INVESTMENT SUB-ADVISER AGREEMENT
Agreement made as of this 1st day of March 2001, between Investors Bank &
Trust Company (the "Adviser"), a Massachusetts banking corporation, and ABN
AMRO Asset Management (USA) LLC (the "Sub-Adviser"), a Delaware limited
liability company.
WHEREAS, MERRIMAC MUNICIPAL 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 Portfolio, pursuant to the terms of an
Investment Adviser Agreement (the "Adviser Agreement"); and
WHEREAS, the Merrimac Municipal Series, an open-end diversified management
investment company registered as such with the SEC pursuant to the 1940 Act
and the Securities Act of 1933, as amended (the "1933 Act") will invest all
of its investable assets in the Portfolio; and
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; and
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; and
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
----------------
(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.
1
2. Delivery of Documents
--------------------------
Prior to the execution of this Agreement, 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;
(e) The Trust's initial Registration Statement on Form N-1A under
the 1940 Act and all amendments thereto;
(f) The current Prospectus or similar document of any entity which
the Trust has authorized as an investor (the "Authorized Investor")
in the Portfolio (the "Investor Offering Documents");
(g) The policies and procedures applicable to the Portfolio as
adopted by the Trustees; and all amendments and supplements thereto.
(h) Any further documents, materials or information that the
Sub-Adviser may reasonably request from time to time to enable it
to perform its duties pursuant to this Agreement.
3. Sub-Adviser Duties
-----------------------
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 Investor
Offering Documents, 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 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
------------------------------------
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.
2
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. 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.
6. Interested Trustees or Parties
-----------------------------------
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. The Adviser will use its best
efforts to ensure that the composition of the Board of Trustees of the Trust
is at all times in compliance with the 1940 Act and the rules of the
Securities and Exchange Commission thereunder.
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 compliance procedures which
are reasonably designed to ensure the Portfolio's compliance with
the applicable provisions of the 1940 Act and any rules or
regulations thereunder and the investment objective, policies and
restrictions of the Portfolio as set forth in the current Investor
Offering Documents or any other applicable provisions or 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.
3
(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 may retain copies of all
records surrendered to the Trust; such copies shall be deemed to be
the property and records of the Sub-Adviser. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any records which it is required to maintain by
Rule 31a-1 under the 1940 Act. The Sub-Adviser will treat
confidentially and as proprietary information of the Trust all
records and other information obtained from the Trust relative to
the Authorized Investors and prior or potential shareholders,
except as otherwise required by law.
9. Limitation of Liability of Sub-Adviser; Indemnification
------------------------------------------------------------
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 Authorized
Investors or their shareholders, 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 Authorized Investors or their
shareholders, 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.
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 Authorized
Investors.
(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 Authorized
Investors 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.
(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.
4
(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
------------------
(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) This Agreement may be executed in two or more counterparts,
which taken together shall constitute one and the same instrument.
(f) 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.
5
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
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: President & CEO
ABN AMRO ASSET MANAGEMENT (USA) LLC
("SUB-ADVISER")
By: /s/ Xxxx X. Xxxxxxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Group Senior Vice President and
Chief Administrative Officer
The Merrimac Master Portfolio on behalf of the Merrimac Municipal Portfolio
hereby acknowledges the execution of this Agreement
Merrimac Master Portfolio
("THE TRUST")
By: /s/ Xxxx X. Xxxxxxxx
------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
6
SCHEDULE A
The Adviser will pay to the Sub-Adviser as full compensation for the
Sub-Adviser's services rendered an annual fee, computed and paid monthly,
based on the average daily net assets of the Portfolio according to the
schedule set forth below. 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 that
such period bears to a full month.
0.12% on the first $75,000,000 in assets;
0.10% on the next $75,000,000 in assets; and
0.08% on assets exceeding $150,000,000
7
