Exhibit 5(b)
INVESTMENT SUB-ADVISER AGREEMENT
Agreement made as of this 30th day of October, 1996, between Investors
Bank and Trust Company (the "Adviser"), a Massachusetts banking corporation, and
The Bank of New York (the "Sub-Adviser"), a New York banking corporation.
WHEREAS, Merrimac Cash 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 Fund, pursuant to the terms of an Investment Adviser
Agreement (the "Adviser Agreement");
WHEREAS, the Merrimac Cash 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
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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 when filed with the SEC;
(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 for the Fund;
(g) The policies and procedures applicable to the Portfolio as adopted
by the Trustees; and all amendments and supplements thereto.
The Adviser will promptly furnish the Sub-Adviser with copies of all
amendments of or supplements to the foregoing documents. The Sub-Adviser shall
be entitled to rely on all such documents furnished to it by the Adviser and
shall not be responsible for its failure to perform its duties in accordance
therewith if any such document is not furnished to it.
3. Sub-Adviser Duties
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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 Fund's
Confidential Offering Circular, 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
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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 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
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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). In evaluating the best overall
terms available, and in selecting the broker or dealer to execute a particular
transaction, the Sub-Adviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to the Sub-Adviser or an affiliate of the Sub-Adviser in
respect of accounts over which it exercises investment discretion. The
Sub-Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Sub-Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of that particular transaction or in terms of all of the
accounts over which investment discretion is so exercised by the Sub-Adviser or
its affiliates. 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 (such approval not to be
unreasonably withheld).
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6. Interested Trustees or Parties
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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 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 Fund Confidential
Offering Circular 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
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other information relative to the Fund and prior, present or potential
shareholders, except as otherwise required by law.
9. Limitation of Liability of Sub-Adviser; Indemnification
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(a) 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 Fund 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 Fund 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.
(b) Notwithstanding Section 9(a) hereof, the Trust shall indemnify the
Sub-Adviser, any affiliated person of the Sub-Adviser, and each person, if any,
who within the meaning of Section 15 of the Securities Act of 1933, as amended
(the "'33 Act"), controls the Sub-Adviser (all of such persons being referred to
as "Indemnified Persons") against any and all losses, expenses, damages,
liabilities or claims (including attorneys' fees and expenses) to which an
Indemnified Person may become subject under the '33 Act, the 1940 Act, any other
statute, common law or otherwise, which may be based upon any untrue statement
or alleged untrue statement of a material fact contained in the Trust's
Notification of Registration on Form N-8A under the 1940 Act, the Trust's
Registration Statement on Form N-1A under the 1940 Act, the Confidential
Offering Circular for the Fund and any amendment of, or supplement to, any of
the foregoing documents, or the omission or alleged omission or failure to state
therein a material fact known or which should have been known to the Trust and
was required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that no Indemnified Person shall be entitled
to indemnification hereunder for any such statements, omissions, or failures
that are (i) based upon information provided to the Trust by the Sub-Adviser in
writing, or (ii) attributable to investments made by the Sub-Adviser which are
not in accordance with the investment objectives and policies of the Portfolio.
This indemnity shall be a continuing obligation of the Trust, notwithstanding
the termination of this Agreement.
(c) The Sub-Adviser shall indemnify the Trust, and each person, if any,
who within the meaning of Section 15 of the '33 Act controls the Trust (all such
persons being referred to as "Trust Indemnified Persons") against any and all
losses, expenses, damages, liabilities or claims (including attorneys' fees and
expenses) to which the Trust Indemnified Person may become subject under the '33
Act, the 1940 Act, any other statute, common law or otherwise, which may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Trust's Notification of Registration on Form N-8A under the
1940 Act, the Trust's Registration Statement on Form N-1A under the 1940 Act,
the Confidential Offering Circular for the Fund and any amendment of, or
supplement to, any of the foregoing documents, or the omission or alleged
omission or failure to state therein a material fact known or which should have
been known to the Trust and was required to be stated therein or necessary to
make the statements therein not misleading and was (i) based upon information
provided to the Trust by the Sub-Adviser in writing, or (ii) attributable to
investments made by the Sub-Adviser which are
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not in accordance with the investment objectives and policies of the Portfolio.
This indemnity shall be a continuing obligation of the Sub-Adviser,
notwithstanding the termination of this Agreement.
(d) The Adviser shall indemnify the Sub-Adviser and hold it harmless
from and against any and all losses, expenses, damages, liabilities or claims
(including attorneys' fees and expenses), sustained or incurred by it which may
be based upon misfeasance, bad faith or negligence by the Adviser in the
discharge of its duties and performance of its obligations under this Agreement
or the Investment Adviser Agreement. This indemnity shall be a continuing
obligation of the Adviser, notwithstanding the termination of this Agreement.
(e) The Sub-Adviser shall indemnify the Adviser and hold it harmless
from and against any and all losses, expenses, damages, liabilities or claims
(including attorneys' fees and expenses), sustained or incurred by it which may
be based upon misfeasance, bad faith or negligence by the Sub-Adviser in the
discharge of its duties and performance of its obligations under this Agreement.
This indemnity shall be a continuing obligation of the Sub-Adviser,
notwithstanding the termination of this Agreement.
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 Fund.
Unless the Sub-Adviser receives a written notice of termination, the Sub-Adviser
shall be entitled to presume without further inquiry that all consents or
approvals required by Section 15 of the 1940 Act with respect to the
continuation of the Agreement have been obtained.
(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 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 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.
Upon execution by the Sub-Adviser of any modification or amendment agreement,
the Sub-Adviser shall be entitled to presume without further inquiry that all
consents or approvals required by Section 15 of the 1940 Act with respect to
such modification or amendment have been obtained.
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(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. Upon receipt by the Sub-Adviser of a termination
notice from the Portfolio, the Sub-Adviser shall be entitled to presume without
further inquiry that all consents or approvals required by Section 15 of the
1940 Act with respect to such termination have been obtained.
(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.
(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) The Sub-Adviser's duties and responsibilities are solely those set
forth herein and no other covenant or obligation shall be implied against the
Sub-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.
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(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.
INVESTORS BANK & TRUST COMPANY
("ADVISER")
By: /s/ Xxxxx X. Xxxxxxx
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Title: President and C.E.O.
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THE BANK OF NEW YORK
("SUB-ADVISER")
By: /s/ Xxxxxx Xxxxx
--------------------------
Title: Senior Vice President
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The Merrimac Master Portfolio
on behalf of the Merrimac Cash
Portfolio hereby agrees to be bound
by the provisions of Sections 9(b), 9(c)
and 11 of this Agreement.
Merrimac Master Portfolio
("THE TRUST")
By: /s/ Xxxx X. Xxxxxxx
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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 .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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