INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 2nd day of June, 1997, by and between
Xxxxxxxx, Xxxx & Xxxx Master Portfolio, an unincorporated trust organized under
the laws of the State of New York (the "Portfolio Trust") and Xxxxxxxx, Ayer &
Wood, Inc., a Massachusetts corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Xxxxxxxx Diversified Income Portfolio (the
"Portfolio"), a separate fund of the Portfolio Trust, and the Adviser is willing
to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
1. Appointment of the Adviser. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.
2. Duties of the Adviser.
(a) The Adviser, at its expense, will furnish continuously an
investment program for the Portfolio, will determine, subject to the overall
supervision and review of the Trustees of the Portfolio Trust what investments
shall be purchased, held, sold or exchanged by the Portfolio and what portion,
if any, of the assets of the Portfolio will be held uninvested, and shall, on
behalf of the Portfolio Trust, make changes in the investments of the Portfolio.
Subject always to the supervision of the Trustees of the Portfolio Trust and to
the provisions of the Portfolio Trust's
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Agreement and Declaration of Trust and Bylaws and of the 1940 Act, the Adviser
will also manage, supervise and conduct the other affairs and business of the
Portfolio and matters incidental thereto. Notwithstanding the foregoing, the
Adviser shall not be required to perform any such non-investment advisory
services that may, in the opinion of counsel to the Portfolio Trust, cause the
Portfolio to be engaged in a "trade or business within the United States", as
such term is used in Section 864 of the Internal Revenue Code of 1986, or any
successor statute. The Adviser, and any affiliate thereof, shall be free to
render similar services to other investment companies and other clients and to
engage in other activities, so long as the services rendered hereunder are not
impaired.
(b) The Portfolio shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums, costs of notices and reports to interest-holders, typesetting and
printing of registration and financial statements for regulatory purposes and
for distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.
3. Compensation of the Adviser.
(a) As full compensation for the services and facilities furnished by
the Adviser under this Agreement, the Portfolio Trust agrees to pay to the
Adviser a fee equal at an annual rate to 0.50% of the Portfolio's average daily
net assets. Such fees shall be accrued when computed and payable monthly. For
purposes of calculating such fee, the Portfolio's average daily net asset value
shall be determined by taking the average of all determinations of net asset
value made in the manner provided in the Portfolio's current prospectus and
statement of additional information.
(b) The compensation payable to the Adviser hereunder for any period
less than a full month during which this Agreement is in effect shall be
prorated according to the proportion which such period bears to a full month.
4. Limitation of Liability of Adviser. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; provided,
however, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.
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5. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall remain in full force and
effect until December 31, 1998 and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance is approved annually (1) by either the Trustees of the Portfolio
Trust or by vote of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of the Portfolio, and, in either event, (ii) by vote of a
majority of the Trustees of the Portfolio Trust who are not parties to this
Agreement or "interested persons" (as defined in the 0000 Xxx) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the Portfolio or by the Adviser, on sixty days' written notice to the other
party.
(c) This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.
6. Limitation of Liability. The phrase "Xxxxxxxx, Xxxx & Xxxx Master
Portfolio" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Portfolio Trust dated January 18,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Portfolio Trust
hereunder shall not be binding upon any of the Trustees, interest-holders,
nominees, officers, agents or employees of the Portfolio Trust, personally, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust of the Portfolio Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and
interest-holders of the Portfolio and this Agreement has been signed by an
authorized officer of the Portfolio Trust, acting as such, and neither such
authorization by such Trustees and interest-holders nor such execution and
delivery by such officer shall be deemed to have been made by any of them, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
XXXXXXXX, AYER & WOOD MASTER
PORTFOLIO, on behalf of XXXXXXXX
DIVERSIFIED INCOME PORTFOLIO
Attest:
/s/ Xxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxxx Xxxxxxx X. Xxxx, President
(Executed outside the United States)
XXXXXXXX, XXXX & XXXX, INC.
Attest:
/s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx III
Xxxx X. Xxxxxxxx Xxxxx X. Xxxxxx III
Its: Executive Vice President
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