EXHIBIT 4
INVESTMENT ADVISORY AGREEMENT
AGREEMENT effective as of April 23, 2001 by and between MERCURY V.I.
FUNDS, INC., a Maryland corporation (hereinafter referred to as the
"Corporation") on behalf of its series XXXXXXX XXXXX LARGE CAP GROWTH FOCUS FUND
(the "Fund") and FUND ASSET MANAGEMENT, L.P., a Delaware limited partnership
(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
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 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
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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 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,
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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 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
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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 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
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),
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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 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.
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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, 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
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 approved at least annually by
(i) the Directors, or by the vote of a majority of the
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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 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 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 VIII
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.
ARTICLE IX
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
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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 on any number of counterparts, all of which
together shall constitute one and the same instrument.
MERCURY V.I. FUNDS, INC.
on behalf of its series,
XXXXXXX XXXXX LARGE
CAP GROWTH FOCUS FUND
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Director and Executive Vice President
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
GENERAL PARTNER
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Executive Vice President
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