Exhibit 4(b)
SUB-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 FUND ASSET MANAGEMENT, L.P., a Delaware limited partnership
(hereinafter referred to as "FAM").
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, FAM is engaged principally in rendering investment advisory
services and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, the Corporation, on behalf of the Fund, has entered into an
investment advisory agreement (the "MAM Advisory Agreement"), dated April 30,
1999, with Mercury Asset Management International Ltd. (hereinafter referred to
as "MAM") pursuant to which
MAM will provide investment advisory and management services to the Corporation
and the Fund; and
WHEREAS, FAM is willing to provide investment advisory services to the
Fund with respect to all or a portion of the daily cash position of the Fund on
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Corporation and FAM hereby agree as follows:
ARTICLE I
Duties of FAM
The Corporation hereby employs FAM to act as an investment adviser for all
or a portion of the daily cash position of the Fund and to furnish, or arrange
for affiliates to furnish, certain investment advisory services with respect to
such portion of the Fund, as described below, subject to the policies of, review
by and overall control of the Directors of the Corporation, for the period and
on the terms and conditions set forth in this Agreement. FAM 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, to be paid by MAM, provided for herein. FAM 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 Fund in any way or
otherwise be deemed agents of the Corporation or Fund.
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FAM 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 management of all or a portion of
the daily cash position of the Fund from time to time managed by FAM. All advice
and recommendations provided by FAM shall be subject 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
restrictions as the same are set forth in the Fund's current Registration
Statement.
ARTICLE II
Allocation of Charges and Expenses
FAM assumes and shall pay for maintaining the staff and personnel
necessary to perform its obligations under this Agreement and shall pay all
compensation of officers of the Corporation and all Directors of the Corporation
who are affiliated persons of FAM to the extent not otherwise paid by MAM.
ARTICLE III
Compensation of FAM
For the services rendered, the facilities furnished and expenses assumed
by FAM, the Corporation shall cause MAM to pay to FAM at the end of each
calendar month a fee of at least $1.00 or another amount to be determined from
time to time by MAM and FAM, but in no event in excess of the amount that MAM
actually receives for providing services to the Corporation and the Fund
pursuant to the MAM Advisory Agreement.
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ARTICLE IV
Limitation of Liability of FAM
FAM 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
performance of services rendered hereunder with respect to 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 "FAM" shall include
any affiliates of FAM performing services for the Corporation contemplated
hereby and partners, directors, officers and employees of FAM and such
affiliates.
ARTICLE V
Activities of FAM
The services of FAM to the Corporation and the Fund are not to be deemed
to be exclusive, and FAM and any person controlled by or under common control
with FAM (for purposes of this Article V referred to as "affiliates") is free to
render services to others. It is understood that Directors, officers, employees
and shareholders of the Corporation and Fund are or may become interested in FAM
and its affiliates, as directors, officers, partners, employees and
shareholders, and that FAM and its affiliates are or may become similarly
interested in the Corporation or Fund.
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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 until the date of termination of the Advisory
Agreement (but not later than two years after the effective date of this
Agreement) and thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the Directors of the Corporation, 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 vote of a majority of the outstanding voting
securities of the Fund, or by FAM, on sixty days' written notice to the other
party. This Agreement shall automatically terminate in the event of its
assignment. Any termination shall be without prejudice to the completion of
transactions already initiated.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
approved in compliance with the requirements of the Investment Company Act and
the rules and regulations thereunder.
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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 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 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 in 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
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Treasurer
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC., ITS
GENERAL PARTNER
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
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