Exhibit 4(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 30, 1999 by and between MERCURY ASSET
MANAGEMENT V.I. FUNDS, INC., a Maryland corporation (hereinafter referred to as
the "Corporation") on behalf of its series MERCURY V.I. U.S. LARGE CAP FUND (the
"Fund") and MERCURY ASSET MANAGEMENT INTERNATIONAL LTD., a corporation organized
under the laws of England and Wales (hereinafter referred to as the "Investment
Adviser").
W I T N E S S E T H:
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 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 Investment Adviser 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 regulated by the
Investment Management Regulatory Organization, a selfregulating organization
recognized under the Financial Services Act of 1986 of the United Kingdom
(hereinafter referred to as "IMRO"), and the conduct of its investment business
is regulated by IMRO; and
WHEREAS, the Corporation desires to retain the Investment Adviser to
provide management and investment advisory services to the Fund in the manner
and on the terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the Fund on the terms and conditions hereafter
set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Corporation and the Investment Adviser hereby agree
as follows:
ARTICLE I
Duties of the Investment Adviser
The Corporation hereby employs the Investment Adviser to act as a manager
and investment adviser of 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 Directors, for
the period and on the terms and conditions set forth in this Agreement. The
Investment Adviser 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 Investment Adviser 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.
(a) Management Services. The Investment Adviser 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. The Investment
Adviser shall provide the Corporation and the
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Fund with office space, facilities, equipment and necessary personnel and such
other services as the Investment Adviser, 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 Investment Adviser shall also, on behalf
of the Corporation and the Fund, conduct relations with custodians,
depositories, transfer agents, dividend disbursing agents, other shareholder
servicing agents, accountants, attorneys, underwriters, insurance companies,
brokers and dealers, corporate fiduciaries, insurers, banks and such other
persons in any such other capacity deemed to be necessary or desirable. The
Investment Adviser shall generally monitor the Corporation's and the Fund's
compliance with investment policies and restrictions as set forth in the
Registration Statement of the Fund filed with the Securities and Exchange
Commission under the Investment Company Act, as amended from time to time (the
"Registration Statement"). The Investment Adviser 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.
(b) Investment Advisory Services. The Investment Adviser shall provide (or
arrange for affiliates to provide) the Corporation 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 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 and other
financial instruments in which the Fund invests or cash, subject always to the
restrictions of the Articles of Incorporation and By-Laws of the Corporation, 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
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restrictions as the same are set forth in the Fund's current Registration
Statement. The Investment Adviser shall make decisions for the Corporation 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 Directors at any time, however, make any definite determination as to
investment policy and notify the Investment Adviser thereof in writing, the
Investment 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 Investment Adviser shall take, on behalf of the Fund, 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 the Fund's portfolio securities for the Fund's account with brokers or
dealers selected by it, and to that end, the Investment Adviser is authorized as
the agent of the Corporation 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 Investment Adviser is
directed at all times to seek to obtain execution and price within the policy
guidelines determined by the Directors 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 Investment Adviser may select brokers or
dealers with which it or the Corporation is affiliated.
(c) Affiliated Sub-Advisers. In carrying out its responsibilities
hereunder, the Investment Adviser may employ, retain or otherwise avail itself
of the services of other persons or entities including without limitation,
affiliates of the Investment Adviser, on such terms as the Investment Adviser
shall determine to be necessary, desirable or appropriate. However, if the
Investment
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Adviser 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 Investment Adviser, (ii) retained at the Investment Adviser'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
subadvisers, or the employment or retention of other persons or entities to
perform services, shall in no way reduce the responsibilities or obligations of
the Investment Adviser under this Agreement and the Investment Adviser 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 Investment
Adviser's duties hereunder.
ARTICLE II
Allocation of Charges and Expenses
(a) The Investment Adviser. The Investment Adviser 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 Investment Adviser 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
Investment Adviser or any sub-adviser, or of an affiliate of the Investment
Adviser or any sub-adviser.
(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 certain insurance companies (the "Participating Insurance Companies")
including, without limitation: taxes, expenses for legal and auditing services,
costs of printing proxies, shareholder reports, copies of the
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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
Directors who are not affiliated persons of the Investment Adviser or any
sub-adviser, or of an affiliate of the Investment Adviser 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
Corporation or the Fund. It is also understood that the Corporation shall
reimburse the Investment Adviser or an affiliate of the Investment Adviser for
its costs in providing accounting services to the Corporation and the Fund. Each
Participating Insurance Company will pay certain of the expenses of the Fund
incurred in connection with the continuous offering of shares of beneficial
interest of the Fund.
ARTICLE III
Compensation of the Investment Adviser
Management and Investment Advisory Fee. For the services rendered, the
facilities furnished and expenses assumed by the Investment Adviser, the Fund
shall pay to the Investment Adviser 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 Registration Statement, at the annual rate of 0.65%
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
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manner consistent with the calculation of the fee as set forth above. Payment of
the Investment 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
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.
ARTICLE IV
Limitation of Liability of the Investment Adviser
The Investment 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 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 "Investment Adviser" shall include any affiliates
of the Investment Adviser performing services for the Corporation or the Fund
contemplated hereby and partners, directors, officers and employees of the
Investment Adviser and such affiliates.
ARTICLE V
Activities of the Investment Adviser
The services of the Investment Adviser to the Corporation and the Fund are
not to be deemed to be exclusive, and the Investment Adviser 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 Investment Adviser and its affiliates, as directors, officers,
employees, partners and shareholders or otherwise, and that the Investment
Adviser and directors,
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officers, employees, partners and shareholders of the Investment Adviser and its
affiliates are or may become similarly interested in the Corporation or the Fund
as shareholders or otherwise.
ARTICLE VI
Investment Adviser Statements Pursuant to IMRO Rules
Any complaints concerning the Investment Adviser should be in writing
addressed to the attention of the Managing Director of the Investment Adviser.
The Corporation has the right to obtain from the Investment Adviser a copy of
the IMRO complaints procedure and to approach IMRO and the Investment Ombudsman
directly.
The Investment Adviser may make recommendations, subject to the investment
restrictions referred to in Article I herein, regarding Investments Not Readily
Realisable (as that term is used in the IMRO Rules) or investments denominated
in a currency other than British pound sterling. There can be no certainty that
market makers will be prepared to deal in unlisted or thinly traded securities
and an accurate valuation may be hard to obtain. The value of investments
recommended by the Investment Adviser may be subject to exchange rate
fluctuations which may have favorable or unfavorable effects on investments.
The Investment Adviser may make recommendations, subject to the investment
restrictions referred to in Article I herein, regarding options, futures or
contracts for differences. Markets can be highly volatile and such investments
carry a high degree of risk of loss exceeding the original investment and any
margin on deposit.
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
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approved at least annually by (i) the Directors, or by the vote of a majority of
the outstanding voting securities of the Fund, and (ii) 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.
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 Fund, or by the Investment Adviser, on sixty days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its assignment.
ARTICLE VIII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding voting
securities of the Fund, and (ii) 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 IX
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.
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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.
ARTICLE XI
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 Corporation,
and the Fund shall not be liable for the obligations of any other series of the
Corporation.
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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 V.I.
FUNDS, INC. on behalf of its series,
MERCURY V.I. U.S. LARGE CAP FUND
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Treasurer
MERCURY ASSET MANAGEMENT
INTERNATIONAL LTD.
By: /s/ Xxxxx Xxxxx /s/ Xxxxx X.X. Xxxxx
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Name: Xxxxx Xxxxx Xxxxx X.X. Xxxxx
Title: Chairman Director
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