1
MANAGEMENT AGREEMENT
AGREEMENT made as of December , 1999, by and between MASTER FOCUS
TWENTY TRUST, a Delaware business trust (hereinafter referred to as the "Trust")
and FUND ASSET MANAGEMENT, L.P., a Delaware limited partnership (hereinafter
referred to as the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust 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 Manger is engaged principally in rendering management and
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Manager to provide management and
investment advisory services to the Trust in the manner and on the terms
hereinafter set forth; and
WHEREAS, the Manager is willing to provide management and investment
advisory services to the Trust on the terms and conditions hereafter set forth;
WHEREAS, the Trust serves as the "master" portfolio for one or more
"feeder" funds (each, a "Fund") that inverts all of their assets in the Trust
and that have the same investment objective and policies as the Trust.
2
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Manager hereby agree as follows:
Article I
Duties of the Manager
The Trust hereby employs the Manager to act as a manager and investment
adviser of the Trust and to furnish, or arrange for affiliates to furnish, the
management and investment advisory services described below, subject to the
policies of, review by and overall control of the Trustees, for the period and
on the terms and conditions set forth in this Agreement. The Manager 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
Manager 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 Trust in any way or
otherwise be deemed agents of the Trust.
(a) Management and Administrative Services. The Manager shall perform (or
arrange for affiliates to perform) the management and administrative services
necessary for the operation of the Trust, including administering shareholder
accounts and handling shareholder relations for each Fund. The Manager shall
provide the Trust and each Fund with office space, facilities, equipment and
necessary personnel and such other services as the Manager, subject to review by
the Trustees, shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement. The Manager also shall, on behalf
of the Trust, conduct relations with custodians, depositories, transfer agents,
dividend disbursing agents, other
3
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 Manager shall
generally monitor the Trust's compliance with investment policies and
restrictions as set forth in the Registration Statement of the Trust filed with
the Securities and Exchange Commission under the Investment Company Act, as
amended from time to time (the "Registration Statement"). The Manager shall make
reports to the Trustees of its performance of obligations hereunder and furnish
advice and recommendations with respect to such other aspects of the business
and affairs of the Trust as it shall determine to be desirable.
(b) Investment Advisory Services. The Manager shall provide (or arrange
for affiliates to provide) the Trust with such investment research, advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the assets of the Trust, shall furnish continuously an
investment program for the Trust and shall determine from time to time which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Trust shall be held in the various securities and other financial
instruments in which the Trust invests or cash, subject always to the
restrictions of the Declaration of Trust and By-Laws of the Trust, as amended
from time to time, the provisions of the Investment Company Act and the
statements relating to the Trust's investment objectives, investment policies
and investment restrictions as the same are set forth in the Trust's current
Registration Statement. The Manager shall make decisions for the Trust as to the
manner in which voting rights, rights to consent to corporate action and any
other rights pertaining to the Trust's portfolio securities shall be exercised.
Should the Trustees at any time, however, make any definite determination as to
investment policy and notify the Manager thereof in writing, the Manager shall
be bound by such
4
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Manager shall
take, on behalf of the Trust, all actions which it deems necessary to implement
the investment policies determined as provided above, and in particular to place
all orders for the purchase or sale of portfolio securities for the Trust's
account with brokers or dealers selected by it, and to that end, the Manager is
authorized as the agent of the Trust to give instructions to the custodian of
the Trust as to deliveries of securities and payments of cash for the account of
the Trust. In connection with the selection of such brokers or dealers and the
placing of such orders with respect to assets of the Trust, the Manager is
directed at all times to seek to obtain execution and price within the policy
guidelines determined by the Trustees and set forth in the then current
Registration Statement. Subject to this requirement and the provisions of the
Investment Company Act, the Securities Exchange Act of 1934, as amended, and
other applicable provisions of law, the Manager may select brokers or dealers
with which it or the Trust is affiliated.
(c) Affiliated Sub-Advisers. In carrying out its responsibilities
hereunder, the Manager may employ, retain or otherwise avail itself of the
services of other persons or entities including without limitation, affiliates
of the Manager, on such terms as the Manager shall determine to be necessary,
desirable or appropriate. However, if the Manager chooses to retain or avail
itself of the services of another person or entity to manage assets of the
Trust, such other person or entity must be (i) an affiliate of the Manager, (ii)
retained at the Manager's own cost and expense, and (iii) retained subject to
the requirements of Section 15 of the Investment Company Act. Retention of one
or more affiliated sub-advisers, or the employment or retention of other persons
or entities to perform services, shall in no way reduce the responsibilities or
obligations of the Manager under this Agreement and the Manager shall be
responsible for all
5
acts and omissions of such affiliated sub-advisers, or other persons or
entities, in connection with the performance of the Manager's duties hereunder.
(d) Notice Upon Change in Partners of Managers. The Manager is a limited
partnership and its limited partner is Xxxxxxx Xxxxx & Co., Inc. and its general
partner is Princeton Services, Inc. The Manager will notify the Trust of any
change in the membership of the partnership within a reasonable time after such
change.
Article II
Allocation of Charges and Expenses
(a) The Manager. The Manager 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
provide under Article I hereof. The Manager shall pay, or cause its affiliate to
pay, compensation of all officers of the Trust and each Fund and all Trustees of
the Trust and Directors of each Fund who are affiliated persons of the Manager
or any sub-adviser, or of an affiliate of the Manager or any sub-adviser.
(b) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust, including, without limitation: taxes, expenses for
legal and auditing services, costs of printing proxies, shareholder reports,
copies of the Registration Statement, 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 Trustees who are not affiliated persons of the Manager
or any sub-adviser, or of an affiliate of the
6
Manager or any sub-adviser, accounting and pricing costs (including 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 Trust. It is also understood that the Trust shall
reimburse the Manager or an affiliate of the Manager for its costs in providing
accounting services to the Trust and each Fund. The distributor of each Fund
will pay certain of the expenses of each Fund incurred in connection with the
continuous offering of shares of each Fund.
Article III
Compensation of the Manager
Management Fee. For the services rendered, the facilities furnished and
expenses assumed by the Manager, the Trust shall pay to the Manager at the end
of each calendar month a fee based upon the average daily value of the net
assets of the Trust, as determined and computed in accordance with the
description of the determination of net asset value contained in the
Registration Statement, at the annual rate of 0.75% of the average daily net
assets of the Trust, 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 Manager'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 Trustees, 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.
7
Article IV
Limitation of Liability of the Manager
The Manager shall not be liable for any error of judgment or mistake of law
or for any loss arising out of any investment or for any act or omission in the
management of the Trust, 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
"Manager" shall include any affiliates of the Manager performing services for
the Trust contemplated hereby and partners, directors, officers and employees of
the Manager and such affiliates.
Article V
Activities of the Manager
The services of the Manager to the Trust are not to be deemed to be
exclusive, and the Manager and each affiliate is free to render services to
others. It is understood that Trustees, officers, employees and shareholders of
the Trust are or may become interested in the Manager and its affiliates, as
directors, officers, employees, partners and shareholders or otherwise, and that
the Manager and directors, officers, employees, partners and shareholders of the
Manager and its affiliates are or may become similarly interested in the Trust
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 until November 30, 2001, and thereafter, but only so
long as such continuance is
8
specifically approved at least annually by (i) the Trustees, or by the vote of a
majority of the outstanding voting securities of the Trust, and (ii) a majority
of those Trustees 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 Trustees or by the vote of a majority of the outstanding voting
securities of the Trust, or by the Manager, 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 (i) by the vote of a majority of outstanding voting
securities of the Trust, and (ii) a majority of those Trustees 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.
9
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 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.
10
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written. This Agreement may be executed by
the parties hereto on any number of counterparts, all of which together shall
constitute one and the same instrument.
MASTER FOCUS TWENTY TRUST
By:
--------------------------------
Title:
FUND ASSET MANAGEMENT L.P.
By:
--------------------------------
Title:
