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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of November __, 1996 by and between AUSA Life
Insurance Company, Inc. ("AUSA Life"), on behalf of The Diversified Investors
Strategic Variable Funds, a separate account of AUSA Life registered as a
management investment company under the Investment Company Act of 1940 (the
"1940 Act") (herein called the "Funds"), and Diversified Investment Advisors,
Inc. a Delaware corporation (herein called "Diversified").
WHEREAS, there are three distinct series, each of which is a subaccount
of the Funds, issuing its own units: Diversified Investors Conservative
Strategic Variable Fund, Diversified Investors Moderate Strategic Variable Fund
and Diversified Investors Aggressive Strategic Variable Fund (herein called
"Fund(s)"); and
WHEREAS, each Fund will purchase units of existing subaccounts of
Diversified Investors Variable Funds, a separate account of AUSA Life and a unit
investment trust under the 1940 Act (herein called "Underlying Diversified
Funds");
WHEREAS, Diversified has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940; and
WHEREAS, AUSA Life desires to retain Diversified to render investment
advisory services to each of the Funds, and Diversified is willing to so render
such services on the terms hereinafter set forth;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. AUSA Life hereby appoints Diversified to act as investment advisor
to each Fund for the period and on the terms set forth in this Agreement.
Diversified accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
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(a) Subject to the general supervision of the Board of
Directors of AUSA Life and the Managing Board of the Funds, Diversified shall
provide each Fund with discretionary investment services. Specifically,
Diversified is responsible for supervising and directing the investments of each
Fund in accordance with each Fund's investment objectives, program, and
restrictions as provided in the then current Prospectus and the Statement of
Additional Information. Diversified is also responsible for effecting all
security transactions on behalf of each Fund. The Funds will invest their assets
in the shares of the Underlying Diversified Funds, and such investment will be
made without the payment of any commission or other sales charges.
As manager of the assets of the Funds, Diversified shall make
investments for the account of the Fund in accordance with Diversified's best
judgment and within the Funds' investment objectives, guidelines, and
restrictions, the 1940 Act, New York Insurance Law and applicable provisions of
the Internal Revenue Code of 1986 subject to policy decisions adopted by the
Managing Board.
(b) Diversified shall furnish to the Managing Board periodic
reports on the investment performance of the Funds and on the performance of its
obligations under this Agreement and shall supply such additional reports and
information as AUSA Life officers or the Managing Board shall reasonably
request.
(c) Diversified shall at its expense provide each Fund with all
services, equipment and facilities as may be required to perform its obligations
under this Agreement including, but not limited to:
(i) providing each Fund with certain administrative
services, including: maintaining records,
monitoring the financial, accounting, and
administrative functions of each Fund; maintaining
liaison with the agents employed by each Fund such
as the custodian; assisting each Fund in the
coordination of such agents' activities;
(ii) providing office space, equipment and clerical
personnel necessary for maintaining the
organization of the Funds and for performing
administrative and management functions;
(iii) supervising the overall administration of the
Funds, including negotiation of contracts and fees
with and the monitoring of performance and xxxxxxxx
of the Funds' independent contractors or agents;
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(iv) preparing and, if applicable, filing all documents
required for compliance by the Funds with
applicable laws and regulations, including
registration statements, registration fee filings,
semi-annual and annual reports to investors and
proxy statements and tax returns;
(v) preparation of agendas and supporting documents for
and minutes of meeting of Managing Board,
committees and investors; and
(vi) maintaining books and records of the Funds.
(d) Diversified shall have no discretion with respect to the
exercise of voting rights; and, whenever an Underlying Diversified Fund shall
hold a meeting of unit holders and request the Fund to vote on a matter, AUSA
Life will cast all of its votes in the same proportion as the votes of the
shareholders. Diversified shall give the Funds the benefit of Diversified's best
judgment and efforts in rendering services under this Agreement. As an
inducement to Diversified's undertaking to render these services, AUSA Life
agrees that Diversified shall not be liable under this Agreement for any mistake
in judgment or in any other event whatsoever PROVIDED that nothing in this
Agreement shall be deemed to protect or purport to protect Diversified against
any liability to the Funds or its investors to which Diversified would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its advisory duties under this Agreement or by reason of its
reckless disregard of its obligations and duties hereunder.
2. In consideration of the services to be rendered by Diversified under
this Agreement, each Fund shall pay Diversified a fee accrued daily and paid
monthly at an annual rate equal to 0.20% of each Fund's average daily net
assets. If the fees payable to Diversified pursuant to this paragraph 2 begin to
accrue before the end of any month, or, if this Agreement terminates before the
end of any month, the fees for the period from that date to the end of that
month or from the beginning of that month to the date of termination, as the
case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Fund shall be computed in the manner specified in its Regulation Statement on
Form N-3 for the computation of net asset value. For purposes of this Agreement,
a "business day" is any day the New York Stock Exchange is open for trading.
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In compliance with the requirements of Rule 31a-3 under the
1940 Act, Diversified hereby agrees that all records which it maintains for the
Funds are property of the Funds and further agrees to surrender promptly to the
Funds any such records upon the Funds' request. Diversified further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records required to be maintained by Rule 31a- 1 under the 0000 Xxx.
3. This Agreement shall be effective as to the Funds as of the date the
Funds commence investment operations after this Agreement and shall have been
approved by the Managing Board and the investor(s) in the Funds in the manner
contemplated by Section 15 of the 1940 Act and, unless sooner terminated as
provided herein, shall continue until the second anniversary of the date hereof.
Thereafter, if not terminated, this Agreement shall continue in effect as to
each Fund for successive periods of 12 months each, provided such continuance is
specifically approved at least annually by the vote of a majority of those
members of the Managing Board who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval; and either (a) by the vote of a majority of
the full Managing Board or (b) by vote of a majority of the outstanding voting
securities of the Funds; provided, however, that this Agreement may be
terminated by any or all of the three Funds at any time, without the payment of
any penalty, by the Managing Board or by vote of a majority of the outstanding
voting securities of the Funds on 60 days' written notice to Diversified, or by
Diversified as to any or all of the three Funds at any time, without payment of
any penalty, on 90 days' written notice to the Funds. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities",
"interested person" and "assignment" shall have the same meanings as such terms
have in the 1940 Act and the rule and regulatory constructions thereunder.) This
Agreement may be terminated with respect to any Fund and remain in full force
and effect for those Funds which were not specifically terminated.
4. Except to the extent necessary to perform Diversified's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of Diversified, or any affiliate of Diversified, or any employee of
Diversified, to engage in any other business or devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other trust,
corporation, firm, individual or association.
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5. The investment management services of Diversified to the Funds under
this Agreement are not to be deemed exclusive as to Diversified and Diversified
will be free to render similar services to others.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge, or
termination is sought and no material amendment of this Agreement shall be
effective until approved by vote of the holders of a majority of the outstanding
voting securities of the Funds.
This Agreement embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. Should any part of this Agreement be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors, to the extent
permitted by law.
6. This Agreement shall be construed in accordance with the laws of the
State of New York provided that nothing herein shall be construed in a manner
inconsistent with the requirements of 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
Attest: The Diversified Investors
Strategic Variable Funds
By:
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Attest: Diversified Investment Advisors, Inc.
By:
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