PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 11th day of May, 2001, by and between, Evergreen
Investment Management Company, LLC, a Delaware limited liability company, (the
"Advisor"), and Oppenheimer Funds, Inc., a Colorado corporation (the "Manager").
WHEREAS, Evergreen Masters Fund ("Fund"), a series of Evergreen Equity
Trust (the "Trust"), is a Delaware business trust which has filed a registration
statement under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933 (the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Fund; and
WHEREAS, the Advisor desires to avail itself of the services, advice
and assistance of the Manager to assist the Advisor in providing investment
advisory services to the Fund and the Manager desires to provide such services;
and
WHEREAS, the Advisor has entered into an Investment Advisory Agreement
as of September 18, 1997 with the Trust pursuant to which the Advisor acts as
investment adviser with respect to the Fund;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Manager. The Manager is registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") and is engaged
in the business of rendering investment advisory services. The Advisor is
registered under the Advisers Act and serves as investment manager to the Fund.
The Advisor hereby employs the Manager to manage the investment and reinvestment
of that portion of the Fund which the Advisor allocates to the Manager from time
to time (the "Account"), subject to the supervision of the Advisor and the
control and direction of the Trust's Board of Trustees, for the period and on
the terms hereinafter set forth, and the Manager hereby accepts such employment.
The Manager shall not be responsible for any services to the Fund, or the
Account, or to bear any expenses, other than those expressly set forth in this
Agreement. The Manager shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Advisor, the Fund or the Trust in any way. The Manager, on behalf of the Fund,
may execute account documentation, agreements, contracts, and other documents
requested by brokers, dealers, counter-parties and other persons in connection
with its management of the Account.
2. Rebalancing of the Fund. In addition to the Manager, the Advisor
intends to appoint two other sub-advisers to assist in the management of the
Fund's assets, and to allocate to each sub-adviser (including the Manager) 25%
of all Fund inflows from share sales and distribution reinvestment and 25% of
all Fund outflows from share redemptions and cash distributions. The Advisor and
the Manager acknowledge that market action may result in each sub-adviser
managing more or less than 25% of the Fund's assets at any point in time. The
Advisor agrees that it will not actively reallocate Fund assets among the
sub-advisers unless average daily net assets allocated to one sub-adviser (i)
exceeds 35% or (ii) is less than 15%, in each case of average daily net assets
of the Fund for three consecutive calendar months. Upon the occurrence of such
an event, the Advisor may, but shall not be obligated to, reallocate Fund assets
among the sub-advisers so as to provide for more equal distribution of Fund
assets among sub-advisers. The Advisor shall provide each sub-adviser affected
by such reallocation with at least 30 days prior notice thereof.
3. Obligations of Services to be Provided by the Manager. The Manager
undertakes to provide the following services and to assume the following
obligations:
a. The Manager shall manage the investment and reinvestment of the
portfolio assets of the Account, all without prior consultation with the
Advisor, subject to and in accordance with (i) the investment objective and
policies of the Fund set forth in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect (the "Governing
Documents"), (ii) the requirements applicable to registered investment companies
under the 1940 Act and Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and (iii) any written instructions which the Advisor or the
Trust's Board of Trustees may issue from time-to-time; provided, however, that
for purposes of determining compliance with the Governing Documents and with
applicable law, the Manager shall treat the Account as if it constituted the
entire Fund. The Manager also agrees to conduct its activities hereunder in
accordance with any applicable procedures or policies adopted by the Trust's
Board of Trustees as from time to time in effect as previously provided to the
Manager by the Advisor (the "Procedures"). Notwithstanding anything to the
contrary contained in this Agreement, but subject to the Manager's obligations
set forth in clauses 3 a (i)-(iii) above, the Advisor expressly assumes and
shall retain overall responsibility for (i) monitoring the investment program
maintained by the Manager for the Account and the other subadvisers to ensure
that the Account's and the Fund's assets are invested in compliance with this
Agreement, the Governing Documents, the Procedures and the requirements of
applicable law, (ii) the actions and omissions of any other subadviser to the
Fund, for the purposes of compliance or otherwise, and (iii) all other
compliance requirements relating to the Fund. The Advisor has provided to the
Manager true and correct copies of all Governing Documents and Procedures and
shall promptly provide to the Manager any amendments or supplements thereto.
Subject to and in pursuance of the foregoing, the Manager shall make all
determinations with respect to the purchase and sale of portfolio securities and
shall take such action necessary to implement the same. The Manager shall from
time to time (but no more often than quarterly) upon reasonable request render
reports in such form as the Manager shall determine to the Trust's Board of
Trustees and the Advisor on portfolio transactions and investments held in the
Account. The Manager shall, in good faith and in a manner which it reasonably
believes best serves the interests of the Account's shareholders, direct the
Account's custodian as to how to vote such proxies as may be necessary or
advisable in connection with any matters submitted to a vote of shareholders of
securities held in the Account.
b. Subject to supervision of the Advisor, the Manager is authorized to,
in the name of the Fund, place orders for the execution of portfolio
transactions with or through such brokers, dealers or other financial
institutions as the Manager may select which may include, to the extent
permitted by the Advisor and the Fund, brokers or dealers affiliated with the
Manager. The Manager shall seek to obtain "best execution" on all portfolio
transactions executed on behalf of the Fund, provided that, so long as the
Manager has complied with Section 28(e) of the Securities Exchange Act of 1934,
the Manager may cause the Fund to pay a commission on a transaction in excess of
the amount of commission another broker-dealer would have charged.
On occasions when the Manager deems the purchase or sale of a security
to be in the best interests of the Fund as well as other clients of the Manager,
the Manager, to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities to be sold or
purchased in order to obtain to most favorable price or lower brokerage
commissions and efficient execution. In such event, allocations of securities so
sold or purchased, as well as the expenses incurred in the transaction, will be
made by the Manager in the manner the Manager considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to such other
clients. Subject to the foregoing provisions of this section (b), then Manager
may also consider sales of Fund shares and shares of other investment companies
managed by the Manager or its affiliates as a factor in the selection of brokers
or dealers for the Fund's portfolio transactions.
c. Solely in connection with the placement of orders for the execution
of the portfolio transactions of the Account, the Manager shall maintain all
necessary records pertaining to the purchase and sale of securities by the
Manager on behalf of the Account required by Rule 31a-2 (c) and (f) under the
1940 Act. All records shall be the property of the Trust and shall be available
for inspection and use by the Securities and Exchange Commission ("SEC"), the
Trust, the Advisor or any person retained by the Trust during business hours
upon reasonable notice and request. Where applicable, such records shall be
maintained by the Manager for the periods and in the places required by Rule
31a-2 under the 0000 Xxx.
d. The Manager shall bear its expenses of providing services pursuant
to this Agreement.
e. Notwithstanding anything to the contrary contained herein, the
Adviser shall remain responsible for, among other things, providing to the
Manager, or causing the Fund's Custodian to provide to the Manager, on each
business day as of a time deadline to be mutually agreed upon but in no event
later than reasonably necessary for the Manager to perform its daily duties, a
report or computer download in a mutually acceptable software program and
format, detailing the Account's portfolio holdings, uninvested cash, current
valuations and other information requested by the Manager to assist it in
carrying out its duties under this Agreement, as of the close of the prior
business day. In performing obligations under this Agreement, the Manager may
rely on the information provided to it by or on behalf of the Advisor or the
Fund's Custodian.
f. The Advisor agrees to abide by the provisions of the 1940 Act and
the Advisers Act, and the regulations thereunder, irrespective of whether it is
not an "investment adviser" subject to the provisions of each statutes and
regulations.
g. The Advisor hereby represents and warrants to the Manager that (i)
all computer and other systems used by the Advisor in connection with the
management and operation of the Fund, and (ii) the Advisor believes, after
reasonable inquiry, that all computer and other systems used by third parties in
connection with the management and operation of the Fund, shall be able to
handle eight digit dates and the advent of the Year 2000 will not materially
affect the functioning of such systems.
4. Compensation of the Manager. In full consideration of services
rendered pursuant to this Agreement, the Advisor will pay the Manager a fee at
the annual rate set forth in Schedule A hereto of the value of the Account's
average daily net assets. Such fee shall be accrued daily and paid monthly as
soon as possible after the end of each month but no later than 15 days after the
end of the preceding 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 Account's net assets
shall be computed at the times and in the manner that the Fund's net assets are
computed, as specified in the Governing Documents.
5. Other Activities of the Manager. The services of the Manager
hereunder are not to be deemed exclusive, and the Manager (including its
officers and employees) shall be free to render investment advisory,
administrative or other services to others and to engage in other activities.
6. Use of Names. The Advisor shall not use the name of the Manager or
any of its affiliates in any prospectus, sales literature or other material in
any manner not approved in writing prior thereto by the Manager; provided,
however, that the Advisor may use the name of the Manager in any such material
that merely refers in accurate terms to the Manager's appointment hereunder so
long as the size and format of reference is consistent with any reference to
other Fund sub-advisors named in such material. The Manager shall not use the
name of the Trust or the Advisor in any material relating to the Manager in any
manner not approved prior thereto by the Advisor; provided, however, that the
Manager may use the name of the Advisor or the Trust in any material that merely
refers in accurate terms to the appointment of the Manager hereunder.
7. Liability of the Manager. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Manager, the Manager shall not be liable for any act or
omission, or any losses that may be sustained, in the course of, or connected
with, rendering services hereunder. Subject to the foregoing, nothing herein
shall constitute a waiver of any rights or remedies which the Trust may have
under any federal or state securities laws. The Manager shall not be liable to
the Advisor, the Trust or the Fund for any losses that may be sustained as a
result of delays in or inaccuracy of information about the Fund provided to the
Manager by or on behalf of the Advisor or the Fund's Custodian.
8. Limitation of Trust's Liability. The Manager acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Manager agrees that any
of the Trust's obligations shall be limited to the assets of the Fund and that
the Manager shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
9. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, until December 31,
2001 and shall continue in full force and effect for successive periods of one
year thereafter, but only so long as each such continuance is specifically
approved at least annually by vote of the holders of a majority of the
outstanding voting securities of the Fund or by vote of a majority of the
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 payment of any
penalty, by the Trust's Board of Trustees, by the Advisor, or by a vote of a
majority of the outstanding voting securities of the Fund upon 60 days prior
written notice to the Manager or by the Manager upon 60 days' prior written
notice to the Advisor, or upon such shorter notice as may be mutually agreed
upon. This Agreement shall terminate automatically and immediately upon
termination of the Investment Advisory and Management Agreement between the
Advisor and the Trust. 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. This Agreement may be amended at any time
by the Manager and the Advisor, subject to approval by the Trust's Board of
Trustees and, if required by applicable SEC rules and regulations, a vote of a
majority of the Fund's outstanding voting securities.
10. Confidential Relationship. Any confidential information and advice
furnished by either party to this Agreement to the other shall be treated as
confidential and shall not be disclosed to third parties without the consent of
the other party hereto except as required by law, rule or regulation. The
Advisor hereby consents to the disclosure to third parties of investment results
and other data of the Account in connection with providing composite investment
results and related information of the Manager.
11. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statue, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
12. Miscellaneous. 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
Commonwealth of Massachusetts. 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 the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC
By: _______________________________
Authorized Officer
OPPENHEIMERFUNDS, INC.
By: _______________________________
Authorized Officer
SCHEDULE A
Evergreen Masters Annual Fee as a % of average daily net
Fund assets of the Account:
0.50% of the first $500 million of net assets,
(with a minimum fee of no less than $5,000 per
month commencing 3 months after the date hereof)
0.40% of next $500 million of net assets,
0.35% of net assets over $1 billion
