Exhibit 4(c)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , 2000, by and between
THE ASSET PROGRAM, INC., a Maryland corporation (hereinafter referred to as the
"Program"), 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:
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WHEREAS, the Program intends to engage in business as an open-end
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 Program (the "Directors") are authorized to
establish separate series relating to separate portfolios of securities, each of
which will offer separate classes of shares; and
WHEREAS, the Directors have established and designated the Mercury U.S.
Government Bond Fund (the "Fund") as a series of the Program; 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, as amended; and
WHEREAS, the Program desires to retain the Investment Adviser to render
management and investment advisory services to the Program and 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 Program and the Fund on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Program and the Investment Adviser hereby agree as
follows:
ARTICLE I
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Duties of the Investment Adviser
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The Program hereby employs the Investment Adviser to act as an investment
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 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 Program or
the Fund in any way or otherwise be deemed agents of the Program or the Fund.
(a) Management Services. The Investment Adviser shall perform (or arrange
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for its affiliates to perform) the management and administrative services
necessary for the operation of the Program and the Fund including administering
shareholder accounts and handling shareholder relations. The Investment Adviser
shall provide the Program and Fund with office space, equipment and facilities
and such other services as the Investment Adviser, subject to
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review by the Directors, from time to time shall determine to be necessary or
useful to perform its obligations under this Agreement. The Investment Adviser,
also on behalf of the Program and the Fund, shall conduct relations with
custodians, depositories, transfer agents, dividend disbursing agents, other
shareholder servicing agents, accountants, attorneys, underwriters, 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
generally shall monitor the Program's and the Fund's compliance with investment
policies and restrictions as set forth in the currently effective prospectus and
statement of additional information relating to the shares of the Fund under the
Securities Act of 1933, as amended (the "Prospectus" and "Statement of
Additional Information", respectively). 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 Program and the Fund as it shall determine to be desirable.
(b) Investment Advisory Services. The Investment Adviser shall provide the
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Program 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 money market securities or cash, subject always to the restrictions of
the Articles of Incorporation and By-Laws of the Program, as amended from time
to time, the provisions of the Investment Company Act and the statements
relating to the Fund's investment objective, investment policies and investment
restrictions as the same are set forth in the Prospectus and Statement of
Additional Information. The Investment Adviser also shall make
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decisions for the Program as to the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining to the portfolio
securities held by the Fund 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 portfolio
securities for the Fund's account with brokers or dealers selected by it, and to
this end the Investment Adviser is authorized as the agent of the Program 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 as set forth in the Prospectus and Statement of Additional
Information. 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 Program is affiliated.
(c) Notice Upon Change in Partners of Investment Adviser. The Investment
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Adviser is a limited partnership and its limited partners are Xxxxxxx Xxxxx &
Co., Inc. and and its sole general partner is Princeton Services, Inc. The
Investment Adviser will notify the Program and the Fund of any change in the
membership of the partnership within a reasonable time after such change.
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ARTICLE II
Allocation of Charges and Expenses
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(a) The Investment Adviser. The Investment Adviser assumes and shall pay
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for maintaining the staff and personnel necessary to perform its obligations
under this Agreement, and, at its own expense, shall provide the office space,
equipment and facilities which it is obligated to provide under Article I
hereof, and shall pay all compensation of officers of the Program and all
Directors who are affiliated persons of the Investment Adviser.
(b) The Program. The Program assumes and shall pay or cause to be paid all
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other expenses of the Program and the Fund (except for the expenses paid by the
Distributor), including, without limitation: redemption expenses, expenses of
portfolio transactions, expenses of registering shares under federal and state
securities laws, pricing costs (including the daily calculation of net asset
value), expenses of printing shareholder reports, prospectuses and statements of
additional information, Securities and Exchange Commission fees, interest,
taxes, fees and actual out-of-pocket expenses of Directors who are not
affiliated persons of the Investment Adviser, fees for legal and auditing
services, litigation expenses, costs of printing proxies and other expenses
related to shareholder meetings, and other expenses properly payable by the
Program and the Fund. It also is understood that the Program will reimburse the
Investment Adviser for its costs in providing accounting services to the Program
and the Fund. The Distributor will pay certain of the expenses of the Fund
incurred in connection with the continuous offering of Fund shares.
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ARTICLE III
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Compensation of the Investment Adviser
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Investment Advisory Fee. For the services rendered, the facilities
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furnished and expenses assumed by the Investment Adviser, the Program 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 Prospectus and Statement of Additional Information, at the
annual rate of 0.50% 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 the part of the month that this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fee as set
forth above. Subject to the provisions of subsection (b) hereof, payment of the
Investment Adviser's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated by
subsection (b) hereof. During any period when the determination of net asset
value is suspended by the Directors, the net asset value 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
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Limitation of Liability of the Investment Adviser
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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 Program 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
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hereunder. As used in this Article IV, the term "Investment Adviser" shall
include any affiliates of the Investment Adviser performing services for the
Program or the Fund contemplated hereby and directors, officers and employees of
the Investment Adviser and such affiliates.
ARTICLE V
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Activities of the Investment Adviser
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The services of the Investment Adviser to the Program and the Fund are not
to be deemed to be exclusive, and the Investment Adviser and any person
controlled by or under common control with the Investment Adviser (for purposes
of Article V referred to as "affiliates") are free to render services to others.
It is understood that Directors, officers, employees and shareholders of the
Program and the Fund are or may become interested in the Investment Adviser and
its affiliates, as directors, officers, employees and shareholders or otherwise,
and that directors, officers, employees and shareholders of the Investment
Adviser and its affiliates are or may become similarly interested in the Program
and the Fund, and that the Investment Adviser may become interested in the
Program and the Fund as a shareholder or otherwise.
ARTICLE VI
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Duration and Termination of this Contract
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This Agreement shall become effective as of the date first above written
and shall remain in force until June 30, 2000 and thereafter, but only for so
long as such continuance is specifically 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) by the vote of 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.
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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 the Investment Adviser, on sixty days' written
notice to the other party. This Agreement shall terminate automatically in the
event of its assignment.
ARTICLE VII
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Amendment of this Agreement
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This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of (i) 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.
ARTICLE VIII
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Definitions of Certain Terms
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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 the
Investment Company Act.
ARTICLE IX
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Governing Law
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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
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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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE ASSET PROGRAM, INC.
By________________________________
Title:
FUND ASSET MANAGEMENT, L.P.
By________________________________
Title:
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