay the Manager a fee at the respective annual rates of the value
of each Subaccount's average daily net asset set forth in Schedule A hereto as
such schedule may be amended from time to time. Such fees shall be accrued daily
and paid monthly as soon as practicable after the end of each month. If the
Manager shall serve for less than the whole of any month, the foregoing
compensation shall be prorated. For the purpose of determining fees payable to
the Manager, the value of the Subaccounts' net assets shall be computed at the
times and in the manner specified in the Registration Statement.
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4. Expenses
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The Account shall pay all expenses other than those expressly assumed by
the Manager herein, which expenses payable by the Account shall include, but are
not limited to:
a. Fees to the Manager;
b. Legal and audit expenses,
c. Fees and expenses related to the registration and qualification of the
Account and its shares for distribution under federal and state securities laws;
d. Expenses of the Account's transfer agent, custodian and administrator;
e. Salaries, fees and expenses of members of the Board of Managers and
executive officers of the Account who are not "affiliated persons" of the
Manager or the Advisers within the meaning of the 1940 Act,
f. Taxes (including the expenses related to preparation of tax returns) and
corporate or other fees levied against the Account;
g. Brokerage commissions and other expenses associated with the purchase
and sale of portfolio securities for the Account;
h. Expenses, including interest, of borrowing money;
i. Expenses incidental to meetings of the Account's policy owners, Board of
Managers and the maintenance of the Account's organizational existence;
j. Expenses of preparing, printing and mailing notices, proxy material,
reports to regulatory bodies and reports to policy owners of the Account;
k. Expenses of preparing and typesetting of prospectuses of the Account;
l. Expenses of printing and distributing prospectuses to policy owners of
the Account;
m. Association membership dues;
n. Premiums for fidelity insurance, directors and officers liability
insurance and other coverage,
o. Charges of an independent pricing service to value the Subaccount's
assets;
p. Expenses related to the purchase or redemption of the Account's units;
and
q. Such nonrecurring expenses as may arise, including those associated with
actions, suits, or proceedings to which the Account is a party and arising from
any legal obligation which the Account may have to indemnify its officers and
members of the Board of Managers with respect thereto.
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5. Standard of Care
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The Manager shall exercise its best judgment in rendering the services
hereunder. The Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Account in connection with the matters to
which this Agreement relates, provided that nothing herein shall be deemed to
protect or purport to protect the Manager against liability to the Account or to
the policy owners of the Account to which the Manager would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or by reason of the Manager's reckless disregard
of its obligations and duties under this Agreement. Any person, even though an
officer, director, employee or agent of the Manager, who may be or become an
officer, member of the Board of Managers, employee or agent of the Account,
shall be deemed, when rendering services to the Account to be rendering such
services to or to be acting solely for the Account and not as an officer,
director, employee or agent, or one under the control or direction of the
Manager, even though paid by it.
6. Term
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This Agreement shall continue in effect, unless sooner terminated as
hereinafter provided, for a period of two years from the date hereof and
indefinitely thereafter provided that its continuance after such two year period
as to each Subaccount shall be specifically approved at least annually by vote
of a majority of the outstanding voting securities of such Subaccount or by vote
of a majority of the Account's Board of Managers; and further provided that such
continuance is also approved annually by the vote of a majority of the Board of
Managers who are not parties to this Agreement or interested persons of the
Account or the Manager, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to any Subaccount
at any time, without payment of any penalty, by the Account's Board of Managers
or by a vote of a majority of the outstanding voting securities of such
Subaccount upon 60 days' prior written notice to the Manager, or by the Manager
upon 90 days' prior written notice to the Account, or upon such shorter notice
as may be mutually agreed upon. This Agreement may be amended at any time by
the Manager and the Account, subject to approval by the Account's Board of
Managers and, if required by applicable SEC rules and regulations, a vote of a
majority of the Account's outstanding voting securities. This Agreement shall
terminate automatically and immediately in the event of its assignment. The
terms "assignment" and "vote of a majority of the outstanding voting securities"
shall have the meaning set forth for such terms in the 1940 Act.
7. Limitation of Account's Liability
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The Manager agrees that the Account's obligations hereunder in any case
shall be limited to the Account and to its assets and that the Manager shall not
seek satisfaction of any such obligation from the policy owners of the Account
nor from any member of its Board of Managers, officer, employee or agent of the
Account.
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8. Force Majeure
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The Manager shall not be liable for delays or errors occurring by reason of
circumstances beyond its control, including but not limited to acts of civil or
military authority, national emergencies, work stoppages, fire, flood,
catastrophe, acts of God, insurrection, war, riot, or failure of communication
or power supply. In the event of equipment breakdowns beyond its control, the
Manager shall take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto.
9. Severability
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If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
10. Miscellaneous
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This Agreement constitutes the full and complete agreement of the parties
hereto with respect to the subject matter hereof Each party agrees to perform
such further actions and execute such further documents as are necessary to
effectuate the purposes hereof. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of California. The
captions in this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all the parties.
If the foregoing is in accordance with your understanding, kindly indicate your
acceptance hereof by signing and returning to us the enclosed copy hereof.
Very truly yours,
AUSA ENDEAVOR TARGET ACCOUNT
By /s/ Xxxxxxx X. XxXxxxxxxx, Xx.
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Authorized Officer
Accepted:
ENDEAVOR MANAGEMENT CO.
By: Endeavor Management Co.,
Managing Partner
By /s/ Xxxxxxx X. XxXxxxxxxx, Xx.
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Authorized Officer
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SCHEDULE A
[Dow Target 10 Subaccount 0.75% of average daily net assets]
[Dow Target 5 Subaccount 0.75% of average daily net assets]
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