1
EXHIBIT 8(a)
ADMINISTRATION AGREEMENT
AGREEMENT made as of September 22, 1999, by and between MERCURY ASSET
MANAGEMENT FUNDS, INC., a Maryland corporation (hereinafter referred to as the
"Corporation") on behalf of its series, MERCURY U.S. SMALL CAP GROWTH FUND
(hereinafter referred to as the "Fund"), and FUND ASSET MANAGEMENT, L.P., a
Delaware limited partnership, (hereinafter referred to as the "Administrator").
WITNESSETH:
WHEREAS, the Corporation is engaged in business as an open-end
management investment company registered under the Investment Company Act of
1940, as amended (hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Board of Directors of the Corporation (the "Directors")
are authorized to establish separate series relating to separate portfolios of
securities, each of which may offer separate classes of shares; and
WHEREAS, the Directors have established and designated the Fund as a
series of the Corporation; and
WHEREAS, the Corporation desires to retain the Administrator to
provide management and administrative services to the Fund in the manner and on
the terms hereinafter set forth; and
WHEREAS, the Administrator is willing to provide management and
administrative services to the Fund on the terms and conditions hereafter set
forth;
2
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Corporation and the Administrator hereby agree as
follows:
ARTICLE I
DUTIES OF THE ADMINISTRATOR
The Corporation hereby employs the Administrator to act as a manager
and administrator of the Fund, and to furnish, or arrange for affiliates to
furnish, the management and administrative services described below, subject to
review by and the overall control of the Directors, for the period and on the
terms and conditions set forth in this Agreement. The Administrator hereby
accepts such employment and agrees during such period, at its own expense, to
render, or arrange for the rendering of, such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Administrator and its affiliates shall for all purposes herein be deemed to be
independent contractors and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Corporation or the
Fund in any way or otherwise be deemed agents of the Corporation or the Fund.
Management Services. The Administrator shall perform (or
arrange for the performance by affiliates of) the management and administrative
services necessary for the operation of the Corporation and the Fund including
administering shareholder accounts and handling shareholder relations. The
Administrator shall provide the Corporation and the Fund with office space,
facilities, equipment and necessary personnel and such other services as the
Administrator, subject to review by the Directors, shall from time to time
determine to be necessary or useful to perform its obligations under this
Agreement. The Administrator shall also, on behalf of the Corporation and the
Fund, conduct relations with custodians, depositories, transfer agents,
dividend
2
3
disbursing agents, other shareholder servicing agents, accountants, attorneys,
underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and
such other persons in any such other capacity deemed to be necessary or
desirable. The Administrator shall make reports to the Directors of its
performance of obligations hereunder and furnish advice and recommendations
with respect to such other aspects of the business and affairs of the Fund as
it shall determine to be desirable.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Administrator. The Administrator assumes and shall pay, or cause
its affiliate to pay, for maintaining the staff and personnel necessary to
perform its obligations under this Agreement, and shall, at its own expense,
provide the office space, facilities and necessary personnel which it is
obligated to provided under Article I hereof. The Administrator shall pay, or
cause its affiliate to pay, compensation of all Officers of the Corporation and
all Directors of the Corporation who are affiliated persons of the
Administrator or of an affiliate of the Administrator.
(b) The Corporation. The Corporation assumes and shall pay or cause to be
paid all other expenses of the Corporation and the Fund (except for the
expenses paid by the Mercury Funds Distributor division of Princeton Funds
Distributor, Inc. (the "Distributor")), including, without limitation: taxes,
expenses for legal and auditing services, costs of printing proxies,
shareholder reports, prospectuses and statements of additional information,
charges of the custodian, any sub-custodian and transfer agent, expenses of
portfolio transactions, expenses of redemption of shares, Securities and
Exchange Commission fees, expenses of registering the shares under Federal,
state and foreign laws, fees and actual out-of-pocket expenses of Directors who
are not affiliated persons of the Administrator, or of an affiliate of the
Administrator, accounting and pricing costs (including
3
4
the daily calculation of the net asset value), insurance, interest, brokerage
costs, litigation and other extraordinary or non-recurring expenses, and other
expenses properly payable by the Corporation or the Fund. It is also understood
that the Corporation shall reimburse the Administrator for its costs in
providing accounting services to the Corporation and the Fund. The Distributor
will pay certain of the expenses of the Fund incurred in connection with the
continuous offering of shares of common stock in the Fund.
ARTICLE III
COMPENSATION OF THE ADMINISTRATOR
Administrative Fees. For the services rendered, the facilities furnished
and expenses assumed by the Administrator, the Fund shall pay to the
Administrator at the end of each calendar month a fee based upon the average
daily value of the net assets of the Fund, as determined and computed in
accordance with the description of the determination of net asset value
contained in the prospectus and statement of additional information, at the
annual rate of 0.20% of the average daily net assets of the Fund, commencing on
the day following effectiveness hereof. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day
of a month, compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fee as set
forth above. Payment of the Administrator's compensation for the preceding
month shall be made as promptly as possible after completion of the
computations contemplated above. During any period when the determination of
net asset value is suspended by the Directors, the net asset value of a share
as of the last business day prior to such suspension shall for this purpose be
deemed to be the net asset value at the close of each succeeding business day
until it is again determined.
4
5
ARTICLE IV
LIMITATION OF LIABILITY OF THE ADMINISTRATOR
The Administrator shall not be liable for any error of judgment or mistake
of law or for any loss arising out of any act or omission in the management and
administration of the Corporation and the Fund, except for willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder. As used in this
Article IV, the term "Administrator" shall include any affiliates of the
Administrator performing services for the Corporation or the Fund contemplated
hereby and partners, shareholders, directors, officers and employees of the
Administrator and such affiliates.
ARTICLE V
ACTIVITIES OF THE ADMINISTRATOR
The services of the Administrator to the Corporation and the Fund are not
to be deemed to be exclusive, and the Administrator and each affiliate is free
to render services to others. It is understood that Directors, officers,
employees and shareholders of the Corporation and the Fund are or may become
interested in the Administrator and its affiliates, as directors, officers,
employees, partners and shareholders or otherwise, and that the Administrator
and directors, officers, employees, partners and shareholders of the
Administrator and its affiliates are or may become similarly interested in the
Corporation or the Fund as shareholders or otherwise.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force for two years thereafter and thereafter continue from
year to year, but only so long as such continuance is specifically approved at
least annually by (i) the Directors, and (ii) a majority of those
5
6
Directors 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.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Directors or by the vote of a majority of the outstanding
voting securities of the Corporation, or by the Administrator, on sixty days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by a majority of those Directors 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.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the Rules and Regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with laws of the State of
New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of
6
7
the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the Investment Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MERCURY ASSET MANAGEMENT FUNDS, INC.
on behalf of its series,
MERCURY U.S. SMALL CAP GROWTH FUND
By: /s/ XXXXXX X. XXXXX
---------------------------------
Title: Vice President and Treasurer
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
GENERAL PARTNER
By: /s/ XXXXX X. XXXXX
---------------------------------
Title: Executive Vice President
and Director
7
