INVESTMENT ADVISER AGREEMENT
Agreement made as of this ____ day of March, 2001, by and between
Merrimac Master Portfolio, a New York Trust (the "Trust") and Investors Bank
and Trust Company (the "Adviser"), a Massachusetts banking corporation.
WHEREAS, the MERRIMAC MUNICIPAL PORTFOLIO (the "Portfolio") is a
series of the Trust, which is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission (the
"SEC") pursuant to the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Merrimac Municipal Series (the "Fund"), which is an
open-end diversified management investment company registered as such with
the SEC pursuant to the 1940 Act and the Securities Act of 1933, will invest
all of its investable assets in the Portfolio;
WHEREAS, the Trust, on behalf of the Portfolio, desires to appoint
the Adviser to render, or contract to obtain as hereinafter provided,
investment advisory services to the Portfolio and to administer the
Portfolio's day to day business affairs and the Adviser is willing to act in
such capacity upon the terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Trust, on behalf of the Portfolio, and the
Adviser, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Appointment
(a) The Trust, on behalf of the Portfolio, hereby appoints the
Adviser as the investment adviser of the Portfolio to administer its business
affairs and to perform for the Portfolio such other duties and functions as
are hereinafter set forth. The Adviser hereby accepts such appointment and
agrees to give the Portfolio and the Trust's Board of Trustees (the
"Trustees"), the benefit of the Adviser's best judgment, effort, advice and
recommendations in respect of its duties as defined in Section 2.
(b) The Trust hereby represents and warrants to the Adviser, which
representations and warranties shall be deemed to be continuing, that (i) it
has full power and authority to enter into this Agreement, and (ii) it has
taken all necessary and proper action to authorize the execution and delivery
of this Agreement.
(c) The Adviser hereby represents and warrants to the Trust, which
representations and warranties shall be deemed to be continuing, that (i) it
has full power and authority to enter into this Agreement, and (ii) it has
taken all necessary and proper action to authorize the execution and delivery
of this Agreement.
2. Adviser Duties
(a) The Adviser shall, subject to the direction and control of the
Trustees and in accordance with the objective and policies of the Portfolio
and the implementation thereof as set forth in the Fund's Prospectus and
Statement of Additional Information ("SAI"), the Portfolio's Registration
Statement on Form N-1A and any federal and state laws: (i) regularly provide
investment advice and recommendations to the Portfolio, with respect to the
Portfolio's investments, investment policies and the purchase and sale of
securities; (ii) supervise and monitor continuously the investment program of
the Portfolio and the composition of its portfolio and determine what
securities shall be purchased and sold by the Portfolio; (iii) arrange,
subject to the provision of Section 4 hereof, for the purchase of securities
and other investments for the Portfolio and the sale of securities and other
investments of the Portfolio; (iv) provide reports on the foregoing to the
Trust in such detail as the Trust may reasonably deem to be appropriate in
order to permit the Trust to determine the adherence by the Adviser to the
investment policies and legal requirements of the Portfolio; and (v) make its
officers and employees available to the Trust's officers at reasonable times
to review the investment policies of the Portfolio and to consult with the
Trust's officers regarding the investment affairs of the Portfolio.
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(b) The Adviser is further authorized to enter into a sub-adviser
arrangement for the investment advisory services outlined in Section 2 (a) of
this Agreement in connection with the management of the Portfolio, provided
that no such arrangement shall be made until a sub-adviser agreement has been
approved by the Trustees. Should the Adviser enter into such a sub-adviser
agreement, the Adviser shall, nevertheless, retain supervisory responsibility
for all investment advisory services furnished pursuant to any such
sub-advisory arrangements and the Adviser's duties shall then include: (i)
supervise and monitor continuously the investment advisory services furnished
pursuant to any such sub-adviser arrangements; (ii) review the performance of
the sub-adviser, and make recommendations to the Trustees with respect to the
retention and renewal of such sub-adviser arrangements; (iii) provide reports
on the foregoing to the Trustees for each Board meeting; (iv) make its
officers and employees available to review the investment policies of the
Portfolio and to consult with the sub-adviser regarding the investment
affairs of the Portfolio; (v) supervise relationships with and monitor the
performance of the custodian, depositories, transfer agent, accountants,
attorneys, insurers and other persons in any capacity deemed to be necessary
or desirable; and (vi) make recommendations to the Trustees with respect to
Portfolio policies and carry out such policies as are adopted by the Trustees.
3. Compensation of the Adviser
The Portfolio will pay to the Adviser as compensation for the
Adviser's services rendered and for the expenses borne by the Adviser,
including personnel expenses, a fee, determined as described in Schedule A
which is attached hereto and made a part hereof.
4. Portfolio Transactions and Brokerage
The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with issuers, brokers or
dealers selected by the Adviser, which may include where permissible under
the 1940 Act, brokers or dealers affiliated with the Adviser. In the
selection of such brokers or dealers and the placing of such orders, the
Adviser always shall seek best execution, which is to place transactions
where the Portfolio can obtain the most favorable combination of price and
execution services in particular transactions or provided on a continuing
basis by a broker or dealer, and to deal directly with a principal market in
connection with over-the-counter transactions, except when it is believed
that best execution is obtainable elsewhere.
5. Interested Trustees or Parties
It is understood that Trustees, officers, and shareholders of the
Trust may be or become interested in the Adviser as directors, officers or
employees and that directors, officers and stockholders of the Adviser may be
or become similarly interested in the Trust, and that the Adviser may be or
become interested in the Trust as a shareholder or otherwise.
6. Services Not Exclusive
The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage in
other activities, provided, however, that such other services and activities
do not, during the term of this Agreement, interfere, in a material manner,
with the Adviser's ability to meet all of its obligations hereunder.
7. Compliance; Books and Records
(a) The Adviser agrees to maintain adequate compliance procedures to
ensure its compliance with the applicable provisions of the 1940 Act and any
rules or regulations thereunder, the investment objective, policies and
restrictions of the Portfolio as set forth in the current Fund Prospectus and
SAI and any other applicable provisions of state or federal law.
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(b) The Adviser shall furnish to the Portfolio, at the Portfolio's
expense, copies of all records prepared in connection with the performance of
this Agreement and the maintenance of compliance procedures pursuant to this
Section 7 as the Portfolio may reasonably request.
(c) The Adviser agrees to provide upon reasonable request of the
Portfolio, information regarding the Adviser, including but not limited to,
background information about the Adviser and its personnel, for use in
connection with efforts to promote the Fund and the sale of its shares.
(d) In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Adviser hereby agrees that all records which it maintains for the
Trust are the property of the Trust and further agrees to surrender promptly
to the Trust any of such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the 1940
Act. The Adviser will treat confidentially and as proprietary information of
the Trust all records and other information relative to the Fund and prior,
present or potential shareholders, except as otherwise required by law.
8. Limitation of Liability of Adviser
In consideration of the Adviser's undertaking to render the services
described in this Agreement, the Trust, on behalf of the Portfolio, agrees
that the Adviser shall not be liable under this Agreement for any loss
suffered by the Trust in connection with the performance of this Agreement,
provided that nothing in this Agreement shall be deemed to protect or purport
to protect the Adviser against any liability to the Trust or its shareholders
to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties under
this Agreement.
9. Duration, Amendment and Termination
(a) Subject to prior termination as provided in sub-section (d) of
this Section 9, this Agreement shall continue in effect until two years from
the date hereof and for successive annual periods thereafter, but only so
long as the continuance after such initial two year period shall be
specifically approved at least annually by vote of the Trustees or by vote of
a majority of the outstanding voting securities of the Portfolio and the Fund.
(b) This Agreement may be modified by the written Agreement of the
Adviser and the Portfolio, such consent on the part of the Portfolio to be
authorized by vote of a majority of the outstanding voting securities of the
Portfolio and the Fund if required by law. The execution of any such
modification or amendment by a party shall constitute a representation and
warranty to the other party that all necessary consents or approvals with
respect to such modification or amendment have been obtained.
(c) In addition to the requirements of sub-sections (a) and (b) of
this Section 9, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees who are
not parties to such Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval.
(d) Either the Adviser or the Portfolio may, at any time on sixty
(60) days' prior written notice to the other party, terminate this Agreement,
without payment of any penalty, and in the case of the Portfolio, by action
of its Trustees, or by vote of a majority of its outstanding voting
securities.
(e) This Agreement shall terminate automatically in the event of its
assignment.
(f) Termination of this Agreement shall not relieve the Adviser nor
the Trust from any liability or obligation in respect of any matters,
undertakings or conditions which shall not have been done, observed or
performed prior to such termination. All records of the Portfolio in the
possession of the Adviser shall be returned to the Portfolio as soon as
reasonably practicable after the termination of this Agreement.
10. Disclaimer of Liability; Several Obligations
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The Adviser understands that the obligations of the Trust under this
Agreement are not binding upon any Trustee or shareholder of the Trust
personally, but bind only the Trust and the Trust's property.
This Agreement is an agreement entered into between the Adviser and
the Trust on behalf of the Portfolio. With respect to any obligation of the
Trust on behalf of any other Portfolio arising out of this Agreement, the
Adviser shall look for payment or satisfaction of such obligation solely to
the assets of the Portfolio to which such obligation relates as though the
Adviser had separately contracted with the Trust by separate written
instrument with respect to each Portfolio.
11. Miscellaneous
(a) The terms "vote of a majority of the outstanding voting
securities," "assignment," and "interested persons," when used herein, shall
have the respective meanings specified in the 1940 Act as now in effect or as
hereafter amended.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(c) 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.
(d) This Agreement shall be binding upon and shall insure to the
benefit of the parties hereto and their respective successors.
(e) The Adviser's duties and responsibilities are solely those set
forth herein and no other covenant or obligation shall be implied against the
Adviser in connection with this Agreement.
(f) This Agreement may be executed in two or more counterparts,
which taken together shall constitute one and the same instrument.
(g) Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address
as such other party may designate for the receipt of such notice. No notice
shall be effective until received.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed by their respective officers designated below as of the day and year
first above written.
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Merrimac Master Portfolio ("TRUST") on behalf of
the Merrimac Municipal Portfolio ("PORTFOLIO")
By: ___________________
Xxxx X. Xxxxxxxx
Title: President
INVESTORS BANK & TRUST COMPANY
("ADVISER")
By: ___________________
Title:
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MERRIMAC MUNICIPAL PORTFOLIO
FEE SCHEDULE
MARCH __, 2001
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INVESTMENT ADVISER
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__ BASIS POINTS ANNUALLY ON NET ASSETS OF PORTFOLIO
Investment Adviser will pay from its fees the cost of Sub-Adviser fees,
portfolio custody, fund Accounting, transfer agency and fund
administration (excluding transaction costs and out-of-pocket charges
related to these services as detailed below).
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TRANSACTION COSTS
================================================================================
Per Transaction
---------------
DTC/Fed Book Entry $12.00
Non-DTC, Boston Settlements $20.00**
Non-DTC, New York Settlement $35.00
Non-DTC, New York Maturities $10.00
GNMA Securities $40.00
Government Paydown $5.00
Futures $18.00
Incoming Wires $6.00
Outgoing Wires $8.00
** There is no charge for maturities of these items.
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OUT-OF-POCKET & BALANCE CREDITS
================================================================================
OUT-OF-POCKET
These charges consist of:
- Pricing & Verification Services
- Systems Customization (if required)
- Ad hoc Reports
- All local duties, script fees and any other market
standard fee levied in accordance with local market
practices
BALANCE CREDITS
We allow balance credits against fees (excluding out-of-pocket charges)
for collected fund balances aising out of the custody relationship. The
monthly earnings allowance will equal 75% of the 90 day Treasury Xxxx
rate.
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