Exhibit 4(b)
MANAGEMENT AGREEMENT
AGREEMENT, made as of the _____ day of _________, 2002, by and between
XXXXXXX XXXXX PRINCIPAL PROTECTED TRUST, a Delaware business trust (the
"Trust"), on behalf of its series, XXXXXXX XXXXX BASIC VALUE PRINCIPAL PROTECTED
FUND (the "Fund"), and FUND ASSET MANAGEMENT, L.P., a Delaware limited
partnership (the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Manager is engaged principally in rendering management and
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Manager to render management and
investment advisory services to the Fund 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 Fund on the terms and conditions hereinafter set forth;
and
WHEREAS, during the Fund's Guarantee Period (as defined in the
Registration Statement (as defined below)) the Manager is required to manage the
Fund's portfolio in accordance with certain agreed-upon investment parameters as
set forth in that certain Financial Warranty Agreement, dated ________________,
2002, by and between the Trust and Main Place Funding, LLC (the "Warranty
Agreement"); and
WHEREAS, during the Fund's Guarantee Period the Manager will allocate the
Fund's assets between a Basic Value Component and a Protection Component (as
each term is defined in the Registration Statement) based on a proprietary
mathematical formula.
NOW, THEREFORE, in consideration of the promises 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 manager and investment
adviser to the Fund 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 Board of Trustees of the
Trust, 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 or the Fund in
any way or otherwise be deemed agents of the Trust or the Fund.
(a) Management Services. The Manager shall perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Trust and the Fund, including administering
shareholder accounts and handling shareholder relations for the Trust and the
Fund. It is understood that the Manager or its affiliates may enter into
separate agreements with the Fund for the provision of management services
necessary for the operation of the Fund. The Manager shall provide the Trust and
the Fund with office space, facilities, equipment and necessary personnel and
such other services as the Manager, subject to review by the Board of Trustees,
shall from time to time determine to be necessary or useful to perform its
obligations under this Agreement. The Manager shall also, on behalf of the Trust
and the Fund, conduct relations with custodians, depositories, transfer agents,
dividend disbursing agents, other shareholder servicing agents, pricing 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 and the Fund's compliance with investment policies and restrictions as
set forth in the current registration statement relating to the Trust under the
Investment Company Act (the "Registration Statement"). The Manager shall make
reports to the Board of 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 Fund as it shall determine to be desirable.
(b) Investment Advisory Services. The Manager shall provide (or arrange
for affiliates to provide) the Fund with such investment advice and supervision
as the latter may from time to time consider necessary for the proper
supervision of the assets of the Fund, shall furnish continuously an investment
program for the Fund and shall determine from time to time which securities
shall be purchased, sold or exchanged and what portion of the assets of the Fund
shall be held in the various securities in which the Fund invests or cash,
subject always to the restrictions set forth in the Declaration of Trust and the
By-Laws of the Trust, as amended from time to time, the provisions of the
Investment Company Act and the statements relating to the Fund's investment
objectives, investment policies and investment restrictions as the same are set
forth in the 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 Fund's portfolio securities shall
be exercised. Should the Board of 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 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 Fund,
all actions that 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 Fund'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 Fund as to deliveries
of securities and payments of cash for the account of the Fund. In connection
with the selection of such brokers or dealers and the placing of such orders
with respect to assets of the Fund, the Manager is directed at all times to seek
to obtain
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execution and prices within the policy guidelines determined by the Board of
Trustees as set forth in the 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 Fund,
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 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 the Manager. 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
and the Fund 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 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, equipment
and necessary personnel which it is obligated to provide under Article I hereof,
and shall pay all compensation of officers of the Trust and all Trustees of the
Trust who are affiliated persons of the Manager.
(b) The Fund. The Fund assumes and shall pay or cause to be paid all other
expenses of the Trust and the Fund (except for the expenses paid by FAM
Distributors, Inc. (the "Distributor")) including, without limitation:
organizational costs, the principal protection insurance premium, taxes,
expenses for legal and auditing services, costs of printing proxies, stock
certificates (if any), shareholder reports and prospectuses and statements of
additional information, charges of the custodian, any sub-custodian and transfer
agent, redemption expenses, expenses of portfolio transactions, Securities and
Exchange Commission fees, expenses of registering the shares under Federal and
state securities laws, fees and actual out-of-pocket expenses of all Trustees of
the Trust who are not affiliated persons of the Manager, accounting and pricing
costs (including the daily calculation of the net asset value), insurance,
interest and brokerage costs, litigation and other extraordinary or
non-recurring expenses, and other expenses properly payable by the Trust or the
Fund. It is also understood that the Fund shall reimburse the Manager for its
costs in providing accounting services, if any, to the Fund.
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The Distributor will pay certain of the expenses of the Fund incurred in
connection with the continuous offering of shares of the Fund.
ARTICLE III
Compensation of the Manager
(a) Investment Advisory Fee. Unless reduced as set forth below, for the
services rendered, the facilities furnished and expenses assumed by the Manager,
the Fund shall pay to the Manager at the end of each calendar month a fee at the
annual rate of 0.65% of the average daily net assets of the Fund commencing on
the day following effectiveness hereof, as determined and computed in accordance
with the description of the determination of net asset value contained in the
Registration Statement. 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. In the event that all of the Fund's assets become completely and
irreversibly allocated to the Protection Component under the terms of the
Warranty Agreement, the Manager agrees to reduce its fee to 0.25% per annum of
the average daily net assets of the Fund. This reduction in fee shall be
effective on the day following the complete and irreversible allocation of the
Fund's assets to the Protection Component (a "Complete Allocation"). If the
Complete Allocation occurs subsequent to the first day of a month, compensation
for that part of the month the reduced fee is in effect shall be prorated in a
manner consistent with the calculation of the fee as set forth above.
(b) Fee Payment. Payment of the Manager's compensation for the preceding
month shall be made as promptly as possible after completion of the computations
contemplated by Article III(a) above. During any period when the determination
of net asset value is suspended by the Board of Trustees, the average net asset
value of a share for 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.
(c) Expense Limitations. In the event the operating expenses of the Fund,
including the management and investment advisory fee payable to the Manager
pursuant to subsection (a) hereof, for any fiscal year ending on a date on which
this Agreement is in effect exceed the expense limitations applicable to the
Fund imposed by applicable state securities laws or regulations thereunder, as
such limitations may be raised, lowered or waived from time to time, the Manager
shall reduce its management and investment advisory fee by the extent of such
excess and, if required pursuant to any such laws or regulations, will reimburse
the Fund in the amount of such excess; provided, however, to the extent
permitted by law, there shall be excluded from such expenses the amount of any
interest, taxes, brokerage commissions and extraordinary expenses (including but
not limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Whenever the
expenses of the Fund exceed a pro rata portion of the applicable annual expense
limitations, the estimated amount of reimbursement under such limitations shall
be applicable as an offset against the monthly payment of the fee due to the
Manager. Should two or more such expense limitations be applicable as at the end
of the last business day of the month, that expense limitation which results in
the largest reduction in the Manager's fee shall be applicable.
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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 suffered by the Fund in connection with any investment or
for any act or omission in the management of the Trust or the Fund. Nothing
herein contained shall be construed to protect the Manager against any liability
to the Trust, the Fund or its security holders to which the Manager shall
otherwise be subject by reason of 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 or the Fund contemplated hereby and the partners, shareholders,
directors, officers and employees of the Manager and such affiliates.
ARTICLE V
Activities of the Manager
The services of the Manager to the Trust and the Fund are not to be deemed
to be exclusive; the Manager and any person controlled by or under common
control with the Manager (for purposes of this Article V referred to as
"affiliates") are free to render similar services to others so long as its
services hereunder are not impaired thereby. It is understood that the Trustees,
officers, employees and shareholders of the Trust and the Fund are or may become
interested in the Manager and its affiliates, as directors, officers, employees,
partners, and shareholders or otherwise and that the directors, officers,
employees, partners, and shareholders of the Manager and its affiliates are or
may become similarly interested in the Trust or the Fund, and that the Manager
and directors, officers, employees, partners, and shareholders of its affiliates
may become interested in the Trust 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 a period of 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 Board of Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the Fund, 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 Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund, or by the Manager, on sixty days' written notice
to the other party. This Agreement shall automatically terminate in the event of
its assignment.
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ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of the Trustees, or by the vote of a
majority of outstanding voting securities of the Fund, 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 a 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 and interpreted in accordance with the
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.
ARTICLE X
Limitation of Obligations of The Fund
The obligations of the Fund shall be limited to the assets of the Fund,
shall be separate from the obligations of any other series of the Trust, and the
Fund shall not be liable for the obligations of any other series of the Trust.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
XXXXXXX XXXXX PRINCIPAL PROTECTED TRUST,
on behalf of its series, XXXXXXX XXXXX
BASIC VALUE PRINCIPAL PROTECTED FUND
By:
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Name:
Title:
FUND ASSET MANAGEMENT, L.P.,
by PRINCETON SERVICES, INC.,
its General Partner
By:
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Name:
Title:
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