INVESTMENT SUB-ADVISER AGREEMENT
Agreement made as of this 24th day of February, 1997, between Investors
Bank and Trust Company (the "Adviser"), a Massachusetts banking corporation, and
Aeltus Investment Management, Inc. (the "Sub-Adviser"), a Connecticut
corporation.
WHEREAS, Merrimac Treasury Portfolio (the "Portfolio") is a series of
the Merrimac Master Portfolio (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"), and the Trust has appointed the Adviser as the
investment adviser for the Portfolio, pursuant to the terms of an Investment
Adviser Agreement (the "Adviser Agreement");
WHEREAS, the Merrimac Treasury Fund (the "Fund"), which is an open-end
diversified management investment company registered as such with the SEC
pursuant to the 1940 Act, will invest all of its investable assets in the
Portfolio;
WHEREAS, the Adviser Agreement provides that the Adviser may, at its
option, subject to approval by the Trustees of the Trust and, to the extent
necessary, shareholders of the Portfolio, appoint a sub-adviser to assume
certain responsibilities and obligations of the Adviser under the Adviser
Agreement;
WHEREAS, the Adviser desires to appoint the Sub-Adviser as its
sub-adviser for the Portfolio and the Sub-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 Adviser and the Sub-Adviser, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Appointment
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(a) The Adviser hereby appoints the Sub-Adviser as the investment
sub-adviser of the Portfolio to provide investment advice and to perform for the
Portfolio such other duties and functions as are hereinafter set forth. The
Sub-Adviser hereby accepts such appointment and agrees to give the Portfolio and
the Trust's Board of Trustees (the "Trustees"), directly or through the Adviser,
the benefit of the Sub-Adviser's best judgment, effort, advice and
recommendations in respect of its duties as defined in Section 2.
(b) The Adviser hereby represents and warrants to the Sub-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 to delegate
investment management discretion on behalf of the Portfolio to the Sub-Adviser,
and (ii) it has taken all necessary and proper action to authorize the execution
and delivery of this Agreement.
(c) The Sub-Adviser 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.
2. Delivery of Documents
---------------------
Prior to the execution of this Agreement or at such later date as
specified in this Section 2, the Adviser will furnish the Sub-Adviser with
copies, properly certified or authenticated, of each of the following documents:
(a) The Trust's Agreement and Declaration; and all amendments thereto
or restatements thereof;
(b) The Trust's By-Laws; and all amendments thereto;
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Sub-Adviser and approving this Agreement;
(d) The Trust's original Notification of Registration on Form N-8A
under the 1940 Act ;
(e) The Trust's initial Registration Statement on Form N-1A under the
1940 Act when filed with the SEC and all amendments thereto;
(f) The current Confidential Offering Circular, Prospectus or similar
document of any entity which the Trust has authorized as an investor (the
"Authorized Investor") in the Portfolio (the "Investor Offering Documents");
(g) The policies and procedures applicable to the Portfolio as adopted
by the Trustees; and all amendments and supplements thereto.
3. Sub-Adviser Duties
------------------
The Sub-Adviser shall, subject to the direction and control of the
Trustees or the Adviser, and in accordance with the objective and policies of
the Portfolio and the implementation thereof as set forth in the Investor
Offering Documents, the Portfolio's Registration Statement on Form N-1A and any
applicable 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 provisions of Section 5 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 Adviser in such detail as the Adviser may reasonably deem
to be appropriate in order to permit the Adviser to determine the adherence by
the Sub-Adviser to the investment policies and legal requirements of
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the Portfolio; and (v) make its officers and employees available to the Adviser
at reasonable times to review the investment policies of the Portfolio and to
consult with the Adviser regarding the investment affairs of the Portfolio.
4. Compensation of the Sub-Adviser
-------------------------------
The Adviser will pay to the Sub-Adviser as compensation for the
Sub-Adviser's services rendered and for the expenses borne by the Sub-Adviser, a
fee, determined as described in Schedule A which is attached hereto and made a
part hereof. Such fee shall be paid by the Adviser and the Trust shall have no
liability therefor.
5. Portfolio Transactions and Brokerage
------------------------------------
The Sub-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 Sub-Adviser, which may include where permissible under
the 1940 Act, brokers or dealers affiliated with the Sub-Adviser, although the
Portfolio will pay the actual transaction costs, including without limitation,
brokerage commissions on portfolio transactions. In executing portfolio
transactions and selecting brokers or dealers, the Sub-Adviser shall seek on
behalf of the Portfolio the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser shall consider all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any (for the
specific transaction and on a continuing basis). Nothing in this Agreement shall
preclude the combining of orders for the sale or purchase of securities or other
investments with other accounts managed by the Sub-Adviser or its affiliates,
provided that the Sub-Adviser does not favor any account over any other account
and provided that any purchase or sale orders executed contemporaneously shall
be allocated in an equitable manner among the accounts involved in accordance
with procedures adopted by the Sub-Adviser and reviewed and approved by the
Adviser.
6. Interested Trustees or Parties
------------------------------
It is understood that Trustees, officers, and shareholders of the Trust
may be or become interested in the Adviser or the Sub-Adviser as directors,
officers or employees and that directors, officers and stockholders of the
Adviser or the Sub-Adviser may be or become similarly interested in the Trust,
and that the Adviser or the Sub-Adviser may be or become interested in the Trust
as a shareholder or otherwise.
7. Services Not Exclusive
----------------------
The services of the Sub-Adviser to the Adviser are not to be deemed
exclusive, the Sub-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 Sub-Adviser's ability to meet all of its obligations with respect to
rendering investment advice hereunder. The Sub-Adviser, its affiliates and its
other
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clients may at any time acquire or dispose of securities which are at the same
time being acquired or disposed of for the account of the Portfolio. The
Sub-Adviser shall not be obligated to acquire for the Portfolio any security or
other investment which the Sub-Adviser or its affiliates may acquire for its or
their own accounts or for the account of another client.
8. Compliance; Books and Records
-----------------------------
(a) The Sub-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 Investor Offering
Documents and any other applicable provisions of state or federal law.
(b) The Sub-Adviser shall furnish to the Adviser, at the Adviser's
expense, copies of all records prepared and maintained in connection with the
performance of this Agreement and the maintenance of compliance procedures
pursuant to this Section 8 as the Adviser may reasonably request.
(c) The Sub-Adviser agrees to provide upon reasonable request of the
Adviser, information regarding the Sub-Adviser, including but not limited to,
background information about the Sub-Adviser and its personnel and performance
data, 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 Sub-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 Sub-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
Sub-Adviser will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Authorized Investors and
prior or potential shareholders, except as otherwise required by law.
9. Limitation of Liability of Sub-Adviser; Indemnification
-------------------------------------------------------
In consideration of the Sub-Adviser's undertaking to render the
services described in this Agreement, the Adviser agrees that the Sub-Adviser
shall not be liable for any loss suffered by the Adviser, the Trust, the
Authorized Investors or the Portfolio in connection with the performance of this
Agreement, provided that nothing in this Agreement shall be deemed to protect or
purport to protect the Sub-Adviser against any liability to the Adviser, the
Trust, the Authorized Investors or the Portfolio to which the Sub-Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of its duties under this Agreement.
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10. Duration, Amendment and Termination
-----------------------------------
(a) Subject to prior termination as provided in sub-section (d) of this
Section 10, 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 Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio and the
Authorized Investors.
(b) This Agreement may be modified by the written agreement of the
Adviser, the Sub-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 Authorized Investors if required by law. The
execution of any such modification or amendment by a party shall constitute a
representation and warranty to the other parties 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 10, the terms of any continuance, modification or amendment 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, the Sub-Adviser or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, and in the case of the
Portfolio, by action of its Board of 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
Sub-Adviser 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
Sub-Adviser shall be returned to the Portfolio as soon as reasonably practicable
after the termination of this Agreement.
11. Disclaimer of Shareholder Liability
-----------------------------------
The Adviser and the Sub-Adviser understand 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.
12. Miscellaneous
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(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.
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(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 inure to the benefit
of the parties hereto and their respective successors.
(e) This Agreement may be executed in two or more counterparts, which
taken together shall constitute one and the same instrument.
(f) 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.
INVESTORS BANK & TRUST COMPANY
("ADVISER")
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Title: President
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AELTUS INVESTMENT MANAGEMENT, INC.
("SUB-ADVISER")
By: /s/ Xxxx X. Xxx
------------------------------
Title: President
---------------------------
The Merrimac Master Portfolio
on behalf of the Merrimac Treasury
Portfolio hereby acknowledges
the execution of this Agreement
Merrimac Master Portfolio
("THE TRUST")
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Title: President
-----------------------------
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SCHEDULE A
The Adviser will pay to the Sub-Adviser as full compensation for the
Sub-Adviser's services rendered a fee, computed and paid monthly at an annual
rate of 0.08% of the average daily net assets of the Portfolio. The fee for each
month shall be payable within 30 business days after the end of the month.
If the Sub-Adviser shall serve for any period less than a full month,
the foregoing compensation shall be prorated according to the proportion which
such period bears to a full month.
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