SUB-ADVISORY AGREEMENT
AGREEMENT made as of __________________, 2000, by and between MERCURY ASSET
MANAGEMENT US, A DIVISION OF FUND ASSET MANAGEMENT, L.P., a Delaware limited
partnership, (hereinafter referred to as the "Investment Adviser"), and XXXXXX
INVESTMENT PARTNERS, INC., a Pennsylvania corporation (hereinafter referred to
as the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, MERCURY ASSET MANAGEMENT MASTER TRUST (the "Trust") is a Delaware
business trust, with terms established by a Declaration of Trust dated April 23,
1998 (the "Declaration of Trust"), 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 Trustees of the Trust (the "Trustees") are authorized to
establish separate series relating to separate portfolios of securities, each of
which may offer separate classes of shares; and
WHEREAS, the Trustees have established and designated MERCURY MASTER SELECT
GROWTH PORTFOLIO (the "Portfolio") as a series of the Trust; and
WHEREAS, the Investment Adviser and the Sub-Adviser are engaged principally
in rendering investment advisory services and are registered as investment
advisers under the Investment Advisers Act of 1940, as amended (hereinafter
referred to as the "Advisers Act"); and
WHEREAS, the Investment Adviser has entered into an investment advisory
agreement with the Trust on behalf of the Portfolio (the "Advisory Agreement"),
dated _____________,
2000, pursuant to which the Investment Adviser will provide investment advisory
and management services to the Trust and the Portfolio; and
WHEREAS, the Sub-Adviser is willing to provide sub-advisory services to the
Investment Adviser with respect to the Portfolio on the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Sub-Adviser and the Investment Adviser hereby agree
as follows:
ARTICLE I
Duties of the Sub-Adviser
The Investment Adviser hereby employs the Sub-Adviser to act as sub-adviser
to the Investment Adviser and to furnish the investment advisory services with
respect to the assets of the Portfolio, as described below, subject to the
supervision of the Investment Adviser and the Trustees of the Trust, for the
period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such employment and agrees during such period to
render such services and to assume the obligations herein set forth for the
compensation from the Investment Adviser provided for herein. The Sub-Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Trust or Portfolio in any way or otherwise be deemed an
agent of the Trust or Portfolio.
(a) Investment Advisory Services. The Sub-Adviser shall provide the
Investment Adviser 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 Portfolio, shall furnish continuously an investment program
for the Portfolio, and shall determine from time to time which securities shall
be purchased, sold or exchanged and what portion of the assets of the Portfolio
shall be held in the various securities and other financial instruments in which
the Portfolio 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
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and rules adopted thereunder, and the statements relating to the Portfolio's
investment objectives, investment policies and investment restrictions as the
same are set forth in the Registration Statement of the Trust filed with the
Securities and Exchange Commission ("Commission") under the Investment Company
Act, as amended from time to time ("Registration Statement"). Without limiting
the foregoing, the Sub-Adviser shall manage the Portfolio in compliance with the
requirements of the Internal Revenue Code of 1986, as amended, applicable to a
"regulated investment company" as though such requirements were applied at the
Portfolio level and in compliance with applicable federal and state securities,
commodities and banking laws.
The Sub-Adviser 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 Portfolio's portfolio securities shall be exercised. Should
the Trustees at any time, however, make any definite determination as to
investment policy, and the Trustees or the Investment Adviser notifies the
Sub-Adviser thereof in writing, the Sub-Adviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Sub-Adviser
shall take, on behalf of the Portfolio, 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 Portfolio's account with brokers or dealers selected by it, and to that
end, the Sub-Adviser is authorized as the agent of the Trust to give
instructions to the custodian of the Portfolio as to deliveries of securities
and payments of cash for the account of the Portfolio. In connection with the
selection of such brokers or dealers and the placing of such orders with respect
to assets of the Portfolio, the Sub-Adviser 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 Sub-Adviser may select brokers or dealers with which it, the
Investment Adviser or the Trust is affiliated. [Duty to monitor?]
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(b) Filings. The Sub-Adviser shall be responsible for the preparation and
filing on behalf of the Portfolio of any ownership reports required to be filed
with the Commission, including reports on Schedule 13G and Form 13F.
The Investment Adviser shall take such actions and furnish the Sub-Adviser
with such information as may be reasonably necessary for or requested by the
Sub-Adviser to perform its responsibilities under this Agreement. The
Sub-Adviser shall make reports to the Trustees or the Investment Adviser
regarding the performance of its obligations hereunder and furnish advice and
recommendation with respect to other matters related to its investment advisory
services.
ARTICLE II
Allocation of Charges and Expenses
The Sub-Adviser assumes and shall 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, equipment, necessary personnel and
facilities which it is obligated to provide under Article I hereof. The
Sub-Adviser shall pay compensation of any officers of the Trust and any Trustees
of the Trust who are affiliated persons of the Sub-Adviser to the extent not
otherwise paid by the Investment Adviser.
ARTICLE III
Compensation of the Sub-Adviser
For the services rendered, the facilities furnished and expenses assumed by
the Sub-Adviser, the Investment Adviser shall pay to the Sub-Adviser at the end
of each calendar month a fee based upon the average daily value of the net
assets of the Portfolio, 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 set forth in Schedule A hereto,
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
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month that 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 Sub-Adviser'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.
ARTICLE IV
Limitation of Liability of the Sub-Adviser
(a) The Sub-Adviser 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 and the Portfolio, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of obligations or duties (collectively,
"disabling conduct") hereunder. As used in this Article IV, the term
"Sub-Adviser" shall include the partners, directors, officers and the employees
of the Sub-Adviser.
(b) The Investment Adviser agrees to indemnify and hold harmless the
Sub-Adviser and its affiliates against any and all losses, claims, damages,
liabilities or litigation (including legal and other expenses) (each, a "Loss,"
and collectively, "Losses") arising from or based upon (1) the Investment
Adviser's disabling conduct, as defined above, under this Agreement, or (2) any
untrue statement of a material fact in the Trust's registration statement or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or omission was
made in reliance on information furnished by the Investment Adviser; provided,
however, that in no case is the Investment Adviser's indemnity in favor of any
person deemed to protect such other person against any Loss arising from such
other person's disabling conduct, as defined above.
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(c) The Sub-Adviser agrees to indemnify and hold harmless the Investment
Adviser and its affiliates against any and all Losses arising from or based upon
(1) the Sub-Adviser's disabling conduct, as defined above, under this Agreement
or (2) any untrue statement of a material fact in the Trust's registration
statement or omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such statement or
omission was made in reliance on information furnished by the Sub-Adviser;
provided, however, that in no case is the Sub-Adviser's indemnity in favor of
any person deemed to protect such other person against any Loss arising from
such other person's disabling conduct, as defined above.
ARTICLE V
Activities of the Sub-Adviser
The services of the Sub-Adviser to the Trust and the Portfolio are not to
be deemed to be exclusive, and the Sub-Adviser and its affiliates are free to
render investment advisory services to others. It is understood that Trustees,
officers, employees and shareholders of the Trust and the Portfolio are or may
become interested in the Sub-Adviser and its affiliates, as directors, officers,
employees, partners and shareholders or otherwise, and that the Sub-Adviser and
directors, officers, employees, partners and shareholders of the Sub-Adviser and
its affiliates are or may become similarly interested in the Trust or the
Portfolio as shareholders or otherwise.
ARTICLE VI
Certain Records
While the Sub-Adviser is not being engaged to serve as the Trust's official
record keeper, the Sub-Adviser nevertheless hereby undertakes and agrees to
maintain, in the form and for the period required by the Investment Company Act
and Section 204 of the Advisers Act and Rule 204-2 thereunder, all records
relating to the investments of the Portfolio that are required to be
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maintained by the Sub-Adviser pursuant to such requirements. The Sub-Adviser
will also, in connection with the purchase and sale of securities for the
Portfolio, arrange for the transmission to the custodian for the Trust on a
daily basis, such confirmation, trade tickets, and other documents and
information, that identify securities to be purchased or sold on behalf of the
Portfolio, as may be reasonably necessary to enable the custodian to perform its
administrative and record keeping responsibilities with respect to the
Portfolio. The Sub-Adviser agrees that all accounts, books and other records
maintained and preserved by it with respect to the Portfolio as required hereby
shall be subject at any time, and from time to time, to reasonable periodic,
special and other examinations by the Commission, the Trust's auditors, the
Trust or any representative of the Trust, the Investment Adviser, or any
governmental agency or other instrumentality having regulatory authority over
the Trust.
ARTICLE VII
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, but only so
long as such continuance is specifically approved at least annually by (i) the
Trustees, or by the vote of a majority of the outstanding voting securities of
the Portfolio, 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 Portfolio, or
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by the Investment Adviser or the Sub-Adviser, on sixty days' written notice to
the other party. This Agreement shall automatically terminate in the event of
its assignment.
This Agreement shall automatically terminate in the event of its assignment
(as defined by the Investment Company Act). This Agreement will also terminate
in the event that the Advisory Agreement by and between the Trust and the
Investment Adviser is terminated. The obligations contained in Articles IV and
VI shall survive termination of this Agreement.
ARTICLE VIII
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 Portfolio, 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 IX
Severability
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.
ARTICLE X
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.
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ARTICLE XI
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, unless defined, 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 Commission under the
Investment Company Act.
ARTICLE XII
Limitation of Obligations of the Portfolio
The obligations of the Portfolio shall be limited to the assets of the
Portfolio, shall be separate from the obligations of any other series of the
Trust, and the Portfolio shall not be liable for the obligations of any other
series of the Trust.
ARTICLE XIII
Notices
All notices shall be in writing and deemed properly given when delivered or
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
Investment Adviser: Mercury Asset Management US, a division of
Fund Asset Management, L.P.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Sub-Adviser: Xxxxxx Investment Partners, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
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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.
MERCURY ASSET MANAGEMENT US, A
DIVISION OF FUND ASSET MANAGEMENT,
L.P.
By:
------------------------------------
Name:
Title:
XXXXXX INVESTMENT PARTNERS, INC.
By:
-------------------------------------
Name:
Title:
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Schedule A dated ___________, 2000
to the Sub-Advisory Agreement
dated __________, 2000
between Mercury Asset Management US, a division of Fund Asset Management, L.P.
and
Xxxxxx Investment Partners, Inc.
Pursuant to Article III, the Investment Adviser shall pay the Sub-Adviser
compensation at an annual rate as follows:
Portfolio Fee (in basis points)
---------------------------- ------------------------------------------------
Mercury Master Select Growth .40% of the first $500 million of net assets of
Portfolio the Portfolio; .35% of all net assets of the
Portfolio exceeding $500 million but less than
or equal to $1.5 billion; .30% of all net asset
of the Portfolio exceeding $1.5 billion
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