As filed with the Securities and Exchange Commission on March 28, 1997
1940 Act File No. 811-07941
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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MERRIMAC MASTER PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
P.O. Box 501, Cardinal Avenue, George Town, Grand Cayman, Cayman Islands, BWI
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (809) 949-2001
Susan C. Mosher, Secretary
Merrimac Master Portfolio
200 Clarendon Street
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copy to:
Philip H. Newman
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
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MERRIMAC MASTER PORTFOLIO
EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended (the "1940 Act").
However, beneficial interests in the Registrant are not being registered under
the Securities Act of 1933, as amended (the "1933 Act") since such interests
will be issued solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant's series may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any beneficial
interests in any series of the Registrant.
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Pursuant to General Instruction F4 of Form N-1A, a registration statement filed
under only the 1940 Act shall consist of the facing sheet of the Form, responses
to all items of Parts A and B except Items 1, 2, 3 and 5A of Part A thereof,
responses to all items of Part C except Items 24(b)(6), 24(b)(10), 24(b)(11),
24(b)(12) and 24(b)(16) required signatures, and all other documents that are
required or which the Registrant may file as part of the registration statement.
(i)
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PART A
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PART A
March 26, 1997
Responses to Items 1 through 3 and 5A have been omitted pursuant to paragraph 4
of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant
The Merrimac Master Portfolio (the "Trust") is an open-end management investment
company registered with the Securities and Exchange Commission (the "SEC") under
the 1940 Act. The Trust was organized as a common law trust under the laws of
the State of New York on October 30, 1996. The Trust has established two series
of beneficial interest: Merrimac Cash Portfolio (the "Cash Portfolio") and
Merrimac Treasury Portfolio (the "Treasury Portfolio") (collectively, the
"Portfolios" and singly, a "Portfolio"). The beneficial interests of each series
shall hereinafter be referred to as "shares" and holders of such interests shall
hereinafter be referred to as "shareholders." Each Portfolio is diversified
within the meaning of the 1940 Act. The Treasury Portfolio has not yet commenced
operations. Beneficial interests in each Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in a Portfolio may only be
made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
Investment Objective
The investment objective of each Portfolio is to obtain as high a level of
current income as is consistent with the preservation of capital and liquidity.
There is no assurance that either Portfolio will achieve its investment
objective. Neither Portfolio's investment objective is fundamental and therefore
may be changed at any time by the Board of Trustees of the Trust (the "Board of
Trustees" or the "Trustees") upon at least 30 days prior written notice to
shareholders of the particular Portfolio.
Investment Policies
Each Portfolio seeks to achieve its objective by investing in high quality U.S.
dollar denominated money market instruments. The Cash Portfolio may invest in
U.S. Government Obligations (such as U.S. Treasury bills, notes and bonds, and
instruments issued by U.S. Government agencies or instrumentalities); securities
of U.S. and Non-U.S. banks or thrift organizations (such as bankers'
acceptances, time deposits and certificates of deposit); corporate debt
obligations, including commercial paper, notes and bonds and other money market
instruments; asset-backed securities; and variable rate obligations (defined as
a security whose coupon rate resets at least every six months). The Cash
Portfolio also may invest in repurchase agreements that are collateralized by
the securities listed above with no restrictions on the maturity of obligations
collateralizing such repurchase agreements and may engage in securities lending.
The Treasury
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Portfolio will invest substantially all, but not less than 65% of its assets in
U.S. Government Obligations (as defined above) which are backed by the "full
faith and credit" of the U.S. Government. To maximize the tax-effective yield
for shareholders, under normal circumstances, the Treasury Portfolio will invest
only in obligations that qualify for the exemption from state taxation.
The Portfolios will each operate as a "money market mutual fund" and all
investments will qualify as "eligible securities" within the meaning of Rule
2a-7 under the 1940 Act. Consistent with Rule 2a-7, a Portfolio will not
purchase securities of any issuer (except securities issued or guaranteed by the
United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if as a result more than 5% of the total assets of
the Portfolio would be invested in the securities of such issuer or the
Portfolio would own more than 10% of the outstanding voting securities of such
issuer.
Additional Investment Policies
Maturity and Quality. Each Portfolio will manage interest rate risk by
maintaining a dollar-weighted average maturity of 90 days or less and will not
invest in securities with remaining maturities of more than 397 days (as
determined in accordance with Rule 2a-7 under the 1940 Act.) Each Portfolio may
invest in variable or floating rate securities which bear interest at rates
subject to periodic adjustment or which provide for periodic recovery of
principal on demand. Each Portfolio intends to incur only limited credit risk.
The Portfolios may only purchase securities, in addition to U.S. Government
Obligations (as defined above), that are rated in the highest or second highest
rating categories for short-term obligations by at least two nationally
recognized statistical rating organizations ("NRSROs"). As a matter of operating
policy, however, the Portfolios will only invest in securities, exclusive of
U.S. Government Obligations, that are rated in the highest rating category for
short-term obligations by at least two NRSROs. Investments in high quality,
short term instruments may, in many circumstances, result in a lower yield than
would be available from investments in instruments with a lower quality or a
longer term.
Investment Restrictions. Part B of this Registration Statement contains
a list of specific investment restrictions which govern the investment policies
of the Portfolios. These specific restrictions may not be changed without
shareholder approval. Except as otherwise indicated, each Portfolio's investment
policies may be changed at any time by the Board of Trustees upon at least 30
days prior written notice to shareholders of the particular Portfolio. If a
percentage or rating restriction is adhered to at the time an investment is
made, a later change in percentage or rating resulting from changes in a
Portfolio's securities will not be a violation of policy.
Investment Practices
Money Market Instruments. An investment in a Portfolio is subject to
interest rate risk and credit risk of the issuers of the money market
instruments. All money market instruments can change in value when interest
rates or an issuer's creditworthiness changes, or if an issuer or guarantor of a
security fails to pay interest or principal when due.
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U.S. Government Obligations. Each Portfolio may invest in U.S.
Government money market obligations, which are debt securities issued or
guaranteed by the U.S. Treasury, including bills, certificates of indebtedness,
notes and bonds, or by an agency or instrumentality of the U.S. Government
established under the authority of an act of Congress. Not all U.S. Government
obligations are backed by the full faith and credit of the United States. For
example, securities issued by the Federal Farm Credit Bank or by the Federal
National Mortgage Association are supported by the agency's right to borrow
money from the U.S. Treasury under certain circumstances. Securities issued by
the Federal Home Loan Bank are supported only by the credit of the agency. There
is no guarantee that the U.S. Government will support these types of securities,
and therefore they involve more risk than "full faith and credit" Government
obligations. The Treasury Portfolio will generally invest in "full faith and
credit" U.S. Government Obligations.
Bankers' Acceptances. The Cash Portfolio may invest in bankers'
acceptances which are bills of exchange or time drafts drawn on and accepted by
a commercial bank. They are used by corporations to finance the shipment and
storage of goods and to furnish dollar exchange. Maturities are generally six
months or less.
Time Deposits. The Cash Portfolio may invest in time deposits ("TDs"),
which are non-negotiable receipts issued by a bank in exchange for the deposit
of funds. Like a certificate of deposit, a TD earns a specified rate of interest
over a definite period of time; however, it cannot be traded in the secondary
market. The Portfolio may make time deposits in commercial banks, savings banks,
thrifts, and in foreign banks if the institution has total assets in excess of
$1 billion. Such instruments include Eurodollar TDs, which are U.S. dollar
denominated deposits in a foreign branch of a U.S. or foreign bank.
Certificates of Deposit. The Cash Portfolio also may invest in
certificates of deposit ("CDs"), which are negotiable interest bearing
instruments with a specific maturity. CDs are issued by banks and thrift
institutions in exchange for the deposit of funds and normally can be traded in
the secondary market prior to maturity. The Portfolio may invest in CDs of
domestic and foreign branches of U.S. commercial banks and domestic thrifts that
are FDIC insured and that have total assets in excess of $1 billion. The
Portfolio also may invest in U.S. dollar-denominated CDs issued by foreign banks
having total assets in excess of $1 billion. Such instruments include Eurodollar
CDs, which are issued by branches of foreign and domestic banks located outside
the U.S., and Yankee CDs, which are issued by a U.S. branch of a foreign bank
and held in the U.S.
Commercial Paper. The Cash Portfolio may invest in commercial paper,
which is the term used to designate unsecured short-term promissory notes issued
by corporations and other entities. Maturities on these issues vary from a few
days to nine months. The Portfolio may also purchase Europaper that is U.S.
dollar-denominated commercial paper of a foreign issuer and may buy bonds with
remaining maturities of under thirteen months.
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Asset-Backed Securities. The Cash Portfolio also may invest in
asset-backed securities, which consist of securities secured by company
receivables, home equity loans, truck and auto loans, leases, credit card
receivables and other securities backed by other types of receivables or other
assets. Credit support for asset-backed securities may be based on the
underlying assets and/or provided through credit enhancements such as letters of
credit, insurance bonds, limited issuer guarantees, senior-subordinated
structures and over collateralization. Asset-backed securities are normally
traded over-the-counter and typically have a short-intermediate maturity
structure depending on the paydown characteristics of the underlying financial
assets which are passed through to the security holder. Asset-backed securities
may be subject to prepayment risk, particularly in a period of declining
interest rates. Prepayments, which occur when unscheduled payments are made on
the underlying debt instruments, may shorten the effective maturities of these
securities and may lower their total returns. There is no limit on the extent to
which the Cash Portfolio may invest in asset-backed securities; however, the
Portfolio will only invest in asset-backed securities that carry a rating in the
highest category from at least two NRSROs.
When-Issued and Delayed Delivery Transactions. Each Portfolio may
invest in when-issued securities, which are securities purchased for delivery
beyond the normal settlement date at a stated price and yield, thereby involving
the risk that the yield obtained will be less then that available in the market
at delivery. Although the purchase of securities on a when-issued basis is not
considered leveraging, it has the effect of leveraging. When such a security is
purchased, the Custodian will set aside cash or liquid securities to satisfy the
purchase commitment. These segregated securities will be valued at market and
additional cash or securities will be segregated if necessary so that the market
value of the account will continue to satisfy the purchase commitment. A
Portfolio generally will not pay for such securities or earn interest on them
until received. Commitments to purchase when-issued securities will not, under
normal market conditions, exceed 25% of the Portfolio's total assets, and a
commitment will not exceed 90 days. A Portfolio will only purchase when-issued
securities for the purpose of acquiring portfolio securities and not for
speculative purposes. However, a Portfolio may sell these securities or dispose
of the commitment before the settlement date if it is deemed advisable as a
matter of investment strategy.
Variable and Floating Rate Instruments. Certain of the obligations
purchased by the Portfolios may carry variable or floating rates of interest and
may include variable amount master demand notes. A floating rate security
provides for the automatic adjustment of its interest rate whenever a specified
interest rate changes. A variable rate security provides for the automatic
establishment of a new interest rate on set dates. Variable and floating rate
instruments may include variable amount master demand notes that permit the
indebtedness thereunder to vary in addition to providing for periodic
adjustments in the interest rate. There may be no active secondary market with
respect to a particular variable or floating rate instrument. Nevertheless, the
periodic readjustments of their interest rates tend to assure that their value
to a Portfolio will approximate their par value. Further, some of the demand
instruments purchased by a Portfolio derive their liquidity from the ability of
the holder to demand repayment from the issuer or from a third party providing
credit support.
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Repurchase Agreements. The Cash Portfolio may enter into repurchase
agreements, which are agreements by which a person obtains a security and
simultaneously commits to return the security to the seller at an agreed upon
price (including principal and interest) on an agreed upon date within a number
of days from the date of purchase. In substance, a repurchase agreement is a
loan by the Portfolio collateralized with securities. The Portfolio's custodian
or its agent will hold the security as collateral for the repurchase agreement.
All repurchase transactions must be collateralized initially at a value at least
equal to 102% of the repurchase price and counterparties are required to deliver
additional collateral in the event the market value of the collateral falls
below 100%. The Portfolio bears the risk of loss in the event the other party
defaults on its obligations and the Portfolio is delayed or prevented from its
right to dispose of the collateral securities or if the Portfolio realizes a
loss on the sale of the collateral securities. The Portfolio will enter into
repurchase agreements with financial institutions deemed to present minimal risk
of bankruptcy during the term of the agreement based on guidelines established
and periodically reviewed by the Trustees. The Portfolio will not invest more
than 10% of its net assets in repurchase agreements maturing in more than seven
days.
Reverse Repurchase Agreements. The Cash Portfolio may borrow funds for
temporary purposes by entering into reverse repurchase agreements. Pursuant to
such agreements, the Portfolio would sell its securities to financial
institutions such as banks and broker-dealers and agree to repurchase them at a
mutually agreed-upon date and price. The Portfolio will enter into reverse
repurchase agreements only to avoid otherwise selling securities during
unfavorable market conditions to meet redemptions. At the time the Portfolio
enters into a reverse repurchase agreement, it would place in a segregated
custodial account, assets such as liquid high grade securities, consistent with
the Portfolio's investment restrictions and having a value equal to the
repurchase price (including accrued interest), and would subsequently monitor
the account to ensure that such equivalent value was maintained. Reverse
repurchase agreements involve the risk that the market value of securities sold
by the Portfolio may decline below the price at which the Portfolio is obligated
to repurchase the securities. Reverse repurchase agreements are considered by
the SEC to be borrowings by the Portfolio under the 1940 Act.
Securities Lending. The Cash Portfolio may lend up to 33 1/3% of its
portfolio of securities pursuant to agreements requiring that the loan be
continuously secured by cash or equivalent collateral or by a letter of credit
or bank guarantee in favor of the Portfolio at least equal at all times to 100%
of the market value plus accrued interest on the securities lent. The Portfolio
will continue to receive interest on the securities lent while simultaneously
seeking to earn interest on the investment of cash collateral. Collateral is
marked to market daily. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans will only be made to borrowers
deemed to be of good standing under guidelines established by the Trustees. In
addition, the Portfolio will bear the risk of any decline in value of securities
acquired with cash collateral. Loans are subject to termination by the Portfolio
or the borrower at any time and are, therefore, not considered to be illiquid
investments.
Private Placements and Illiquid Investments. The Cash Portfolio may
invest up to 10% of its net assets in securities for which there is no readily
available market. These illiquid
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securities may include privately placed restricted securities for which no
institutional market exists. The absence of a trading market can make it
difficult to value such securities and disposing of the securities may involve
negotiation and expense. The valuation of these securities generally reflects
limits on their liquidity. At times it may be difficult for the Portfolio to
sell restricted securities promptly at an acceptable price.
Rule 144A Securities. The Cash Portfolio may purchase certain
restricted securities ("Rule 144A securities") for which there is a secondary
market of qualified institutional buyers, as contemplated by Rule 144A under the
1933 Act. Rule 144A provides an exemption from the registration requirements of
the 1933 Act for the resale of certain restricted securities to qualified
institutional buyers.
One effect of Rule 144A is that certain restricted securities may now be liquid,
though there is no assurance that a liquid market for Rule 144A securities will
be maintained. The Board of Trustees of the Portfolio has adopted policies and
procedures for the purpose of determining whether securities that are eligible
for resale under Rule 144A are liquid or illiquid for purposes of the
Portfolio's limitation on investment in illiquid securities. Within those
policies is the delegation to the Portfolio's investment sub-adviser the
determination as to whether a particular security is liquid or illiquid. The
Portfolio's Board of Trustees also periodically reviews Portfolio purchases and
sales of Rule 144A securities.
To the extent that liquid Rule 144A securities within the Portfolio become
illiquid due to the lack of sufficient qualified institutional buyers or due to
market or other conditions, the percentage of the Portfolio's assets invested in
illiquid assets would increase. In that event, these securities would be deemed
illiquid securities for purposes of the Portfolio's 10% limitation on investment
in illiquid securities.
Futures Contracts and Related Options. The Cash Portfolio may enter
into futures contracts, options on futures contracts, index futures and options
thereon that are traded on an exchange regulated by the Commodities Futures
Trading Commission ("CFTC") to the extent that obligations under such contracts
or transactions, together with options on securities, represent not more than
10% of the Portfolio's total assets.
The Portfolio may buy and sell futures contracts and related options to manage
its exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, may reduce
the Portfolio's exposure to price fluctuations. Other strategies, including
buying futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Portfolio expects to
enter into these transactions to "lock in" a return or spread on a particular
investment or portion of its assets, to protect against any increase in the
price of securities the Portfolio anticipates purchasing at a later date, or for
other risk management strategies.
Options and futures can be volatile instruments, and involve certain risks. If a
hedge is applied at an inappropriate time or interest rates are judged
incorrectly, options and futures strategies may
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lower the Portfolio's return. The Portfolio could also experience losses if the
prices of its options and futures positions were poorly correlated with its
other instruments, or if it could not close out its positions because of an
illiquid secondary market.
Typically, investment in these contracts requires the Portfolio to deposit with
the applicable exchange or other specified financial intermediary as a good
faith deposit for its obligations, known as "initial margin", an amount of cash
or specified debt securities that initially is 1%-15% of the face amount of the
contract and that thereafter fluctuates on a periodic basis as the value of the
contract fluctuates. Thereafter, the Portfolio must make additional deposits
equal to any net losses due to unfavorable price movements of the contract and
will be credited with an amount equal to any net gains due to favorable price
movements. These additional deposits or credits are calculated and required
daily and are known as "variation margin".
The SEC requires that when an investment company such as the Portfolio effects
transactions of the foregoing nature, it must either segregate cash or other
liquid portfolio securities with its custodian in the amount of its obligations
under the foregoing transactions or must cover such obligations by maintaining
positions in portfolio securities, futures contracts or options that would serve
to satisfy or offset the risk of such obligations. When effecting transactions
of the foregoing nature, the Portfolio will comply with such segregation or
cover requirements. No limitation exists on the amount of the Portfolio's assets
that may be used to comply with such segregation or cover requirements.
Swaps, Caps and Floors. In order to protect the value of the Cash
Portfolio from interest rate fluctuations and to hedge against fluctuations in
the floating rate market in which the Portfolio's investments are traded, the
Portfolio may enter into swaps, caps, and floors on various securities (such as
U.S. Government securities), securities indexes, interest rates, prepayment
rates or other financial instruments or indexes, for bona fide hedging purposes.
While swaps, caps, and floors (sometimes hereinafter collectively referred to as
"swap contracts") are different from futures contracts (and options on futures
contracts) in that swap contracts are individually negotiated with specific
counterparties, the Portfolio will use swap contracts for purposes similar to
the purposes for which it uses options, futures, and options on futures. Those
uses of swap contracts (i.e., risk management and hedging) present the Portfolio
with risks and opportunities similar to those associated with options contracts,
futures contracts, and options on futures. See "Futures Contracts and Related
Options".
Because swap contracts are individually negotiated, they remain the obligation
of the respective counterparties, and there is a risk that a counterparty will
be unable to meet its obligations under a particular swap contract. If a
counterparty defaults on a swap contract with the Portfolio, the Portfolio may
suffer a loss. To address this risk, the Portfolio will usually enter into
interest rate swaps on a net basis, which means that the two payment streams
(one from the Portfolio to the counterparty, one to the Portfolio from the
counterparty) are netted out, with the Portfolio receiving or paying, as the
case may be, only the net amount of the two payments. Interest rate swaps do not
involve the delivery of securities, other underlying assets, or principal,
except for purposes of collateralization, as discussed below. Accordingly, the
risk of loss with respect to interest rate swaps entered into on a net basis
would be limited to the net amount of the interest
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payments that the Portfolio is contractually obligated to make. If the other
party to an interest rate swap defaults, the Portfolio's risk of loss consists
of the net amount of interest payments that the Portfolio is contractually
entitled to receive. To protect against losses related to counterparty default,
the Portfolio may enter into swaps that require transfers of collateral for
changes in market value. In contrast, currency swaps and other types of swaps
may involve the delivery of the entire principal value of one designated
currency or financial instrument in exchange for the other designated currency
or financial instrument. Therefore, the entire principal value of such swaps may
be subject to the risk that the other party will default on its contractual
delivery obligations.
Securities of Foreign Issuers. The Cash Portfolio may invest in
dollar-denominated commercial paper of foreign issuers and dollar-denominated
obligations of foreign branches of U.S. banks, U.S. branches of foreign banks
and foreign branches of foreign banks. Securities of foreign issuers involve
risks that are different from investments in securities of U.S. issuers. These
risks may include future unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, currency controls,
interest limitations or other governmental restrictions that might affect
payment of principal or interest. Additionally, there may be less public
information available about foreign issuers. Various provisions of federal law
governing the establishment and operation of domestic branches do not apply to
foreign branches of domestic banks. The obligations of U.S. branches of foreign
banks may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation as well as by
federal and state regulation and governmental action in the country in which the
foreign bank has its head office. Foreign branches of foreign banks are not
regulated by U.S. banking authorities and generally are not bound by accounting,
loan limitations, auditing and financial reporting standards comparable to U.S.
banks.
Other Investment Policies. Although the Portfolios usually intend to
hold securities purchased until maturity, at which time they will be redeemable
at their full principal value plus accrued interest, they may, at times, engage
in short-term trading to attempt to take advantage of yield variations in the
short-term market. Each Portfolio also may sell portfolio securities prior to
maturity based on a revised evaluation of the creditworthiness of the issuer or
to meet redemptions. In the event there are unusually heavy redemption requests
due to changes in interest rates or otherwise, a Portfolio may have to sell a
portion of its investment portfolio at a time when it may be disadvantageous to
do so. However, each Portfolio believes that its ability to borrow funds to
accommodate redemption requests may mitigate in part the necessity for such
portfolio sales during these periods.
Risk Factors
The shares of the Portfolios have not been registered under the 1933 Act and,
because they will be offered only to qualified investors, it is anticipated that
they will be exempt from the registrations provisions thereof. Shares of the
Portfolios may not be transferred or resold without registration under the 1933
Act or pursuant to an exemption from such registration. However, shares of the
Portfolios may be redeemed in accordance with the terms of the Declaration of
Trust.
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Investments in shares of either Portfolio are neither insured nor guaranteed by
the government. There is no assurance that a Portfolio will maintain a stable
net asset value of $1.00 per share. Shares of either Portfolio are not deposits
or obligations of, or guaranteed or endorsed by, Investors Bank & Trust Company
("Investors Bank") or The Bank of New York ("BNY"), and shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency, and involve investment risks including the possible loss of
principal.
Item 5. Management of the Portfolios
The Board of Trustees
The Board of Trustees of the Trust has overall responsibility for managing the
Trust in good faith and in a manner that represents the best interests of the
Trust. This management responsibility may be delegated. Accordingly, the Board
of Trustees supervises the management, activities and affairs of the Trust and
has approved contracts with Investors Bank, BNY and Aeltus Investment
Management, Inc. ("Aeltus") to provide day-to-day management of the Trust's
operations. More information regarding the Trustees and Officers of the Trust
appears in Part B of this Registration Statement.
The Adviser
The Trustees, including a majority of the Trustees that are not "interested
persons" of the Trust, as such term is defined in Section 2(a)(19) of the 1940
Act ("Independent Trustees"), have authorized Investors Bank to serve as the
investment adviser to each Portfolio of the Trust pursuant to an investment
adviser agreement (the "Adviser Agreement"). Under the Adviser Agreement,
Investors Bank continuously reviews and supervises each Portfolio's investment
program. Investors Bank discharges its responsibilities subject to the
supervision of, and policies established by, the Trustees of the Portfolio
Trust. Investors Bank was organized in 1969 as a Massachusetts-chartered trust
company and provides domestic and global custody, multi currency accounting,
institutional transfer agency, performance measurement, foreign exchange,
securities lending and mutual fund administration services to a variety of
financial asset managers, including mutual fund complexes, investment advisers,
banks and insurance companies. Investors Bank is a wholly-owned subsidiary of
Investors Financial Services Corp., a publicly-held corporation and holding
company registered under the Bank Holding Company Act of 1956. The business
address of Investors Bank is 89 South Street, Boston, Massachusetts 02111.
Investors Bank began acting as investment adviser at the commencement of
operations of the Cash Portfolio (November 21, 1996) but otherwise has no
previous experience in providing investment advisory services.
The Sub-Advisers
BNY serves as the Cash Portfolio's sub-adviser pursuant to its Investment
Sub-Adviser Agreement (the "BNY Sub-Adviser Agreement") with Investors Bank.
Under the BNY Sub-Adviser Agreement, BNY manages the Portfolio, selects
investments and places all orders
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for the purchase and sale of the Portfolio's securities, subject to the general
supervision of the Trust's Board of Trustees and Investors Bank and in
accordance with the Portfolio's investment objective, policies and restrictions.
BNY is a wholly owned subsidiary of The Bank of New York Company, Inc. BNY has
discretionary investment authority for the short-term money management of
accounts exceeding $30 billion. The business address of BNY is 48 Wall Street,
New York, New York 10286. For its services to the Portfolio, BNY is paid by
Investors Bank a monthly fee computed at an annual rate of .08% of the average
daily net assets of the Cash Portfolio.
Aeltus serves as the Treasury Portfolio's sub-adviser pursuant to its Investment
Sub-Adviser Agreement (the "Aeltus Sub-Adviser Agreement") with Investors Bank.
Under the Aeltus Sub-Adviser Agreement, Aeltus manages the Portfolio, selects
investments and places all orders for the purchase and sale of the Portfolio's
securities, subject to the general supervision of the Trust's Board of Trustees
and Investors Bank and in accordance with the Portfolio's investment objective,
policies and restrictions. Aeltus is an indirect wholly owned subsidiary of
Aetna Inc. As of December 31, 1996, Aeltus managed approximately $38 billion in
assets for various individual and institutional accounts, including registered
investment companies. The business address of Aeltus is 242 Trumbull Street,
Hartford, Connecticut 06103-1205. For its services to the Treasury Portfolio,
Aeltus is paid by Investors Bank a monthly fee computed at an annual rate of
.08% of the average daily net assets of the Treasury Portfolio.
The Administrator, Transfer Agent, Custodian and Fund Accountant
Each Portfolio employs Investors Fund Services (Ireland) Limited ("IBT
Ireland"), a subsidiary of Investors Bank, as Administrator pursuant to an
Administration Agreement (the "Administration Agreement") to provide certain
administrative services. The services provided by IBT Ireland under the
Administration Agreement include certain accounting, clerical and bookkeeping
services, corporate secretarial services and assistance in the preparation and
filing of tax returns and reports to shareholders and the SEC.
IBT Fund Services (Canada) Inc. ("IBT Canada"), a subsidiary of Investors Bank,
acts as transfer agent for each Portfolio pursuant to a Transfer Agency
Agreement. As transfer agent, IBT Canada is responsible for maintaining records
of shareholder interests for the Portfolios. IBT Canada also serves as fund
accountant to the Portfolios pursuant to a Fund Accounting Agreement. In such
capacity, IBT Canada performs certain accounting, clerical and bookkeeping
services, and the daily calculation of net asset value for each Portfolio.
Investors Bank acts as custodian for each Portfolio. As custodian, Investors
Bank holds cash, securities and other assets of the Portfolios as required by
the 1940 Act.
For its services under the Adviser Agreement, Administration Agreement, Transfer
Agency Agreement, Custodian Agreement and the Fund Accounting Agreement, the
Portfolios each pay Investors Bank an aggregate fee which is calculated daily
and paid monthly, at an annual rate of 0.17% of the average daily net assets of
the respective Portfolio. Investors Bank is solely responsible for the payment
of all fees to BNY, Aeltus and to its subsidiaries. For the fiscal year
A-11
<PAGE>
ended December 31, 1996, the compensation paid to Investors Bank by the Cash
Portfolio was 0.08% of that Portfolio's average net assets.
Trust Expenses
The Trust will pay all of its expenses other than those expressly assumed by
Investors Bank. The principal expenses of the Trust are the fees for advisory
services, administration, custody, fund accounting and transfer agency services,
all of which are payable to Investors Bank. Other expenses include: (i)
amortization of deferred organizational costs; (ii) taxes, if any; (iii)
expenses for legal, auditing and financial accounting services; (iv) expense of
preparing (including typesetting, printing and mailing) reports and notices to
existing shareholders; (v) expense of issuing and redeeming Trust shares; (vi)
the fees, travel expenses and other out-of-pocket expenses of the Independent
Trustees; (vii) extraordinary expenses as may arise, including expenses incurred
in connection with litigation proceedings and claims and the legal obligations
of the Trust to indemnify its Trustees, shareholders and agents; and (viii)
other expenses properly payable by the Trust.
Item 6. Capital Stock and Other Securities
Attributes of Portfolio Shares
Investments in the Portfolios have no preferences, pre-emptive or conversion or
similar rights and are fully paid and nonassessable, except as set forth below.
Neither Portfolio is required and neither has a current intention to hold annual
meetings of shareholders. Special meetings of shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the shareholders as provided in the Trust's
Declaration of Trust or as deemed necessary or desirable by the Trustees.
Changes in fundamental policies will be submitted to shareholders. Shareholders
have under certain circumstances (e.g., upon the application and submission of
certain specified documents to the Trustees by a specified percentage of the
aggregate value of the Trust's outstanding shares (or of a Portfolio's
outstanding shares on matters relating solely to one Portfolio)) the right to
communicate with other shareholders in connection with requesting a meeting of
shareholders for the purpose of removing one or more Trustees. Shareholders also
have the right to remove one or more Trustees without a meeting by a declaration
in writing by a specified number of shareholders. Upon liquidation or
dissolution of a Portfolio, shareholders would be entitled to share pro rata in
the net assets of the Portfolio available for distribution to shareholders.
The Trust is organized as a trust under the laws of the State of New York. Under
the Declaration of Trust, the Trustees are authorized to issue shares (i.e.,
beneficial interests) in the Portfolios. Each shareholder is entitled to a vote
in proportion to the value of its investment in the particular Portfolio.
Investments in a Portfolio may not be transferred, but a shareholder may
withdraw all or any portion of its investment at any time at net asset value.
Shareholders in a Portfolio (e.g., investment companies, insurance company
separate accounts and common and commingled trust funds) are each liable for all
obligations of the Portfolio. However, it is not expected that the liabilities
of a Portfolio would ever exceed its assets.
A-12
<PAGE>
Shares of a Portfolio are not registered under the 1933 Act and are sold in
reliance upon an exemption from registration. Shares may not be transferred or
resold without registration under the 1933 Act, except pursuant to an exemption
from registration. However, shares may be redeemed on any day that both the New
York Stock Exchange and the New York Federal Reserve Bank are open for business
(a "Business Day").
Control Persons
As of March 1, 1997, the Merrimac Cash Fund, a series of the Merrimac Funds,
beneficially owned more than 25% of the voting securities of the Cash Portfolio
and therefore controls, as such term is defined under the 1940 Act, the Cash
Portfolio. As of March 1, 1997, the Treasury Portfolio had not commenced
operations.
Shareholder Inquiries
All shareholder inquiries should be directed to Investors Bank.
Dividends and Distributions
The net income of the Portfolios is determined each Business Day (and on such
other days as are deemed necessary in order to comply with Rule 22c-1 under the
1940 Act). This determination is made once during each such day as of 2:00 p.m.,
Eastern time. All net income of a Portfolio, as defined below, so determined is
allocated pro rata among the shareholders in such Portfolio at the time of
determination.
For this purpose, the net income of a Portfolio (from the time of the
immediately preceding determination thereof) consists of (i) all income accrued,
less the amortization of any premium, on the assets of the Portfolio, less (ii)
all actual and accrued expenses of the Portfolio determined in accordance with
generally accepted accounting principles. Interest income includes discount
earned (including both original issue and market discount) accrued ratably to
the date of maturity and any net realized gains or losses on the assets of the
Portfolio.
It is intended that the Portfolios' assets, income and capital gain
distributions will be managed in such a way that a shareholder of either
Portfolio will be able to satisfy the requirements of Subchapter M of the Code,
assuming that the shareholder invested all of its investable assets in the
Portfolio.
Item 7. Purchase of Securities Being Offered
Shares of each Fund are sold at the net asset value of such shares next
determined after an order and payment for the investment is received by the
Trust or its agent by the time designated herein. The net asset value of each
Fund's Shares will be determined at 2:00 p.m. (ET) on each day that both the New
York Stock Exchange and the New York Federal Reserve Bank are open for trading.
Beneficial interests in each Portfolio are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in either Portfolio may only be made
by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This
A-13
<PAGE>
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
An investment in either Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. The net asset value of a Portfolio is determined on
each Business Day. Securities are valued at amortized cost, which the Trustees
of the Portfolios have determined in good faith constitutes fair value for the
purposes of complying with the 1940 Act. This valuation method will continue to
be used until such time as the Trustees of the Portfolios determine that it does
not constitute fair value for such purposes.
There is no minimum initial or subsequent investment in the Portfolios. However,
since the Portfolios intend to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on their assets,
investments must be made in federal funds (i.e., monies credited to the account
of a Portfolio's custodian bank by a Federal Reserve Bank).
Each Portfolio reserves the right to cease accepting investments at any time or
to reject any investment order.
Item 8. Redemption or Repurchase
Shareholders may redeem all or a portion of their interests on any Business Day.
Redemptions will be made at the net asset value next determined after Investors
Bank has received a proper notice of redemption. If notice of redemption is
received prior to 2:00 p.m., Eastern time, on any Business Day, the redemption
will be effective on the date of receipt and the shareholder will not receive
the dividend for that day. Proceeds of the redemption will ordinarily be made by
wire on the same Business Day, but in any event within seven Business Days from
the date of receipt. Shareholders liquidating their account after 2:00 p.m.,
Eastern time, on any Business Day will receive upon redemption all dividends
reinvested through the date of redemption and payment will ordinarily be made by
wire on the next Business Day, but, in any case, within seven Business Days from
the date of receipt of a proper notice of redemption.
A shareholder may elect to receive payment in the form of a wire or check. There
is no charge imposed by either Portfolio to redeem; however, in the case of
redemption by wire, a shareholder's bank may impose its own wire transfer fee
for receipt of the wire.
Item 9. Pending Legal Proceedings
None.
A-14
<PAGE>
PART B
B-1
<PAGE>
Item 10. Cover Page
MERRIMAC MASTER PORTFOLIO
PART B
MARCH 26, 1997
Merrimac Master Portfolio (the "Trust") is a registered open-end investment
company organized as a New York common law trust offering beneficial interests
in two series: Merrimac Cash Portfolio (the "Cash Portfolio") and Merrimac
Treasury Portfolio (the "Treasury Portfolio"). Each Portfolio is diversified as
defined in the Investment Company Act of 1940 (the "1940 Act").
This Part B supplements information concerning the Trust and the Portfolios
contained in Part A of the Trust's Registration Statement dated March 26, 1997.
This Part B should be read in conjunction with Part A, which may be obtained by
telephoning or writing the Trust at 200 Clarendon Street, Boston, Massachusetts
02116, telephone 1-888-MERRMAC.
B-2
<PAGE>
Item 11. Table of Contents
Page
----
General Information and History B-3
Investment Objectives and Policies B-3
Management of the Portfolios B-4
Control Persons and Principal Holders of Securities B-5
Investment Advisory and Other Services B-5
Brokerage Allocation and Other Practices B-8
Capital Stock and Other Securities B-9
Purchase, Redemption and Pricing of Securities Being Offered B-10
Tax Status B-11
Underwriters B-12
Calculation of Performance Data B-12
Financial Statements B-12
B-3
<PAGE>
Item 12. General Information and History
The Trust has no prior business history.
Item 13. Investment Objectives and Policies
Part A contains additional information about the investment objectives and
policies of the Portfolios. This Part B should be read only in conjunction with
Part A.
Investment Limitations
All of the Portfolios' fundamental investment restrictions are set forth below.
These fundamental investment restrictions may not be changed except by the
affirmative vote of a majority of the Portfolios' outstanding voting securities
as defined in the 1940 Act. Under the 1940 Act, a "vote of the majority of the
outstanding voting securities" means the vote, at the annual or a special
meeting of security holders duly called, (i) of 67% or more of the voting
securities present at the meeting if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy or (ii) of
more than 50% of the outstanding voting securities, whichever is less. Under
these restrictions, the Portfolios may not:
(1) purchase any securities that would cause more than 25% of the
total assets of the Portfolio at the time of such purchase to be
invested in securities of one or more issuers conducting their
principal business activities in the same industry, provided that
there is no limitation with respect to U.S. Government Obligations or
to bank obligations or with respect to repurchase agreements
collateralized by any of such obligations;
(2) borrow money, except as a temporary measure for extraordinary or
emergency purposes or to facilitate redemptions, provided that
borrowing does not exceed an amount equal to 33 1/3% of the current
value of the Portfolio's assets taken at market value, less
liabilities, other than borrowings;
(3) purchase securities on margin (except for delayed delivery or
when-issued transactions or such short-term credits as are necessary
for the clearance of transactions);
(4) make loans to any person or firm; provided, however, that the
making of a loan shall not include entering into repurchase
agreements, and provided further that the Portfolio may lend its
portfolio securities to broker-dealers or other institutional
investors if the aggregate value of all securities loaned does not
exceed 33 1/3% of the value of the Portfolio's total assets;
(5) engage in the business of underwriting the securities issued by
others, except that the Portfolio will not be deemed to be engaging in
the business of
B-4
<PAGE>
underwriting with respect to the purchase or sale of securities
subject to legal or contractual restrictions on disposition;
(6) issue senior securities, except as permitted by its investment
objective, policies and restrictions, and except as permitted by the
1940 Act; and
(7) purchase or sell real estate, commodities, or commodity contracts
unless acquired as a result of ownership of securities, and provided
further that the Portfolio may invest in securities backed by real
estate and in financial futures contracts and options thereon.
The foregoing percentages will apply at the time of the purchase of a security.
Investment Policies
See Item 4 in Part A for a description of the Portfolio's investment policies.
Description of Ratings
Description of Commercial Paper Ratings
The following descriptions of short-term debt ratings have been published by
Standard & Poor's Rating Service, a division of McGraw-Hill Companies ("S&P"),
Moody's Investors Service ("Moody's"), Fitch's Investors Service ("Fitch"), Duff
and Phelps ("Duff"), and IBCA Limited ("IBCA"), respectively. These obligations
have an original maturity not exceeding thirteen months, unless explicitly
noted.
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. Commercial
paper issues rated A-1 by S&P reflect a very strong degree of safety of timely
payment. Commercial paper issues rated A-2 reflect a strong degree of safety of
timely payment but not as strong as for issues designated A-1.
Commercial paper issues rated Prime-1 by Moody's are judged by Moody's to be of
the "highest" quality on the basis of relative repayment capacity with a
superior ability for repayment of senior short-term debt obligations. Commercial
paper issues rated Prime-2 are judged by Moody's to be of the "second highest"
quality with a strong ability for repayment of senior short-term debt
obligations.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. Commercial paper issues rated Fitch-2 are regarded
as having only a slightly less assurance of timely payment than those issues
rated Fitch-1.
B-5
<PAGE>
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors that are supported by ample asset protection. Risk
factors are minor. The rating Duff-2 is regarded as having good certainty of
timely payment with sound liquidity factors supported by good asset protection.
Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. The designation A2 by IBCA indicates that
the obligation is supported by a strong capacity for timely repayment.
Description of Long-Term Debt Ratings
The following is a description of Moody's debt instrument ratings:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification. The modifier 1 indicates that the obligation ranks in the higher
end of its generic rating category; the modifier 2 indicates a midrange ranking;
and the modifier 3 indicates a ranking in the lower end of that generic rating
category.
The following is a description of S&P's debt instrument ratings:
S&P's ratings are based, in varying degrees, on the following considerations:
(i) the likelihood of default -- capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligations; (ii) the nature of and provisions of the obligation;
and (iii) the protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
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<PAGE>
Plus (+) or minus (-): The ratings may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Item 14. Management of the Portfolios
The business and affairs of the Portfolios are managed under the direction of
the Board of Trustees of the Trust. The Board of Trustees approves all
significant agreements between the Portfolios and the persons and companies that
furnish services to the particular Portfolio, including (when applicable)
agreements with its investment adviser, administrator, fund accountant,
custodian and transfer agent. The day-to-day operations of each Portfolio are
delegated to the Portfolio's investment manager and administrator.
The following are the names, addresses and ages of the Trust's Trustees and
officers, their positions with the Trust and their present and principal
occupations during the past five years. An asterisk (*) indicates that a Trustee
is an "interested person" of the Trust, as defined in the 1940 Act.
Kevin J. Sheehan, Trustee* (45), Director since 1990, President since 1992,
Chairman and Chief Executive Officer since June 1995, Investors Bank & Trust
Company. Chairman and Chief Executive Officer since June 1995, Investors
Financial Services Corp.
Francis J. Gaul, Jr., Trustee (56), Vice President, Triad Mutual Fund Investors
Corp. (Registered Investment Adviser) July 1996 - present; Vice President &
Resident Manager, Goldman Sachs & Co. (Investment Banking & Institutional Sales)
December 1990 - January 1996.
Edward F. Hines, Jr., Trustee (51), Partner 1977 - present, Managing Partner
1983-87, Choate, Hall & Stewart.
Thomas E. Sinton, Trustee (64), Retired; Managing Director, Corporate Accounting
Policy, April 1993 - October 1996 and Consultant, November 1992 - March 1993,
Bankers Trust Company; General Partner, 1967 - 1992, Ernst & Young.
Sean P. Brennan, President (35), Director, Marketing, Investors Bank & Trust
Company, 1996 to present; Executive Vice President, Aspen Capital Management,
1995-96; Director of International Mutual Funds, CS First Boston, 1993-94; Vice
President of Sales, Concord Financial Corp. 1989-93.
Paul J. Jasinski, Treasurer and Chief Financial Officer (50), Managing Director,
Investors Bank & Trust Company, 1990 - present.
Susan C. Mosher, Secretary (42), Director, Mutual Fund Administration - Legal
and Regulatory, Investors Bank & Trust Company, 1995 - present; Associate
Counsel, 440 Financial Group of Worcester, Inc., 1993 - 95; Associate and
Partner, Gallagher, Callahan & Gartrell, P.A., 1986 - 1992.
B-7
<PAGE>
Raymond O'Neil, Assistant Treasurer and Assistant Secretary (34), Managing
Director, Dublin, Investors Fund Services (Ireland) Limited 1994 - present; Vice
President, Atlantic Corporate Management Limited, 1991-1994.
Compensation
The following table describes the compensation to be received by the Trustees
(with the exception of Mr. Sheehan, who receives no remuneration from the
Portfolios).
<TABLE>
<CAPTION>
Name of Aggregate Pension of Estimated Annual Total
Person, Compensa- Retirement Benefits Upon Compensation
Position tion From Benefits Accrued Retirement From Registrant
- - -------- Registrant As Part of Port- ---------- and Fund
---------- folio Expenses Complex* Paid
-------------- to Trustees
-----------
<S> <C> <C> <C> <C>
Francis J. Gaul, Jr., $20,000 None None $25,000
Trustee
Edward F. Hines, Jr., $20,000 None None $25,000
Trustee
Thomas E. Sinton, $20,000 None None $25,000
Trustee
</TABLE>
- - ---------------
* The term "Fund Complex" refers to the series of the Trust, the series of the
Merrimac Funds, and Merrimac Global Cash Fund (a Cayman company established in
1997).
Item 15. Control Persons and Principal Holders of Securities
As of March 1, 1997, the Merrimac Cash Fund (the "Fund"), a series of the
Merrimac Funds, owns 100% of the beneficial interests in the Cash Portfolio. The
Fund is a newly formed Delaware business trust registered under the 1940 Act as
an open-end management investment company. Because the Fund controls the Cash
Portfolio, the Fund may take action without the prior approval of any other
investors in the Cash Portfolio. Whenever the Fund is requested to vote on
matters pertaining to the Portfolio, it will hold a meeting of its shareholders
and will cast its vote as instructed by its shareholders. As of March 1, 1997,
the Treasury Portfolio had not commenced operations.
The Trustees and officers of the Trust, as a group, own less than 1% of the
Portfolios' beneficial interests.
B-8
<PAGE>
Item 16. Investment Advisory and Other Services
Most of the Portfolios' day-to-day operations are performed by separate business
organizations under contractual agreement with the Portfolios or the Trust. The
principal service providers for the Portfolios are:
<TABLE>
<S> <C>
Investment Adviser Investors Bank & Trust Company
Investment Sub-Adviser (Cash Portfolio) The Bank of New York
Investment Sub-Adviser (Treasury Portfolio) Aeltus Investment Management, Inc.
Administrator Investors Fund Services (Ireland) Limited
Transfer Agent IBT Fund Services (Canada) Inc.
Custodian Investors Bank & Trust Company
Independent Auditors Ernst & Young
</TABLE>
Adviser
Each Portfolio and Investors Bank & Trust Company ("Investors Bank") have
entered into an investment adviser agreement (the "Adviser Agreement"). Under
the Adviser Agreement, Investors Bank continuously reviews and supervises the
Portfolio's investment program. Investors Bank discharges its responsibilities
subject to the supervision of, and policies established by, the Trustees of the
Trust. Investors Bank was organized in 1969 as a Massachusetts-chartered trust
company and provides domestic and global custody, multi currency accounting,
institutional transfer agency, performance measurement, foreign exchange,
securities lending and mutual fund administration services to a variety of
financial asset managers, including mutual fund complexes, investment advisers,
banks and insurance companies. Investors Bank is a wholly-owned subsidiary of
Investors Financial Services Corp., a publicly-held corporation and holding
company registered under the Bank Holding Company Act of 1956. The business
address of Investors Bank is 89 South Street, Boston, Massachusetts 02111.
Investors Bank began acting as an investment adviser at the commencement of
operations of the Cash Portfolio (November 21, 1996) but otherwise has no
previous experience in providing investment advisory services.
Sub-Advisers
The Bank of New York ("BNY") serves as the Cash Portfolio's sub-adviser pursuant
to its Investment Sub-Adviser Agreement (the "BNY Sub-Adviser Agreement") with
Investors Bank. Under the BNY Sub-Adviser Agreement, BNY manages the Portfolio,
selects investments and places all orders for the purchase and sale of the
Portfolio's securities, subject to the general supervision of the Trust's Board
of Trustees and Investors Bank and in accordance with the Portfolio's investment
objective, policies and restrictions. BNY is a wholly owned subsidiary of The
Bank of New York Company, Inc. BNY has discretionary investment authority for
the short-term money management of accounts exceeding $30 billion. The business
address of BNY is 48 Wall Street, New York, New York 10286. For its services to
the Portfolio, BNY is paid by Investors Bank a monthly fee computed at an annual
rate of .08% of the average daily net assets of the Cash Portfolio.
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<PAGE>
Aeltus Investment Management, Inc. ("Aeltus") serves as the Treasury Portfolio's
sub-adviser pursuant to its Investment Sub-Adviser Agreement (the "Aeltus
Sub-Adviser Agreement") with Investors Bank. Under the Aeltus Sub-Adviser
Agreement, Aeltus manages the Portfolio, selects investments and places all
orders for the purchase and sale of the Portfolio's securities, subject to the
general supervision of the Trust's Board of Trustees and Investors Bank and in
accordance with the Portfolio's investment objective, policies and restrictions.
Aeltus is an indirect wholly owned subsidiary of Aetna Inc. As of December 31,
1996, Aeltus managed approximately $38 billion in assets for various individual
and institutional accounts, including registered investment companies. The
business address of Aeltus is 242 Trumbull Street, Hartford, Connecticut
06103-1205. For its services to the Treasury Portfolio, Aeltus is paid by
Investors Bank a monthly fee computed at an annual rate of .08% of the average
daily net assets of the Treasury Portfolio.
Administrator
Each Portfolio employs Investors Fund Services (Ireland) Limited ("IBT
Ireland"), a subsidiary of Investors Bank, as Administrator under an
Administration Agreement (the "Administration Agreement") to provide certain
administrative services. The services provided by IBT Ireland include certain
accounting, clerical and bookkeeping services, corporate secretarial services
and assistance in the preparation and filing of tax returns and reports to
shareholders and the Securities and Exchange Commission.
Transfer Agent
IBT Fund Services (Canada) Inc. ("IBT Canada"), a subsidiary of Investors Bank,
acts as transfer agent for each Portfolio pursuant to a Transfer Agency
Agreement. As transfer agent, IBT Canada is responsible for maintaining records
of shareholder interests for each Portfolio.
Custodian and Fund Accountant
Investors Bank acts as custodian and IBT Canada as fund accountant for the
Portfolios. As custodian, Investors Bank holds cash, securities and other assets
of each Portfolio as required by the 1940 Act. As fund accountant, IBT Canada
performs certain accounting, clerical and bookkeeping services, and the daily
calculation of net asset value for the Portfolios.
For its services under the Adviser Agreement, Administration Agreement, Transfer
Agency Agreement, Custodian Agreement and the Fund Accounting Agreement, each
Portfolio pays Investors Bank an aggregate fee which is calculated daily and
paid monthly, at an annual rate of 0.17% of the average daily net assets of the
particular Portfolio. Investors Bank is solely responsible for the payment of
all fees to BNY, Aeltus and to its subsidiaries.
For the fiscal period ended December 31, 1996, the fee paid to Investors Bank by
the Trust (on behalf of the Cash Portfolio) for all services rendered by
Investors Bank to the Cash Portfolio was $108,913 (of which $57,660 was
voluntarily waived). The Treasury Portfolio had not commenced operations as of
December 31, 1996.
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<PAGE>
Independent Auditors
For the period ended December 31, 1996, the Boston, Massachusetts office of
Ernst & Young LLP ("Ernst & Young LLP") served as independent auditors to the
Trust. For the year ending December 31, 1997, the Grand Cayman office of Ernst &
Young ("Ernst & Young") will serve as independent auditors to the Trust. Ernst &
Young LLP and Ernst & Young are responsible for performing, for the respective
periods noted above, annual audits of the financial statements and financial
highlights in accordance with generally accepted accounting standards, a review
of the Federal tax returns, and, pursuant to Rule 17f-2 of the 1940 Act, three
security counts.
The mailing address of Ernst & Young LLP is 200 Clarendon Street, Boston,
Massachusetts 02116. The mailing address of Ernst & Young is One Capital Place,
Shedden Road, Georgetown, Grand Cayman, Cayman Islands, British West Indies.
Item 17. Brokerage Allocation and Other Practices
Each Portfolio's purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. The Portfolios do
not anticipate paying brokerage commissions. Any transaction for which a
Portfolio pays a brokerage commission will be effected at the best price and
execution available. Subject to this requirement, securities may be bought from
or sold to brokers or dealers who have furnished statistical, research and other
information or services to Investors Bank, BNY or Aeltus. Purchases from
underwriters of portfolio securities include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers serving as market
makers include the spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers is
determined by BNY and Aeltus in their best judgment and in a manner deemed to be
in the best interest of shareholders of the particular Portfolio rather than by
any formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
Investment decisions for each Portfolio will be made independently from those
for any other account that is or may in the future become managed by BNY or
Aeltus. If, however, a Portfolio and other accounts managed by BNY or Aeltus are
contemporaneously engaged in the purchase or sale of the same security, the
transactions my be averaged as to price and allocated equitably to each account.
In some cases, this policy might adversely affect the price paid or received by
a Portfolio or the size of the position obtainable for the Portfolio. In
addition, when purchases or sales of the same security for the Portfolio and for
other accounts managed by BNY or Aeltus occur contemporaneously, the purchase or
sale orders may be aggregated in order to obtain any price advantages available
to large denomination purchases or sales. For the fiscal year ended December 31,
1996, the Cash Portfolio and the Treasury Portfolio paid no brokerage
commissions in 1996.
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<PAGE>
No transactions are executed with BNY, Aeltus or Investors Bank, or with any
affiliate of either entity, acting either as principal or as broker.
Item 18. Capital Stock and Other Securities
The Trust was organized as a New York common law trust on October 30, 1996 and
operates under a Declaration of Trust, dated October 30, 1996. The Trust is
authorized to issue beneficial interests only to Institutional Investors or
other accredited investors, as such term is defined under Rule 501 of the
Securities Act of 1933. The beneficial interests of each series shall
hereinafter be referred to as "shares" and the holders of such interests shall
hereinafter be referred to as "shareholders." The value of a share shall be
equal to the Book Capital Account balance of the shareholder. The Trustees shall
have the authority to establish series, each of which shall be a separate
subtrust and the shares of which shall be separate and distinct from the shares
of any other series and shall evidence ownership interest in a different
investment portfolio (hereinafter referred to as a "Portfolio Series"). The
shares in each Portfolio Series may have such rights as the Trustees may
establish from time to time, including with respect to price, terms and manner
of purchase and redemption, dividends and other distributions, rights on
liquidation, sinking or purchase fund provisions, conversion rights and
conditions under which the shareholders of the several Portfolio Series shall
have separate voting rights or no voting rights.
As of the date of this Part B, the Trust is comprised of the following Portfolio
Series, each of which commenced operations on the date set forth opposite the
Portfolio's name:
Merrimac Cash Portfolio November 21, 1996
Merrimac Treasury Portfolio Has not commenced operations
The Trust is authorized, without shareholder approval, to divide Interests of
any Portfolio Series into two or more classes, each class having such different
dividend, liquidation, voting and other rights as the Trustees may determine.
The Trustees may, without any vote of the shareholders, amend or otherwise
supplement the Declaration of Trust by an instrument in writing executed by a
majority of the Trustees, provided that shareholders shall have the right to
vote with respect to the election or removal of Trustees, any investment
advisory contract, any dissolution of a Portfolio Series, certain amendments to
this Declaration of Trust, any merger, consolidation or sale of assets, such
additional matters relating to the Trust as may be required by the 1940 Act or
otherwise required or authorized by law or by any registration statement of the
Trust filed with the SEC, or as the Trustees may consider desirable.
Shareholders of a Portfolio Series are each liable for all obligations of such
Portfolio Series; however, it is not expected that the liabilities of a
Portfolio Series would ever exceed its assets. If any present or past
shareholder of any Portfolio Series of the Trust is charged or held personally
liable for any obligation or liability of the Trust solely by reason of being or
having been a shareholder and not because of such shareholder's acts or
omissions or for some other reason, the Portfolio Series, upon request, shall
assume the defense against such charge and
B-12
<PAGE>
satisfy any judgment thereon, and the shareholder or former shareholder shall be
entitled out of the assets of such Portfolio Series, to be held harmless from
and indemnified against all loss and expense arising from such liability. Thus,
the risk to shareholders of incurring financial loss beyond their investment is
limited to circumstances in which the Portfolio Series itself would be unable to
meet its obligations.
The Trust will not have an Annual Meeting of Shareholders. Special Meetings may
be convened: (i) by the Board of Trustees; (ii) upon written request to the
Board of Trustees by the holders of at least 10% of the outstanding shares of
the Trust (if such matter relates to the Trust as a whole) or a Portfolio (if
such matter relates only to such Portfolio); or (iii) upon the Board of
Trustee's failure to honor the shareholder's request described above, by
shareholders of at least 10% of the outstanding shares giving notice of the
Special Meeting to the shareholders.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
Manner In Which Shares Are Offered
Shares of each Portfolio are issued solely in private placement transactions
which do not involve any "public offering" within the meaning of Section 4(2) of
the 1933 Act. Investments in a Portfolio may only be made by investment
companies, insurance company separate accounts, common or commingled trust funds
or similar organizations or entities which are "accredited investors" within the
meaning of Regulation D under the 1933 Act. Shares are sold directly by the
Trust without a distributor and are not subject to a sales load or redemption
fee; assets of the Trust are not subject to a Rule 12b-1 fee.
Valuation of Shares
The net asset value per share of the Portfolio is determined each day that both
the New York Stock Exchange ("NYSE") and the New York Federal Reserve Bank are
open (a "Business Day"). This determination is made once each Business Day as of
2:00 p.m., Eastern time.
It is the policy of each Portfolio to use its best efforts to maintain a
constant price per share of $1.00, although there can be no assurance that the
$1.00 net asset value per share will be maintained. In accordance with this
effort and pursuant to Rule 2a-7 under the 1940 Act, each Portfolio uses the
amortized cost valuation method to value its portfolio instruments. This method
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium even though the portfolio
security may increase or decrease in market value generally in response to
changes in interest rates. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price a Portfolio would receive if it sold the
instrument.
The Trustees have established procedures reasonably designed to stabilize each
Portfolio's price per share at $1.00. These procedures include: (i) the
determination of the deviation from $1.00, if any, of the Portfolio's net asset
value using market values; (ii) periodic review by the Trustees
B-13
<PAGE>
of the amount of and the methods used to calculate the deviation; and (iii)
maintenance of records of such determination. The Trustees will promptly
consider what action, if any, should be taken if such deviation exceeds 1/2 of
one percent.
Item 20. Tax Status
The Trust is organized as a common law trust under New York law. Each Portfolio
of the Trust has determined, on the basis of an opinion of counsel, that it is
properly treated as a partnership for federal and New York income tax purposes.
Accordingly, a Portfolio is not subject to any income tax, but each investor in
a Portfolio must take into account its share of the Portfolio's ordinary income
and capital gains in determining its income tax liability. The determination of
such share is made in accordance with the governing instruments of the Portfolio
and the Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
Each Portfolio's tax year-end is December 31. Although, as described above, a
Portfolio is not subject to federal income tax, it files appropriate federal
income tax returns.
Each Portfolio believes that, in the case of an investor in the Portfolio that
seeks to qualify as a regulated investment company ("RIC") under the Code, the
investors should be treated for federal income tax purposes as an owner of an
undivided interest in the assets and operations of the Portfolio, and
accordingly should be deemed to own a proportionate share of each of the assets
of the Portfolio and should be entitled to treat as earned by it the portion of
the Portfolio's gross income attributable to that share. Each Portfolio also
believes that each such investor should be deemed to hold its proportionate
share of the Portfolio's assets for the period the Portfolio has held the assets
or for the period the investor has been a partner in the Portfolio, whichever is
shorter. Each such investor should consult its tax advisers regarding whether,
in light of its particular tax status and any special tax rules applicable to
it, this approach applies to its investment in the Portfolio, or whether the
Portfolio should be treated, as to it, as a separate entity as to which the
investor has no direct interest in Portfolio assets or operations.
In order to enable an investor in the Portfolios that is otherwise eligible to
qualify as a RIC under the Code to so qualify, each Portfolio intends to satisfy
the requirements of Subchapter M of the Code relating to the nature or the
Portfolio's gross income and the composition (diversification) and holding
period of the Portfolio's assets as if those requirements were directly
applicable to the Portfolio, and to allocate and permit withdrawals of its net
investment income and any net realized capital gains in a manner that will
enable an investor that is a RIC to comply with the qualification requirements
imposed by Subchapter M of the Code.
Each Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net investment income, net
realized capital gains, and any other items of income, gain, loss, deduction, or
credit in a manner intended to comply with the Code and applicable Treasury
regulations.
The above discussion does not address the special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions, or the
B-14
<PAGE>
state, local, or foreign tax laws that may be applicable to certain investors.
Investors should consult their own tax advisers with respect to the special tax
rules that may apply in their particular situations, as well as the state,
local, or foreign tax consequences to them of investing in a Portfolio.
Item 21. Underwriters
Not Applicable.
Item 22. Calculation of Performance Data
The yield for each Portfolio is calculated daily based upon the seven days
ending on the date of calculation ("base period"). The yield is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the base period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to the nearest hundredth of one percent. An effective yield is computed
by determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN +1) [SUP{365/7}]]-1
The following is the current yield and effective yield for the Cash Portfolio
for the seven-day period ended December 31, 1996:
Yield 3.61%
Effective Yield 3.67%
The yields quoted are not indicative of future results. Yields will depend on
the type, quality, maturity, and interest rate of money market instruments held
by the Portfolio.
Item 23. Financial Statements
The financial statements contained in the Annual Report of the Cash Portfolio
(Accession Number 000089 7436-97-000035) for the fiscal year ended December 31,
1996 (and filed via the SEC's EDGAR electronic filing system on February 27,
1997) are incorporated by reference into this Part B.
B-15
<PAGE>
PART C
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Statements included in PART A of this Registration
Statement:
None
(2) Financial Statements included in PART B of this Registration
Statement:
Portfolio of Investments at December 31, 1996*
Statement of Assets and Liabilities at December 31, 1996*
Statement of Operations for the period ended December 31,
1996*
Statement of Changes in Net Assets for the period ended
December 31, 1996*
Financial Highlights for the period from November 21, 1996
(commencement of operations) to December 31, 1996*
Supplemental Data*
Notes to Financial Statements - December 31, 1996*
Independent Auditors' Report - February 21, 1997*
- - ----------------------
*Incorporated herein by reference to the Annual Report of the Registrant for the
fiscal year ended December 31, 1996, filed with the Securities and Exchange
Commission on the EDGAR system on February 27, 1997 (Accession Number 000089
7436-97-000035)
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1(a) Declaration of Trust, effective as of October 30, 1996
1(b) Amendment No. 1 to the Declaration of Trust
2 By-Laws
3 None
C-1
<PAGE>
<S> <C>
4 None
5(a) Investment Adviser Agreement between Registrant and Investors
Bank & Trust Company ("Investors Bank")
5(b) Investment Sub-Adviser Agreement between Investors Bank
and The Bank of New York
5(c) Investment Sub-Adviser Agreement between Investors Bank and
Aeltus Investment Management, Inc.
6 *
7 Not Applicable
8 Custodian Agreement between Registrant and Investors Bank
9(a) Fund Accounting Agreement between Registant and IBT
Fund Services (Canada) Inc.
9(b) Administration Agreement between Registrant and Investors Fund
Services (Ireland) Limited (formerly IBT Fund Services (Ireland)
Limited)
9(c) Transfer Agency Agreement between Registrant and IBT Fund
Services (Ireland) Limited
10 *
11 *
12 *
13 None
14 Not Applicable
15 Not Applicable
16 *
18 Not Applicable
27 Financial Data Schedule for the Portfolio
- - -------------------
</TABLE>
C-2
<PAGE>
* Pursuant to General Instructions F4 of Form N-1A, a registration statement
filed under only the Investment Company Act of 1940 shall consist of the
facing sheet of the Form, responses to all items of Part A and B except Items
1, 2, 3, and 5A of Part A thereof, responses to all items of Part C except
Items 24(b)(6), 24(b)(10), 24(b)(11), 24(b)(12) and 24(b)(16), required
signatures and all other documents that are required or which the Registrant
may file as part of the registration statement.
Item 25. Persons Controlled by or Under Common Control with Registrant
As of the close of business on March 3, 1997, the Merrimac Cash Fund, a series
of the Merrimac Funds, owned approximately 100% of the value of the outstanding
shares of the Merrimac Cash Portfolio. Because the Merrimac Cash Fund controls
the Merrimac Cash Portfolio, it may take action without the prior approval of
any other investor in the Merrimac Cash Portfolio.
Item 26. Number of Holders of Securities
As of March 3, 1997, the record holders of each class of Registrant's securities
were as follows:
Title of Class Number of Record Holders
-------------- ------------------------
Merrimac Cash Portfolio 1
Merrimac Treasury Portfolio 0
Item 27. Indemnification
Under Article V of the Registrant's Declaration of Trust, the Trust shall
indemnify, to the fullest extent permitted by law (including the 1940 Act), each
Trustee, officer or employee of the Trust (including any Person who serves at
the Trust's request as a director, officer or trustee of another organization in
which the Trust has any interest as a shareholder, creditor or otherwise)
against all liabilities and expenses (including amounts paid in satisfaction of
judgments, in compromise, as fines and penalties, and as counsel fees)
reasonably incurred by such Person in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which
such Person may be involved or with which such Person may be threatened, while
in office or thereafter, by reason of such Person being or having been such a
Trustee, officer, employee, except with respect to any matter as to which such
Person shall have been adjudicated to have acted with bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person's duties,
such liabilities and expenses being liabilities only of the Portfolio Series out
of which such claim for indemnification arises; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for such payment of for
any other expenses shall be provided unless there has been a determination that
such Person did not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such Person's
office (i) by the court or other body approving the settlement or other
disposition; or (ii) based upon a review of readily available facts (as opposed
to a full trial-type inquiry), by written opinion from independent legal counsel
approved by the Trustees; or (iii) by a majority of the Trustees who are
C-3
<PAGE>
neither Interested Persons of the Trust nor parties to the matter, based upon a
review of readily available facts (as opposed to a full trial-type inquiry).
Item 28. Business and Other Connections of Investment Adviser
Investors Bank serves as investment adviser to the Registrant. Investors Bank
was organized in 1969 as a Massachusetts-chartered trust company and provides
domestic and global custody, multi-currency accounting, institutional transfer
agency, performance measurement, foreign exchange, securities lending and mutual
fund administration services to a variety of financial asset managers, including
mutual fund complexes, investment advisers, banks and insurance companies. The
business, profession, vocation or employment of a substantial nature that each
director or officer of Investors Bank is or has been, at any time during the
past two fiscal years, engaged in for his own account or in the capacity of
director, officer, employee, partner or trustee, is as follows:
<TABLE>
<CAPTION>
Business and Other
Position With Positions Within
Name Adviser Last Two Years
<S> <C> <C>
Kevin J. Sheehan President & Chief Executive President since June 1992
Officer Chief Executive Officer since
June 1995
Michael F. Rogers Executive Managing Director since September 1993
Karen C. Keenan Chief Financial Officer & since June 1995
Secretary Vice President September 1992
to June 1995
Earl W. Zimmerman Treasurer since May 1994
Edmund J. Maroney Managing Director - Systems since July 1991
Robert D. Mancuso Managing Director-Marketing since September 1993
and Client Management
David F. Flynn Managing Director-Lending since April 1992
James M. Oates Director Chairman of IBEX Capital
Markets, LLC since 1996;
Managing Director of The
Wydown Group 1994-1996
Thomas P. McDermott Director Managing Director of TPM
Associates since 1994
C-4
<PAGE>
<S> <C> <C>
Frank B. Condon Director Chief Executive Officer & Chairman
of The Woodstock Corporation since
1993
Phyllis S. Swersky Director President & Chief Executive Officer
of The NET Collaborative since 1996;
President of The Meltech Group
1995-1996; Acting President of Object
Design and I-Cube
Donald G. Friedl Director President of All Seasons Services
since 1996
Robert B. Fraser Director Partner at Goodwin, Procter & Hoar,
L.L.P. since 1994
</TABLE>
Item 29. Principal Underwriters
Not Applicable
Item 30. Location of Accounts and Records
The accounts and records of the Registrant are located, in whole or in part, at
the office of the Registrant and the following locations:
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
(Investment Adviser and Custodian)
The Bank of New York
48 Wall Street
New York, NY 10286
(Investment Sub-Adviser)
Aeltus Investment Management, Inc.
242 Trumbull Street
Hartford, CT 06103
(Investment Sub-Adviser)
Investors Fund Services (Ireland) Limited
Deloitte & Touche House
29 Earlsfort Terrace
Dublin 2, Ireland
(Administrator)
C-5
<PAGE>
IBT Fund Services (Canada) Inc.
1 First Canadian, King Street West
Suite 2800 P.O. Box 231
Toronto, CA M5X1C8
(Transfer Agent)
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Not Applicable
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereto duly authorized in
Dublin, Ireland as of the 27th day of March, 1997.
MERRIMAC MASTER PORTFOLIO
/s/ Raymond O'Neil
----------------------------
Raymond O'Neil
Assistant Treasurer
C-7
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1(a) Declaration of Trust, effective as of October 30, 1996
1(b) Amendment No. 1 to the Declaration of Trust
2 By-Laws
3 None
4 None
5(a) Investment Adviser Agreement between Registrant and Investors
Bank & Trust Company ("Investors Bank")
5(b) Investment Sub-Adviser Agreement between Investors Bank
and The Bank of New York
5(c) Investment Sub-Adviser Agreement between Investors Bank and
Aeltus Investment Management, Inc.
6 *
7 Not Applicable
8 Custodian Agreement between Registrant and Investors Bank
9(a) Fund Accounting Agreement between Registant and IBT
Fund Services (Canada) Inc.
9(b) Administration Agreement between Registrant and Investors Fund
Services (Ireland) Limited (formerly IBT Fund Services (Ireland)
Limited)
9(c) Transfer Agency Agreement between Registrant and IBT Fund
Services (Ireland) Limited
10 *
11 *
12 *
C-8
<PAGE>
13 None
14 Not Applicable
15 Not Applicable
16 *
18 Not Applicable
27 Financial Data Schedule for the Portfolio
- - -------------------
</TABLE>
* Pursuant to General Instructions F4 of Form N-1A, a registration statement
filed under only the Investment Company Act of 1940 shall consist of the
facing sheet of the Form, responses to all items of Part A and B except Items
1, 2, 3, and 5A of Part A thereof, responses to all items of Part C except
Items 24(b)(6), 24(b)(10), 24(b)(11), 24(b)(12) and 24(b)(16), required
signatures and all other documents that are required or which the Registrant
may file as part of the registration statement.
C-9
Exhibit 1a
MERRIMAC MASTER PORTFOLIO
DECLARATION OF TRUST
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I - THE TRUST.............................................................................................1
1.1 NAME............................................................................................1
1.2 DEFINITIONS.....................................................................................1
ARTICLE II - TRUSTEES.............................................................................................3
2.1 NUMBER AND QUALIFICATION........................................................................3
2.2 TERM AND ELECTION...............................................................................4
2.3 RESIGNATION, REMOVAL AND RETIREMENT.............................................................4
2.4 VACANCIES.......................................................................................4
2.5 MEETINGS AND ACTIONS WITHOUT MEETINGS...........................................................5
2.6 OFFICERS; CHAIRMAN OF THE BOARD.................................................................6
2.7 BY-LAWS.........................................................................................6
ARTICLE III - POWERS OF TRUSTEES..................................................................................6
3.1 GENERAL.........................................................................................6
3.2 INVESTMENTS.....................................................................................6
3.3 LEGAL TITLE.....................................................................................7
3.4 SALE AND INCREASES OF INTERESTS.................................................................7
3.5 DECREASES AND REDEMPTIONS OF INTERESTS..........................................................8
3.6 BORROW MONEY....................................................................................8
3.7 DELEGATION; COMMITTEES..........................................................................8
3.8 COLLECTION AND PAYMENT..........................................................................8
3.9 EXPENSES........................................................................................8
3.10 MISCELLANEOUS POWERS............................................................................9
3.11 FURTHER POWERS.................................................................................10
ARTICLE IV - INVESTMENT ADVISORY, ADMINISTRATION
AND PLACEMENT AGENT ARRANGEMENTS; CUSTODIAN.............................................................10
4.1 INVESTMENT ADVISORY AND OTHER ARRANGEMENTS.....................................................10
4.2 PARTIES TO CONTRACT............................................................................10
4.3 CUSTODIAN......................................................................................11
4.4 1940 ACT GOVERNANCE............................................................................11
ARTICLE V - LIABILITY OF HOLDERS;
LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, ETC.....................................................11
5.1 LIABILITY OF HOLDERS; INDEMNIFICATION..........................................................11
5.2 LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES,
AGENTS, INDEPENDENT CONTRACTORS TO THIRD PARTIES...............................................12
5.3 LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS OR
EMPLOYEES TO TRUST, HOLDERS, ETC...............................................................12
(i)
<PAGE>
Page
<S> <C>
5.4 MANDATORY INDEMNIFICATION......................................................................12
5.5 INDEMNIFICATION OF HOLDERS.....................................................................13
5.6 NO BOND REQUIRED OF TRUSTEES...................................................................13
5.7 NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS,
ETC............................................................................................13
5.8 RELIANCE ON EXPERTS, ETC.......................................................................14
5.9 NO REPEAL OR MODIFICATION......................................................................14
ARTICLE VI - INTERESTS...........................................................................................14
6.1 INTERESTS......................................................................................14
6.2 ESTABLISHMENT AND DESIGNATION OF SERIES........................................................15
(a) ASSETS BELONGING TO SERIES.................................................................15
(b) LIABILITIES BELONGING TO SERIES............................................................15
(c) VOTING.....................................................................................16
6.3 NON-TRANSFERABILITY............................................................................16
6.4 REGISTER OF INTERESTS..........................................................................16
6.5 STATUS OF INTERESTS; LIMITATION OF HOLDER LIABILITY............................................16
ARTICLE VII - INCREASES, DECREASES AND REDEMPTIONS OF INTERESTS..................................................16
ARTICLE VIII - DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES AND DISTRIBUTIONS..............................................................................17
8.1 BOOK CAPITAL ACCOUNT BALANCES..................................................................17
8.2 ALLOCATIONS AND DISTRIBUTIONS TO HOLDERS.......................................................17
8.3 POWER TO MODIFY FOREGOING PROCEDURES...........................................................17
ARTICLE IX - HOLDERS.............................................................................................18
9.1 RIGHTS OF HOLDERS..............................................................................18
9.2 MEETINGS OF HOLDERS............................................................................18
9.3 NOTICE OF MEETINGS.............................................................................19
9.4 RECORD DATE FOR MEETINGS, DISTRIBUTIONS, ETC...................................................19
9.5 PROXIES, ETC...................................................................................19
9.6 REPORTS........................................................................................19
9.7 INSPECTION OF RECORDS..........................................................................20
9.8 HOLDER ACTION BY WRITTEN CONSENT...............................................................20
9.9 NOTICES........................................................................................20
ARTICLE X - DURATION; TERMINATION; DISSOLUTION;
AMENDMENT; MERGERS; ETC.................................................................................20
10.1 DURATION.......................................................................................20
10.2 DISSOLUTION....................................................................................20
10.3 TERMINATION....................................................................................21
10.4 AMENDMENT PROCEDURE............................................................................22
(ii)
<PAGE>
Page
<S> <C>
10.5 MERGER, CONSOLIDATION AND SALE OF ASSETS.......................................................22
10.6 INCORPORATION..................................................................................23
ARTICLE XI - MISCELLANEOUS.......................................................................................23
11.1 CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS.......................................23
11.2 GOVERNING LAW..................................................................................23
11.3 COUNTERPARTS...................................................................................23
11.4 RELIANCE BY THIRD PARTIES......................................................................23
11.5 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.................................................24
</TABLE>
(iii)
<PAGE>
DECLARATION OF TRUST
OF
MERRIMAC MASTER PORTFOLIO
This DECLARATION OF TRUST of MERRIMAC MASTER PORTFOLIO is made as of
the 30th day of October, 1996 by the parties signatory hereto, as Trustees (as
defined in Section 1.2 hereof).
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a master trust fund or "Trust" (as
defined in Section 1.2 hereof) under the law of the State of New York consisting
of one or more subtrusts or "Series" (as defined in Section 1.2 hereof) for the
investment and reinvestment of assets contributed thereto; and
WHEREAS, it is proposed that the trust assets be composed of money and
other property contributed to the Series, such assets to be held and managed in
trust for the benefit of the holders of beneficial interests in such Series;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all money and other property contributed to the Trust and will manage and
dispose of the same for the benefit of such holders of beneficial interests and
subject to the provisions hereof, to wit:
ARTICLE I - THE TRUST
1.1 NAME. The name of the Trust shall be, MERRIMAC MASTER PORTFOLIO and
so far as may be practicable the Trustees shall conduct the Trust's activities,
execute all documents and sue or be sued under that name, which name (and the
term "Trust" wherever hereinafter used) shall refer to the Trustees as Trustees,
and not individually, and shall not refer to the officers, employees, agents or
independent contractors of the Trust or its holders of beneficial interests.
1.2 DEFINITIONS. As used in this Declaration, the following terms shall
have the following meanings:
"ADMINISTRATOR" shall mean any party furnishing services to one or more
Series pursuant to any administration contract described in Section 4.1 hereof.
"BOOK CAPITAL ACCOUNT" shall mean, for any Holder (as hereinafter
defined) at any time, the Book Capital Account of the Holder at such time with
respect to the Holder's beneficial interest in the Trust Property (as
hereinafter defined) of any Series, determined in accordance with the method as
may be established by the Trustees pursuant to Section 8.1 hereof. The Trust
shall maintain separate records of Book Capital Accounts for each such Series.
<PAGE>
"CODE" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time, as well as any non-superseded provisions of the
Internal Revenue Code of 1954, as amended (or any corresponding provision or
provisions of succeeding law).
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"DECLARATION" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "DECLARATION", "HEREOF", "HEREIN" and
"HEREUNDER" shall be deemed to refer to this Declaration rather than the article
or section in which any such word appears.
"FISCAL YEAR" shall mean an annual period determined by the Trustees
which ends on December 31 of each year or on such other day as is permitted or
required by the Code.
"HOLDER" shall mean the record holder of any Interest.
"INSTITUTIONAL INVESTOR(S)" shall mean any regulated investment
company, segregated asset account, foreign investment company, common trust
fund, group trust or other investment arrangement, whether organized within or
without the United States of America, other than an individual, s corporation,
partnership or grantor trust that are beneficially owned by any individual, S
corporation or partnership.
"INTERESTED PERSON" shall have the meaning given it in the 1940 Act (as
hereinafter defined).
"INTEREST" shall mean the beneficial interest of a Holder in the Trust
Property of any Series, including all rights, powers and privileges accorded to
Holders by this Declaration, which interest may be expressed as a percentage,
determined by calculating for a particular Series, at such times and on such
basis as the Trustees shall from time to time determine, the ratio of each
Holder's Book Capital Account balance to the total of all Holders, Book Capital
Account balances. Reference herein to a specified percentage of, or fraction of,
Interests, means Holders whose combined Book Capital Account balances represent
such specified percentage or fraction of the combined Book Capital Account
balances of all, or a specified group of, Holders.
"INVESTMENT ADVISER" shall mean any party furnishing services to one or
more Series of the Trust pursuant to any investment advisory contract described
in Section 4.1 hereof.
"MAJORITY INTERESTS VOTE" shall mean the vote, at a meeting of Holders
of one or more Series as the context may require, of (A) 67% or more of the
Interests present or represented at such meeting, if Holders of more than 50% of
all Interests in such one or more Series are present or represented by proxy, or
(B) more than 50% of all Interests in such one or more Series, whichever is
less.
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"1940 ACT" shall mean the United States Investment Company Act of 1940,
as amended from time to time, and the rules and regulations thereunder.
"PERSON" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
"REDEMPTION" shall mean the complete withdrawal of an Interest of a
Holder the result of which is to reduce the Book Capital Account balance of that
Holder to zero, and the term "redeem" shall mean to effect a Redemption.
"REGULATIONS" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"SERIES" shall mean the subtrusts of the Trust as the same are
established and designated pursuant to Article VI hereof, each of which shall be
a separate subtrust.
"TRUST" shall mean the master trust fund established hereby and shall
include each Series hereof.
"TRUST PROPERTY" shall mean as of any particular time any and all
assets or other property, real or personal, tangible or intangible, which at
such time is owned or held by or for the account of any Series or for the
account of the Trustees, each component of which shall be allocated and belong
to a specific Series to the exclusion of all other Series.
"TRUSTEES" shall mean each signatory to this Declaration, so long as
such signatory shall continue in office in accordance with the terms hereof, and
all other individuals who at the time in question have been duly elected or
appointed and have qualified as Trustees in accordance with the provisions
hereof and are then in office, and reference in this Declaration to a Trustee or
Trustees shall refer to such individual or individuals in their capacity as
Trustees hereunder.
ARTICLE II - TRUSTEES
2.1 NUMBER AND QUALIFICATION. The number of Trustees shall be fixed
from time to time by action of the Trustees taken as provided in Section 2.5
hereof; provided, however, that the number of Trustees so fixed shall in no
event be less than three or more than fifteen. Any vacancy created by an
increase in the number of Trustees may be filled by the appointment of an
individual having the qualifications described in this Section 2.1 made by
action of the Trustees taken as provided in Section 2.5 hereof. Any such
appointment shall not become effective, however, until the individual named in
the written instrument of appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of this Declaration.
No reduction in the number of Trustees shall have the effect of removing any
Trustee from office. Whenever a vacancy occurs, until such vacancy is filled as
provided in Section 2.4 hereof, the
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Trustees continuing in office, regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties imposed upon
the Trustees by this Declaration. A Trustee shall be an individual at least 21
years of age who is not under legal disability.
2.2 TERM AND ELECTION. Each Trustee named herein, or elected or
appointed prior to the first meeting of Holders, shall (except in the event of
resignations, retirements, removals or vacancies pursuant to Section 2.3 or
Section 2.4 hereof) hold office until a successor to such Trustee has been
elected at such meeting and has qualified to serve as Trustee, as required under
the 1940 Act. Subject to the provisions of Section 16(a) of the 1940 Act and
except as provided in Section 2.3 hereof, each Trustee shall hold office during
the lifetime of the Trust and until its termination as hereinafter provided.
2.3 RESIGNATION, REMOVAL AND RETIREMENT. Any Trustee may resign his or
her trust (without need for prior or subsequent accounting) by an instrument in
writing executed by such Trustee and delivered or mailed to the Chairman, if
any, the President or the Secretary of the Trust and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any Trustee may be removed with or without cause by the affirmative
vote of Holders of two-thirds of the Interests or (provided the aggregate number
of Trustees, after such removal and after giving effect to any appointment made
to fill the vacancy created by such removal, shall not be less than the number
required by Section 2.1 hereof) by the action of a majority of the remaining
Trustees. Any Trustee who has attained a mandatory retirement age, if any,
established pursuant to any written policy adopted from time to time by a
majority of the Trustees shall, automatically and without action by such Trustee
or the remaining Trustees, be deemed to have retired in accordance with the
terms of such policy, effective as of the date determined in accordance with
such policy. Any Trustee who has become incapacitated by illness or injury as
determined by a majority of the other Trustees, may be retired by written
instrument executed by a majority of the other Trustees, specifying the date of
such Trustee's retirement. Upon the resignation, retirement or removal of a
Trustee, or a Trustee otherwise ceasing to be a Trustee, such resigning,
retired, removed or former Trustee shall execute and deliver such documents as
the remaining Trustees shall require for the purpose of conveying to the Trust
or the remaining Trustees any Trust Property held in the name of such resigning,
retired, removed or former Trustee. Upon the death of any Trustee or upon
removal, retirement or resignation due to any Trustee's incapacity to serve as
Trustee, the legal representative of such deceased, removed, retired or
resigning Trustee shall execute and deliver on behalf of such deceased, removed,
retired or resigning Trustee such documents as the remaining Trustees shall
require for the purpose set forth in the preceding sentence.
2.4 VACANCIES. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, retirement or
removal of a Trustee. No such vacancy shall operate to annul this Declaration or
to revoke any existing agency created pursuant to the terms of this Declaration.
In the case of a vacancy, Holders of at least a majority of the Interests
entitled to vote, acting at any meeting of Holders held in accordance with
Section 9.2 hereof, or, to the extent permitted by the 1940 Act, a majority vote
of the Trustees continuing in office acting by written instrument or
instruments, may fill such vacancy, and any Trustee so elected by the
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Trustees or the Holders shall hold office as provided in this Declaration. The
Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation or removal of a
Trustee, or an increase in number of Trustees, provided that such appointment
shall become effective only when or after the expected vacancy occurs. Subject
to the foregoing sentence, as soon as any Trustee has accepted such appointment
in writing, the Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he or she shall
be deemed a Trustee hereunder. The power of appointment is subject to Section
16(a) of the 1940 Act.
2.5 MEETINGS AND ACTIONS WITHOUT MEETINGS. Meetings of the Trustees
shall be held from time to time upon the call of the Chairman, if any, the
President, the Secretary, an Assistant Secretary or any two Trustees. Regular
meetings of the Trustees may be held without call or notice at a time and place
fixed by the By-Laws or by resolution of the Trustees. Notice of any other
meeting shall be mailed or otherwise given not less than 24 hours before the
meeting but may be waived in writing by any Trustee either before or after such
meeting. The attendance of a Trustee at a meeting shall constitute a waiver of
notice of such meeting except in the situation in which a Trustee attends a
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting was not lawfully called or convened. The Trustees
may act with or without a meeting. A quorum for all meetings of the Trustees
shall be a majority of the Trustees. Unless provided otherwise in this
Declaration, any action of the Trustees may be taken at a meeting by vote of a
majority of the Trustees present (a quorum being present) or without a meeting
by written consent of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if
any, may act with or without a meeting. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present (a quorum being present) or without
a meeting by written consent of a majority of the members.
Any notice, waiver or written consent hereunder may be provided and
delivered to the Trust or a Trustee by facsimile or other similar electronic
mechanism.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust or otherwise
interested in any action to be taken may be counted for quorum purposes under
this Section 2.5 and shall be entitled to vote to the extent permitted by the
1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all individuals participating in the
meeting can hear each other and participation in a meeting by means of such
communications equipment shall constitute presence in person at such meeting.
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2.6 OFFICERS; CHAIRMAN OF THE BOARD. The Trustees shall, from time to
time, elect a President, a Secretary and a Treasurer. The Trustees may elect or
appoint, from time to time, a Chairman of the Board who shall preside at all
meetings of the Trustees and carry out such other duties as the Trustees may
designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers, agents or independent contractors with such powers
as the Trustees may deem to be advisable. The Chairman, if any, shall be and
each other officer may, but need not, be a Trustee.
2.7 BY-LAWS. The Trustees may adopt and, from time to time, amend or
repeal By-Laws for the conduct of the business of the Trust.
ARTICLE III - POWERS OF TRUSTEES
3.1 GENERAL. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust and each Series to
the same extent as if the Trustees were the sole owners of the Trust Property
and such business in their own right, but with such powers of delegation as may
be permitted by this Declaration. The Trustees may perform such acts as in their
sole discretion they deem proper for conducting the business of the Trust and
any Series. The enumeration of or failure to mention any specific power herein
shall not be construed as limiting such exclusive and absolute control. The
powers of the Trustees may he exercised without order of or resort to any court.
The Trustees shall have full power and authority to do any and all acts
and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purposes of this Trust.
3.2 INVESTMENTS. The Trustees shall have the power with respect to the
Trust and each Series to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise deal in or dispose of United States and foreign currencies and related
instruments including forward contracts, and securities, including common and
preferred stock, warrants, bonds, debentures, time notes and all other evidences
of indebtedness, negotiable or non-negotiable instruments, obligations,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including, without
limitation, those issued, guaranteed or sponsored by any state, territory or
possession of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, or by the United States
Government, any foreign government, or any agency, instrumentality or political
subdivision of the United States
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Government or any foreign government, or any international instrumentality, or
by any bank, savings institution, corporation or other business entity organized
under the laws of the United States or any state or under any foreign laws; and
to exercise any and all rights, powers and privileges of ownership or interest
in respect of any and all such investments of any kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
such rights, powers and privileges in respect of any of such investments; and
the Trustees shall be deemed to have the foregoing powers with respect to any
additional instruments in which the Trustees may determine to invest;
(c) definitively interpret the investment objectives, policies
and limitations of any Series.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3 LEGAL TITLE. Legal title to all Trust Property shall be vested in
the Trustees as joint tenants except that the Trustees shall have the power to
cause legal title to any Trust Property to be held by or in the name of one or
more of the Trustees, or in the name of the Trust or any Series, or in the name
or nominee name of any other Person on behalf of the Trust or any Series, on
such terms as the Trustees may determine.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each individual who may hereafter become a Trustee
upon his due election and qualification. Upon the resignation, removal or death
of a Trustee, such resigning, removed or deceased Trustee shall automatically
cease to have any right, title or interest in any Trust Property, and the right,
title and interest of such resigning, removed or deceased Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
3.4 SALE AND INCREASES OF INTERESTS. The Trustees, in their discretion,
may, from time to time, without a vote of the Holders, permit any Institutional
Investor to purchase from the Trust an Interest in a Series, or increase such
Interest, for such type of consideration, including cash or property, at such
time or times (including, without limitation, each business day), and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. Individuals, S corporations,
partnerships and grantor trusts that are beneficially owned by any individual, S
corporation or partnership may not purchase Interests. The Trustees, in their
discretion, may refuse to sell an Interest in a Series to any person without any
cause or reason therefor.
3.5 DECREASES AND REDEMPTIONS OF INTERESTS. Subject to Article VII
hereof, the Trustees, in their discretion, may, from time to time, without a
vote of the Holders,
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permit a Holder to redeem its Interest in a Series, or decrease such Interest,
for either cash or property, at such time or times (including, without
limitation, each business day), and on such terms as the Trustees may deem best.
3.6 BORROW MONEY. The Trustees shall have power on behalf of any Series
to borrow money or otherwise obtain credit and to secure the same by mortgaging,
pledging or otherwise subjecting as security the assets belonging to such
Series, as appropriate, including the lending of portfolio securities, and to
endorse, guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person.
3.7 DELEGATION; COMMITTEES. The Trustees shall have power, consistent
with their continuing exclusive and absolute control over the Trust Property and
over the business of the Trust and any Series, to delegate from time to time to
such of their number or to officers, employees, agents or independent
contractors of the Trust or any Series the doing of such things and the
execution of such instruments in either the name of the Trust or any Series or
the names of the Trustees or otherwise as the Trustees may deem expedient.
3.8 COLLECTION AND PAYMENT. The Trustees shall have power to collect
all property due to the Trust; and to pay all claims, including taxes, against
the Trust Property on behalf of any Series; to prosecute, defend, compromise or
abandon any claims relating to the Trust or the Trust Property on behalf of any
Series; to foreclose any security interest securing any obligation, by virtue of
which any property is owed to the Trust; and to enter into releases, agreements
and other instruments.
3.9 EXPENSES. The Trustees shall have power to incur and pay any
expenses from the Trust Property which in the opinion of the Trustees are
necessary or incidental to carry out any of the purposes of this Declaration,
and to pay reasonable compensation from the Trust Property to themselves as
Trustees. Permitted expenses of the Trust include, but are not limited to,
interest charges, taxes, brokerage fees and commissions; expenses of sales,
increases, decreases or redemptions of Interests; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, placement agents,
custodians, transfer agents and fund accountants; legal counsel to the Trust or
to the Trustees; fees of pricing, interest, dividend, credit and other reporting
services; costs of membership in trade associations; telecommunications
expenses; costs of forming the Trust and its Series and maintaining its and
their existence; costs of preparing and printing the registration statements and
Holder reports of the Trust and each Series and delivering them to Holders;
expenses of meetings of Holders; costs of maintaining books and accounts; costs
of reproduction, stationery and supplies; fees and expenses of the Trustees;
compensation of the Trust's officers and employees and costs of other personnel
performing services for the Trust or any Series; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign securities
laws registration fees and related expenses; and for such non-recurring items as
may arise, including litigation to which the Trust or a Series (or a Trustee or
officer of the Trust acting as such) is a party, and for all losses and
liabilities by them incurred in administering the Trust. The Trustees shall have
a lien on the assets belonging to the appropriate Series, or in
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the case of an expense allocable to more than one Series, on the assets of each
such Series, prior to any rights or interests of the Holders thereto, for the
reimbursement to them of such expenses, disbursements, losses and liabilities.
The Trustees shall fix the compensation of all officers, employees and Trustees.
The Trustees may pay themselves such compensation for special services as they
in good faith may deem reasonable, and reimbursement for expenses reasonably
incurred by themselves on behalf of the Trust or any Series.
3.10 MISCELLANEOUS POWERS. The Trustees shall have power to:
(a) employ or contract with such Persons as the Trustees may
deem appropriate for the transaction of the business of the Trust or any Series
and terminate such employees or contractual relationships as they consider
appropriate;
(b) enter into joint ventures, partnerships and any other
combinations or associations;
(c) purchase, and pay for out of Trust Property insurance
policies insuring the Investment Adviser, Administrator, placement agent,
Holders, Trustees, officers, employees, agents or independent contractors of the
Trust against all claims arising by reason of holding any such position or by
reason of any action taken or omitted by any such Person in such capacity,
whether or not the Trust would have the power to indemnify such Person against
such liability;
(d) establish pension, profit-sharing and other retirement,
incentive and benefit plans for the Trustees, officers, employees or agents of
the Trust or any Series;
(e) prosecute, defend and settle lawsuits in the name of the
Trust or any Series and pay settlements and judgments out of the Trust Property;
(f) to the extent permitted by law, indemnify any Person with
whom the Trust has dealings, including the Investment Adviser, Administrator,
placement agent, Holders, Trustees, officers, employees, agents or independent
contractors of the Trust, to such extent as the Trustees shall determine;
(g) guarantee indebtedness or contractual obligations of
others;
(h) determine and change the Fiscal Year of the Trust or any
Series and the method by which its accounts shall be kept; and
(i) adopt a seal for the Trust or any Series, but the absence
of such a seal shall not impair the validity of any instrument executed on
behalf of the Trust or such Series.
3.11 FURTHER POWERS. The Trustees shall have power to conduct the
business of the Trust or any Series and carry on its operations in any and all
of its branches and maintain offices, whether within or without the State of New
York, in any and all states of the United
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States of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments,
and to do all such other things and execute all such instruments as they deem
necessary, proper, appropriate or desirable in order to promote the interests of
the Trust or any Series although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust or any
Series which is made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Declaration, the presumption shall be in favor
of a grant of power to the Trustees. The Trustees shall not be required to
obtain any court order in order to deal with Trust Property.
ARTICLE IV - INVESTMENT ADVISORY, ADMINISTRATION
AND PLACEMENT AGENT ARRANGEMENTS; CUSTODIAN
4.1 INVESTMENT ADVISORY AND OTHER ARRANGEMENTS. The Trustees may in
their discretion, from time to time, enter into investment advisory contracts,
administration contracts, placement agent agreements or other service agreements
whereby the other party to such contract or agreement shall undertake to furnish
with respect to one or more particular Series such investment advisory,
administration, placement agent and/or other services as the Trustees shall,
from time to time, consider appropriate or desirable and all upon such terms and
conditions as the Trustees may in their sole discretion determine.
Notwithstanding any provision of this Declaration, the Trustees may authorize
any Investment Adviser (subject to such general or specific instructions as the
Trustees may, from time to time, adopt) to employ one or more subadvisers and to
effect purchases, sales, loans or exchanges of Trust Property on behalf of any
Series or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of any such
Investment Adviser (all without any further action by the Trustees).
4.2 PARTIES TO CONTRACT. Any contract of the character described in
Section 4.1 or Section 4.3 hereof or in the By-Laws of the Trust may be entered
into with any corporation, firm, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, Trustee,
shareholder or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any individual holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust or
any Series under or by reason of any such contract or accountable for any profit
realized directly or indirectly therefrom, provided that the contract when
entered into was reasonable and fair and not inconsistent with the provisions of
this Article IV or the By-Laws. The same Person may be the other party to one or
more contracts entered into pursuant to Section 4.1 or Section 4.3 hereof or the
By-Laws, and any individual may be financially interested or otherwise
affiliated with Persons who are parties to any or all of the contracts mentioned
in this Section 4.2 or in the By-Laws.
4.3 CUSTODIAN. The Trustees shall at all times place and maintain the
securities and similar investments of the Trust on behalf of each Series in
custody meeting the requirements of Section 17(f) of the 1940 Act and the rules
thereunder. The Trustees, on behalf of the Trust or
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any Series, may enter into an agreement with a custodian on terms and conditions
acceptable to the Trustees, providing for the custodian, among other things, (a)
to hold the securities owned by the Trust on behalf of any Series and deliver
the same upon written order or oral order confirmed in writing, (b) to receive
and receipt for any moneys due to the Trust on behalf of any Series and deposit
the same in its own banking department or elsewhere, (c) to disburse such funds
upon orders or vouchers, and (d) to employ one or more subcustodians.
4.4 1940 ACT GOVERNANCE. Any contract referred to in Section 4.1 hereof
shall be consistent with and subject to the applicable requirements of Section
15 of the 1940 Act and the rules and orders thereunder with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal. No amendment to a contract referred to in
Section 4.1 hereof shall be effective unless assented to in a manner consistent
with the requirements of Section 15 of the 1940 Act, and the rules and orders
thereunder.
ARTICLE V - LIABILITY OF HOLDERS;
LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, ETC.
5.1 LIABILITY OF HOLDERS; INDEMNIFICATION. Each Holder shall be jointly
and severally liable (with rights of contribution inter se in proportion to
their respective Interests in the Series in which it invests) for the
liabilities and obligations of that Series in the event that such Series fails
to satisfy such liabilities and obligations; provided, however, that, to the
extent assets are available in that Series, the Series shall indemnify and hold
each Holder harmless from and against any claim or liability to which such
Holder may become subject by reason of being or having been a Holder to the
extent that such claim or liability imposed on the Holder an obligation or
liability which, when compared to the obligations and liabilities imposed on
other Holders of that Series, is greater than such Holder's Interest
(proportionate share), and shall reimburse such Holder for all legal and other
expenses reasonably incurred by such Holder in connection with any such claim or
liability. The rights accruing to a Holder under this Section 5.1 shall not
exclude any other right to which such Holder may be lawfully entitled, nor shall
anything contained herein restrict the right of the Trust or a Series to
indemnify or reimburse a Holder in any appropriate situation even though not
specifically provided herein. Notwithstanding the indemnification procedure
described above and subject to the following sentence, it is intended that each
Holder shall remain jointly and severally liable to the creditors of the Series
in which it invests as a legal matter. Notwithstanding any other provision in
this Declaration, in the event that Regulations or other administrative rules
are adopted that would allow a Series to make an election to be treated as
either a partnership or association taxable as a corporation for United States
federal income tax purposes, notwithstanding any limitation on the liability of
the Holders, and pursuant to such Regulations or other administrative rules the
Series properly elects to be treated as a partnership for United States federal
income tax purposes, then the Trustees, in their sole discretion shall have the
power to amend this Declaration to eliminate prospectively any such liability of
Holders; provided, however, that such amendment shall be effective only if and
to the extent that the Series maintains its classification as a partnership for
United States federal income tax purposes and maintains its classification as
either a partnership, sole proprietership or grantor trust for state tax
purposes.
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5.2 LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS,
INDEPENDENT CONTRACTORS TO THIRD PARTIES. No Trustee, officer, employee, agent
or independent contractor (except in the case of an agent or independent
contractor to the extent expressly provided by written contract) of the Trust or
any Series shall be subject to any personal liability whatsoever to any Person,
other than the Trust or the Holders, in connection with Trust Property or the
affairs of the Trust; and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature against a Trustee, officer,
employee, agent or independent contractor (except in the case of an agent or
independent contractor to the extent expressly provided by written contract) of
the Trust arising in connection with the affairs of the Trust.
5.3 LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS OR EMPLOYEES TO
TRUST, HOLDERS, ETC. No Trustee, officer or employee of the Trust shall be
liable to the Trust or the Holders for any action or failure to act (including,
without limitation, the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for such Person's own bad faith,
willful misfeasance, gross negligence or reckless disregard of such Person's
duties.
5.4 MANDATORY INDEMNIFICATION. The Trust shall indemnify, to the
fullest extent permitted by law (including the 1940 Act), each Trustee, officer
or employee of the Trust (including any Person who serves at the Trust's request
as a director, officer or trustee of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) against all liabilities
and expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably incurred by
such Person in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which such Person may be
involved or with which such Person may be threatened, while in office or
thereafter, by reason of such Person being or having been such a Trustee,
officer, employee, except with respect to any matter as to which such Person
shall have been adjudicated to have acted in bad faith, willful misfeasance,
gross negligence or reckless disregard of such Person's duties, such liabilities
and expenses being liabilities only of the Series out of which such claim for
indemnification arises; provided, however, that as to any matter disposed of by
a compromise payment by such Person, pursuant to a consent decree or otherwise,
no indemnification either for such payment or for any other expenses shall be
provided unless there has been a determination that such Person did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Person's office (i) by the court or other
body approving the settlement or other disposition; or (ii) based upon a review
of readily available facts (as opposed to a full trial-type inquiry), by written
opinion from independent legal counsel approved by the Trustees; or (iii) by a
majority of the Trustees who are neither Interested Persons of the Trust nor
parties to the matter, based upon a review of readily available facts (as
opposed to a full trial-type inquiry). The rights accruing to any Person under
these provisions shall not exclude any other right to which such Person may be
lawfully entitled; provided that no Person may satisfy any right of indemnity or
reimbursement granted in this Section 5.4 or in Section 5.2 hereof or to which
such Person may be otherwise entitled except out of the Trust Property. The
rights of indemnification provided herein may be insured against by policies
maintained by the
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Trust. The Trustees may make advance payments in connection with indemnification
under this Section 5.4, provided that the indemnified Person shall have given a
written undertaking to reimburse the Trust in the event it is subsequently
determined that such Person is not entitled to such indemnification, and
provided further that either (i) such Person shall have provided appropriate
security for such undertaking, or (ii) the Trust is insured against losses
arising out of any such advance payments, or (iii) either a majority of the
Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is a reasonable basis for
believing that such Person will not be disqualified from indemnification under
this Section 5.4.
5.5 INDEMNIFICATION OF HOLDERS. If any Holder or former Holder of any
Series shall be held personally liable solely by reason of such Holder being or
having been a Holder and not because of such Holder's acts or omissions or for
some other reason, the Holder or former Holder (or such Holder's general
successor) shall be entitled out of the assets belonging to the applicable
Series to be held harmless from and indemnified against all loss and expense
arising from such liability. The Trust, on behalf of the affected Series, shall,
upon request by such Holder, assume the defense of any claim made against such
Holder for any act or obligation of the Series and satisfy any judgment thereon
from the assets of the Series.
5.6 NO BOND REQUIRED OF TRUSTEES. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of such Trustee's duties hereunder.
5.7 NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender or other Person dealing with any Trustee, officer, employee,
agent or independent contractor of the Trust or any Series shall be bound to
make any inquiry concerning the validity of any transaction purporting to be
made by such Trustee, officer, employee, agent or independent contractor or be
liable for the application of money or property paid, loaned or delivered to or
on the order of such Trustee, officer, employee, agent or independent
contractor. Every obligation, contract, instrument, certificate or other
interest or undertaking of the Trust or any Series, and every other act or thing
whatsoever executed in connection with the Trust or any Series shall be
conclusively taken to have been executed or done by the executors thereof only
in their capacity as Trustees, officers, employees, agents or independent
contractors of the Trust or any Series. Every written obligation, contract,
instrument, certificate or other interest or undertaking of the Trust or any
Series made or sold by any Trustee, officer or employee of the Trust or any
Series, in such capacity, shall contain an appropriate recital to the effect
that the Trustee, officer or employee of the Trust or any Series shall not
personally be bound by or liable thereunder, nor shall resort be had to their
private property for the satisfaction of any obligation or claim thereunder, and
appropriate references shall be made therein to the Declaration, and may contain
any further recital which they may deem appropriate, but the omission of such
recital shall not operate to impose personal liability on any Trustee, officer
or employee of the Trust or any Series. Subject to the provisions of the 1940
Act, the Trust may maintain insurance for the protection of the Trust Property,
the Holders, and the Trustees, officers or employees of the Trust
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and any Series in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
5.8 RELIANCE ON EXPERTS, ETC. Each Trustee, officer or employee of the
Trust and any Series shall, in the performance of such Person's duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust or any Series (whether or not the Trust or any Series would
have the power to indemnify such Persons against such liability), upon an
opinion of legal counsel, or upon reports made to the Trust or any Series by any
of its officers or employees or by any Investment Adviser or Administrator,
accountant, appraiser or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust or any Series,
regardless of whether such counsel or expert may also be a Trustee.
5.9 NO REPEAL OR MODIFICATION. Any repeal or modification of this
Article V by the Holders, or adoption or modification of any other provision of
this Declaration or the By-Laws inconsistent with this Article V, shall be
prospective only, to the extent that such repeal or modification would, if
applied retrospectively, adversely affect any limitation on the liability of any
Person or indemnification available to any indemnified Person with respect to
any act or omission which occurred prior to such repeal, modification or
adoption.
ARTICLE VI - INTERESTS
6.1 INTERESTS. The beneficial interest in the Trust Property shall
consist of non-transferable Interests. Interests may be issued by the Trust only
to Institutional Investors or other accredited investors, as such term is
defined under Rule 501 to the Securities Act of 1933, as may be approved by the
Trustees, for cash or other consideration acceptable to the Trustees, subject to
the requirements of the 1940 Act. The Interests shall be personal property
giving only the rights in this Declaration specifically set forth. The value of
an Interest shall be equal to the Book Capital Account balance of the Holder of
the Interest. All Interests issued hereunder shall be fully paid and
nonassessable.
The Trustees shall have authority, from time to time, to establish
Series, each of which shall be a separate subtrust and the Interests in which
shall be separate and distinct from the Interests in any other Series. The
Series shall include, without limitation, those Series specifically established
and designated pursuant to Section 6.2 hereof, and such other Series as the
Trustees may from time to time deem necessary or desirable. The Trustees shall
have exclusive power without the requirement of Holder approval to establish and
designate such separate and distinct Series, and, subject to the provisions of
this Declaration and the 1940 Act, to fix and determine the rights of Holders of
Interests in such Series, including with respect to the price, terms and manner
of purchase and redemption, dividends and other distributions, rights on
liquidation, sinking or purchase fund provisions, conversion rights and
conditions under which the Holders of the several Series shall have separate
voting rights or no voting rights.
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6.2 ESTABLISHMENT AND DESIGNATION OF SERIES. The establishment and
designation of any Series shall be effective upon the execution by the Secretary
or an Assistant Secretary of the Trust, pursuant to authorization by a majority
of the Trustees, of an instrument setting forth such establishment and
designation and the relative rights and preferences of the Interests in such
Series, or as otherwise provided in such instrument. At any time that there are
no Interests outstanding of any particular Series previously established and
designated, the Trustees may by resolution adopted by a majority of their
number, and evidenced by an instrument executed by the Secretary or an Assistant
Secretary of the Trust, abolish that Series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration of Trust.
Without limiting the authority of the Trustees set forth above to
establish and designate further Series, the Trustees hereby establish and
designate the Series set forth on Schedule A hereto. The Interests in each of
these Series and any Interests in any further Series that may from time to time
be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Series at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) ASSETS BELONGING TO SERIES. All consideration received by
the Trust for the issue or sale of Interests in a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall be held by the Trustees in a separate trust for the benefit of the Holders
of Interests in that Series and shall irrevocably belong to that Series for all
purposes, and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
belonging to" that Series. No Series shall have any right to or interest in the
assets belonging to any other Series, and no Holder shall have any right or
interest with respect to the assets belonging to any Series in which it does not
hold an Interest.
(b) LIABILITIES BELONGING TO SERIES. The assets belonging to
each particular Series shall be charged with the liabilities in respect of that
Series and all expenses, costs, charges and reserves attributable to that
series. The liabilities, expenses, costs, charges and reserves so charged to a
Series are herein referred to as "liabilities belonging to" that Series. No
Series shall be liable for or charged with the liabilities belonging to any
other Series, and no Holder shall be subject to any liabilities belonging to any
Series in which it does not hold an Interest.
(c) VOTING. On each matter submitted to a vote of the Holders,
each Holder shall be entitled to a vote proportionate to its Interest as
recorded on the books of the Trust. Each Series shall vote as a separate class
except as to voting for Trustees, as otherwise required by the
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1940 Act, or if determined by the Trustees to be a matter which affects all
Series. As to any matter which does not affect the interest of all Series, only
the Holders in the one or more affected Series shall be entitled to vote. On
each matter submitted to a vote of the Holders, a Holder may apportion its vote
with respect to a proposal in the same proportion as its own shareholders voted
with respect to that proposal.
6.3 NON-TRANSFERABILITY. A Holder may not transfer, sell, or exchange
its Interest except as part of a merger or similar plan of reorganization of a
Holder that qualifies under Section 368 of the Code as permitted by the
Trustees. Any other attempted transfer will not be recognized or given effect by
the Trust.
6.4 REGISTER OF INTERESTS. A register shall be kept by the Trust under
the direction of the Trustees which shall contain the name, address and Book
Capital Account balance of each Holder in each Series. Such register shall be
conclusive as to the identity of the Holders. No Holder shall be entitled to
receive payment of any distribution, nor to have notice given to it as herein
provided, until it has given its address to such officer or agent of the Trust
as is keeping such register for entry thereon.
6.5 STATUS OF INTERESTS; LIMITATION OF HOLDER LIABILITY. Interests
shall be deemed to be personal property giving Holders only the rights provided
in this Declaration. Every Holder, by virtue of having acquired its Interest,
shall be held expressly to have assented to and agreed to be bound by the terms
of this Declaration and to have become a party hereto. Except as provided in
Section 5.1, no Holder shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing with
respect to, the Trust or any Series. Neither the Trust nor the Trustees shall
have any power to bind any Holder personally or to demand payment from any
Holder for anything, other than as agreed by the Holder or as provided in
Section 5.1. Notwithstanding anything to the contrary in Section 5.1 or this
Section 6.5, any written obligation of the Trust or any Series may contain a
statement to the effect that such obligation may only be enforced against the
assets of the appropriate Series or the Trust, and such statement shall be
binding on the parties to such written obligations.
ARTICLE VII - INCREASES, DECREASES AND REDEMPTIONS OF INTERESTS
Subject to applicable law, to the provisions of this Declaration and to
such restrictions as may from time to time be adopted by the Trustees, each
Holder may vary its Interest in any Series at any time by increasing (through a
capital contribution) or decreasing (through a capital withdrawal) or by a
Redemption of its Interest. An increase in the Interest of a Holder in a Series
shall be reflected as an increase in the Book Capital Account balance of that
Holder in that Series and a decrease in the Interest of a Holder in a Series or
the Redemption of the Interest of that Holder shall be reflected as a decrease
in the Book Capital Account balance of that Holder in that Series. The Trust
shall, upon appropriate and adequate notice from any Holder, increase, decrease
or redeem such Holder's Interest for an amount determined by the application of
a formula adopted for such purpose by resolution of the Trustees; provided that
(a) the amount
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received by the Holder upon any such decrease or Redemption shall not exceed the
decrease in the Holder's Book Capital Account balance effected by such decrease
or Redemption of its Interest, and (b) if so authorized by the Trustees, the
Trust may, at any time and from time to time, charge fees for effecting any such
decrease or Redemption, at such rates as the Trustees may establish, and may, at
any time and from time to time, suspend such right of decrease or Redemption.
The procedures, if any, for effecting decreases or Redemptions shall be as
determined by the Trustees from time to time.
ARTICLE VIII - DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES AND DISTRIBUTIONS
8.1 BOOK CAPITAL ACCOUNT BALANCES. The Book Capital Account balance of
Holders with respect to a particular Series shall be determined on such days and
at such time or times as the Trustees may determine. The Trustees may adopt
resolutions setting forth the method of determining the Book Capital Account
balance of each Holder. The power and duty to make calculations pursuant to such
resolutions may be delegated by the Trustees to the Investment Adviser or
Administrator, custodian, or such other Person as the Trustees may determine.
Subject to compliance with the 1940 Act, upon the Redemption of an Interest, the
Holder of that Interest shall be entitled to receive the balance of its Book
Capital Account. A Holder may not transfer its Book Capital Account balance.
8.2 ALLOCATIONS AND DISTRIBUTIONS TO HOLDERS. The Trustees may, in
compliance with the Code, the 1940 Act and generally accepted accounting
principles, establish the procedures by which the Trust shall make with respect
to each Series (i) the allocation of unrealized gains and losses, taxable income
and tax loss, and profit and loss, or any item or items thereof, to each Holder,
(ii) the payment of distributions, if any, to Holders, and (iii) upon
liquidation, the final distribution of items of taxable income and expense. Any
such procedures shall be set forth in writing and be furnished to the Trust's
accountants. The Trustees may amend the procedures, if any, adopted pursuant to
this Section 8.2 from time to time. The Trustees may retain from the net profits
of each Series such amount as they may deem necessary to pay the liabilities and
expenses of that Series.
8.3 POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of the
foregoing provisions of this Article VIII, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the net income
and net assets of the Trust and of each Series, the allocation of income of the
Trust and of each Series, the Book Capital Account balance of each Holder, or
the payment of distributions to the Holders as they may deem necessary or
desirable to enable the Trust or a Series to comply with any provision of the
1940 Act or any order of exemption issued by the Commission or with the Code.
ARTICLE IX - HOLDERS
9.1 RIGHTS OF HOLDERS. The ownership of the Trust Property and the
right to conduct any business described herein are vested exclusively in the
Trustees, and the Holders shall
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have no right or title therein other than the beneficial interest conferred by
their Interests and they shall have no power or right to call for any partition
or division of any Trust Property.
The Trust shall be entitled to treat a Holder of record as the holder
in fact and shall not be bound to recognize any equitable or other claim of
interest in such Holder's Interest on the part of any other entity except as may
be otherwise expressly provided by law.
In addition, the Holders shall have power to vote only with respect to
(a) the election of Trustees as provided in Article II, Section 2.4; (b) the
removal of Trustees as provided in Article II, Section 2.3; (c) any investment
advisory contract as provided in Article IV, Section 4.1; (d) any dissolution of
a Series as provided in Article X, Section 10.2; (e) the amendment of this
Declaration to the extent and as provided in Article X, Section 10.4; (f) any
merger, consolidation or sale of assets as provided in Article X, Section 10.5;
and (g) such additional matters relating to the Trust as may be required by the
1940 Act or otherwise required or authorized by law, by this Declaration or the
By-Laws or any registration statement of the Trust filed with the Commission, or
as the Trustees may consider desirable.
9.2 MEETINGS OF HOLDERS. Meetings of Holders may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request of Holders holding, in the aggregate, not less than 10% of the Interests
in one or more Series (if the meeting relates solely to such Series), or not
less than 10% of the Interests in the Trust (if the meeting relates to the Trust
and not solely to one or more particular Series), such request specifying the
purpose or purposes for which such meeting is to be called. Any such meeting
shall be held within or without the State of New York and within or without the
United States of America on such day and at such time as the Trustees shall
designate. Holders of at least one-third of the Interests in one or more Series
(if the meeting relates solely to such one or more Series) or Holders of at
least one-third of the Interests in the Trust (if the meeting relates to the
Trust and not solely to one or more particular Series), present in person or by
proxy, shall constitute a quorum for the transaction of any business, except as
may otherwise be required by the 1940 Act, other applicable law, this
Declaration or the By-Laws. If a quorum is present at a meeting, an affirmative
vote of the Holders present, in person or by proxy, holding more than 50% of the
total Interests of the Holders in a Series or the Trust, as applicable, present
either in person or by proxy, at such meeting constitutes the action of the
Holders in such Series or the Trust, as applicable, unless a greater number of
affirmative votes is required by the 1940 Act, other applicable law, this
Declaration or the By-Laws, and except that a plurality of the total Interests
of the Holders present shall elect a Trustee. All or any one of more Holders may
participate in a meeting of Holders by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting by means of such
communications equipment shall constitute presence in person at such meeting.
9.3 NOTICE OF MEETINGS. Notice of each meeting of Holders, stating the
time, place and purposes of the meeting, shall be given by the Trustees by mail
to each Holder of the Series or the Trust, as the case may be, at its registered
address, mailed at least 10 days and not
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more than 60 days before the meeting. Notice of any meeting may be waived in
writing by any Holder either before or after such meeting. The attendance of a
Holder at a meeting shall constitute a waiver of notice of such meeting except
in the situation in which a Holder attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting was
not lawfully called or convened. At any meeting, any business properly before
the meeting may be considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.
9.4 RECORD DATE FOR MEETINGS, DISTRIBUTIONS, ETC. For the purpose of
determining the Holders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time fix a future date, not more than 90
days prior to the date of any meeting of Holders or the payment of any
distribution or the taking of any other action, as the case may be, as a record
date for the determination of the Persons to be treated as Holders of the Series
or the Trust, as the case may be, for such purpose.
9.5 PROXIES, ETC. At any meeting of Holders, any Holder entitled to
vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall be in writing and shall have been placed on file with
the Secretary, or with such other officer or agent of the Trust as the Secretary
may direct, for verification prior to the time at which such vote is to be
taken. A proxy may be revoked by a Holder at any time before it has been
exercised by placing on file with the Secretary, or with such other officer or
agent of the Trust as the Secretary may direct, a later dated proxy or written
revocation. Pursuant to a resolution of a majority of the Trustees, proxies may
be solicited in the name of the Trust or of one or more Trustees or of one or
more officers of the Trust. Only Holders on the record date shall be entitled to
vote. Each such Holder shall be entitled to a vote proportionate to its Interest
in the Series or the Trust, as the case may be. When an Interest is held jointly
by several Persons, any one of them may vote at any meeting in person or by
proxy in respect of such Interest, but if more than one of them is present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Interest. A proxy purporting to be executed by or on behalf of a
Holder, including proxies received via telecopy, shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger.
9.6 REPORTS. As to each Series, the Trustees shall cause to be prepared
and furnished to each Holder thereof, at least annually as of the end of each
Fiscal Year, a report of operations containing a balance sheet and a statement
of income of such Series prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant on such
financial statements. The Trustees shall, in addition, with respect to each
Series furnish to each Holder of such Series at least semi-annually interim
reports of operations containing an unaudited balance sheet as of the end of
such period and an unaudited statement of income for the period from the
beginning of the then-current Fiscal Year to the end of such period.
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9.7 INSPECTION OF RECORDS. The records of the Trust shall be open to
inspection by Holders during normal business hours for any purpose not harmful
to the Trust.
9.8 HOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken on
behalf of the Trust or any Series by Holders may be taken without a meeting if
Holders holding more than 50% of all Interests entitled to vote (or such larger
proportion thereof as shall be required by any express provision of this
Declaration or of applicable law) consent to the action in writing and the
written consents are filed with the records of the meetings of Holders. Such
consents shall be treated for all purposes as a vote taken at a meeting of
Holders. Each such written consent shall be executed by or on behalf of the
Holder delivering such consent and shall bear the date of such execution. No
such written consent shall be effective to take the action referred to therein
unless, within one year of the earliest dated consent, written consents executed
by a sufficient number of Holders to take such action are filed with the records
of the meetings of Holders.
9.9 NOTICES. Any and all communications, including any and all notices
to which any Holder may be entitled, shall be deemed duly served or given if
mailed, postage prepaid, addressed to a Holder at its last known address as
recorded on the register of the Trust or if delivered to a Holder by courier or
by facsimile or other similar electronic mechanism.
ARTICLE X - DURATION; TERMINATION; DISSOLUTION;
AMENDMENT; MERGERS; ETC.
10.1 DURATION. Subject to possible dissolution or termination in
accordance with the provisions of Section 10.2 and Section 10.3 hereof,
respectively, the Trust created hereby shall continue until the expiration of 20
years after the death of the last survivor of the initial Trustees named herein
and the following named persons:
Name Address
---- -------
Anne Marie Jasinski 20 Towne Road
Birthdate: January 15, 1990 Boxford, Massachusetts 01921
Leah Ruth Connerty 4 Gunnison Road
Birthdate: July 5, 1995 Boxford, Massachusetts 01921
Jaclyn K. Brennan 18 Springhill Road
Birthdate: March 28, 1996 Merrimac, Massachusetts 01860
10.2 DISSOLUTION. Any Series shall be dissolved (i) by the affirmative
vote of the Holders of not less than two-thirds of the Interests in the Series
at any meeting of the Holders or by an instrument in writing, without a meeting,
signed by a majority of the Trustees and consented
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to in writing by the Holders of not less than a majority of such Interests, (ii)
by the Trustees by written notice of dissolution to the Holders of the Interests
in the Series, or (iii) upon the bankruptcy or withdrawal of any Holder of an
Interest in the Series, the Series shall be dissolved effective 120 days after
the event. However, the remaining Holders of Interests in such Series may, by
majority vote within ninety (90) days following such event, agree to continue
the business of the Series even if there has been such a dissolution. The Trust
may be dissolved by action of the Trustees upon the dissolution of the last
remaining Series.
10.3 TERMINATION.
(a) Upon an event of dissolution of the Trust or a Series,
unless the Trust or Series is continued in accordance with the proviso to
Section 10.2 above, the Trust or Series, as applicable, shall be terminated in
accordance with the following provisions:
(i) the Trust or Series, as applicable, shall carry
on no business except for the purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the
affairs of the Trust or Series, as applicable, and all of the powers of the
Trustees under this Declaration shall continue until the affairs of the Trust or
Series have been wound up, including the power to fulfill or discharge the
contracts of the Trust or Series, collect the assets of the Trust or Series,
sell, convey, assign, exchange or otherwise dispose of all or any part of the
Trust Property affected to one or more Persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay the liabilities of the Trust or Series,
and do all other acts appropriate to liquidate the business of the Trust or
Series; provided that any sale, conveyance, assignment, exchange or other
disposition of all or substantially all the Trust Property or substantially all
of the assets belonging to a particular Series, other than for cash, shall
require approval of the principal terms of the transaction and the nature and
amount of the consideration by the vote of Holders holding more than 50% of the
total Interests in the Trust or Series, as applicable; and
(iii) after paying or adequately providing for the
payment of all liabilities of the Trust or of the Series being terminated, and
upon receipt of such releases, indemnities and refunding agreements as they deem
necessary for their protection, the Trustees shall distribute the remaining
Trust Property of the Trust or Series, as applicable, in cash or in kind or
partly each, among the Holders according to their respective rights as set forth
in the procedures established pursuant to Section 8.2 hereof.
(b) Upon termination of the Trust or Series and distribution
to the Holders as herein provided, a majority of the Trustees shall execute and
file with the records of the Trust an instrument in writing setting forth the
fact of such termination and distribution. Upon termination of the Trust, the
Trustees shall thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Holders shall thereupon cease.
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10.4 AMENDMENT PROCEDURE.
(a) The Trustees may, without any vote of Holders, amend or
otherwise supplement this Declaration by an instrument in writing executed by a
majority of the Trustees, provided that Holders shall have the right to vote on
any amendment (i) which would affect the voting rights of Holders granted in
Article IX, Section 9.1, (ii) to this Section 10.4, (iii) required to be
approved by Holders by law or by the Trust's registration statement filed with
the Commission, or (iv) submitted to them by the Trustees. Any amendment
submitted to Holders which the Trustees determine would affect the Holders of
certain but not all Series shall be authorized by vote of the Holders of such
Series affected and no vote shall be required of Holders of a Series not
affected. Any amendment applicable to the Trust as a whole, unless otherwise
required by law or by this Declaration or the By-Laws, shall be authorized by
vote of the Holders of the Trust. Notwithstanding anything else herein, any
amendment to Article V which would have the effect of reducing the
indemnification and other rights provided thereby and any repeal or amendment of
this sentence shall each require the affirmative vote of the Holders of
two-thirds of the Interests entitled to vote thereon.
(b) No amendment may be made under Section 10.4(a) hereof
which would change any rights with respect to any Interest by reducing the
amount payable thereon upon liquidation of the Trust or any Series or by
diminishing or eliminating any voting rights pertaining thereto, except with the
vote or consent of Holders of two-thirds of all Interests which would be so
affected by such amendment.
(c) A certification in recordable form executed by a majority
of the Trustees setting forth an amendment and reciting that it was duly adopted
by the Holders or by the Trustees as aforesaid or a copy of the Declaration, as
amended, in recordable form, and executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when filed with the records of the
Trust.
Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees at any meeting of
Trustees or by an instrument executed by a majority of the Trustees.
10.5 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust or any Series
may merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property, or assets belonging to such Series, as applicable, including
good will, upon such terms and conditions and for such consideration when and as
authorized, at any meeting of Holders called for such purpose, by Majority
Interests Vote of Interests in the Series affected by such action, or by an
instrument in writing without a meeting, consented to by Holders of not less
than a majority of the Interests in the Series affected by such action, and any
such merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the law of the State of
New York, provided however that no such vote shall be required where by
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reorganization, purchase of assets or otherwise, the Trust or any affected
Series is the surviving entity.
10.6 INCORPORATION. Upon a Majority Interests Vote, the Trustees may
cause to be organized or assist in organizing a corporation or corporations
under the law of any jurisdiction or a trust, partnership, association or other
organization to take over the Trust Property or to carry on any business in
which the Trust directly or indirectly has any interest, and to sell, convey and
transfer the Trust Property to any such corporation, trust, partnership,
association or other organization in exchange for the equity interests thereof
or otherwise, and to lend money to, subscribe for the equity interests of, and
enter into any contract with any such corporation, trust, partnership,
association or other organization, or any corporation, trust, partnership,
association or other organization in which the Trust holds or is about to
acquire equity interests. The Trustees may also cause a merger or consolidation
between the Trust or any successor thereto and any such corporation, trust,
partnership, association or other organization if and to the extent permitted by
law. Nothing contained herein shall be construed as requiring approval of the
Holders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to one or
more of such organizations or entities.
ARTICLE XI - MISCELLANEOUS
11.1 CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS. If
required by New York law, the Trust shall file, with the Department of State of
the State of New York, a certificate, in the name of the Trust and executed by
an officer of the Trust, designating the Secretary of State of the State of New
York as an agent upon whom process in any action or proceeding against the Trust
or any Series may be served.
11.2 GOVERNING LAW. The rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed in
accordance with the law of the State of New York and reference shall be
specifically made to the trust law of the State of New York as to the
construction of matters not specifically covered herein or as to which an
ambiguity exists.
11.3 COUNTERPARTS. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any one such original counterpart.
11.4 RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust or of any recording office
in which this Declaration may be recorded, appears to be a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Holders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Holders, (d) the fact that the number of
Trustees or Holders present at any meeting or executing any written instrument
satisfies the requirements
23
<PAGE>
of this Declaration, (e) the form of any By-Laws adopted by or the identity of
any officer elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees.
11.5 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, or with other applicable law and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
[Remainder of this page intentionally left blank.]
24
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Trust of MERRIMAC MASTER PORTFOLIO as of the day and year first above written.
/s/ Edward F. Hines, Jr.
-----------------------------------------------------
Edward F. Hines, Jr., as Trustee and not Individually
/s/ Francis J. Gaul, Jr.
-----------------------------------------------------
Francis J. Gaul, Jr., as Trustee and not Individually
/s/ Thomas E. Sinton
-----------------------------------------------------
Thomas E. Sinton, as Trustee and not Individually
/s/ Kevin J. Sheehan
-----------------------------------------------------
Kevin J. Sheehan, as Trustee and not Individually
25
<PAGE>
SCHEDULE A
MERRIMAC MASTER PORTFOLIO
INITIAL SERIES
Merrimac Cash Portfolio
26
Exhibit 1b
AMENDMENT NO. 1 TO
MASTER TRUST AGREEMENT
AMENDMENT NO. 1 to the Master Trust Agreement dated October 30, 1996
made at Tucker's Town, Bermuda as of this 6th day of February, 1997.
WHEREAS, Section 7.3 of the Master Trust Agreement dated October 30,
1996 (the "Agreement") of Merrimac Funds (the "Trust") provides that the
Agreement may be amended at any time by an instrument in writing signed by a
majority of Trustees of the Trust without the vote of the Shareholders of the
Trust, so long as such amendment does not adversely affect the rights of any
shareholder;
WHEREAS, Section 4.1 of the Agreement of the Trust provides that the
Trustees of the Trust may establish and designate additional Series of Shares by
an instrument in writing signed by a majority of Trustees of the Trust; and
WHEREAS, the Trustees of the Trust desire to establish an additional
Series of Shares to be identified as the "Merrimac Treasury Fund."
NOW, THEREFORE, the Trustees hereby state that:
1. Section 4.2 of the Agreement and all other appropriate references in
the Agreement are amended to designate and establish a new Series of shares (in
addition to the Merrimac Cash Fund series heretofore established and designed)
to be known as the Merrimac Treasury Fund, effective as of this date, such new
Series to have the relative rights and preferences set forth in Section 4.2 of
the Agreement.
2. The initial paragraph of Section 4.2 of the agreement, as heretofore
in effect, is amended to read as follows:
"Section 4.2 Establishment and Designation of Sub-Trusts and Classes.
--------------------------------------------------------
Without limiting the authority of the Trustees set forth in Section 4.1
to
<PAGE>
establish and designate any further Sub-Trusts, the Trustees hereby
establish and designate two Sub-Trusts identified as "Merrimac Cash
Fund" and "Merrimac Treasury Fund," which Sub-Trusts shall consist of
two classes of shares identified as the "Premim Class" and the
"Institutional Class" Shares. The Shares of such Sub-Trusts and any
Shares of any further Sub-Trusts that may from time to time be
established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Sub-Trust at the time
of establishing and designating the same) have the following relative
rights and preferences:"
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seal for themselves and their assigns, as of this 6th day of February, 1997.
/s/ Edward F. Hines, Jr.
------------------------------------------
Edward F. Hines, Jr.
/s/ Francis J. Gaul, Jr.
------------------------------------------
Francis J. Gaul, Jr.
/s/ Thomas E. Sinton
------------------------------------------
Thomas E. Sinton
/s/ Kevin J. Sheehan
------------------------------------------
Kevin J. Sheehan
Exhibit 2
BY-LAWS
OF
MERRIMAC MASTER PORTFOLIO
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing MERRIMAC MASTER PORTFOLIO (the "Trust"), dated
as of October 30, 1996 as from time to time amended (the "Declaration"). All
words and terms capitalized in these By-Laws shall have the meaning or meanings
set forth for such words or terms in the Declaration.
ARTICLE I
MEETINGS OF HOLDERS
1.1 Fixing Record Dates. If the Trustees do not, prior to any meeting
of the Holders, fix a record date, then the date of mailing notice of the
meeting shall be the record date.
1.2 Records at Holder Meetings. At each meeting of the Holders there
shall be open for inspection the minutes of the last previous meeting of Holders
of the Trust and a list of the Holders of the Trust, certified to be true and
correct by the Secretary or other proper agent of the Trust, as of the record
date of the meeting. Such list of Holders shall contain the name of each Holder
in alphabetical order and the address and Interest owned by such Holder on such
record date.
1.3 Inspectors of Election. In advance of any meeting of the Holders,
the Trustees may appoint Inspectors of Election to act at the meeting or any
adjournment thereof. If Inspectors of Election are not so appointed, the
chairman, if any, of any meeting of the Holders may, and on the request of any
Holder or his proxy shall, appoint Inspectors of Election. The number of
Inspectors of Election shall be either one or three. If appointed at the meeting
on the request of one or more Holders or proxies, a Majority Interests Vote
shall determine whether one or three Inspectors of Election are to be appointed,
but failure to allow such determination by the Holders shall not affect the
validity of the appointment of Inspectors of Election. In case any individual
appointed as an Inspector of Election fails to appear or fails or refuses to so
act, the vacancy may be filled by appointment made by the Trustees in advance of
the convening of the meeting or at the meeting by the individual acting as
chairman of the meeting. The Inspectors of Election shall determine the Interest
owned by each Holder, the Interests represented at the meeting, the existence of
a quorum, the authenticity, validity and effect of proxies, shall receive votes,
ballots or consents, shall hear and determine all challenges and questions in
any way arising in connection with the right to vote, shall count and tabulate
all votes or consents, shall determine the results, and shall do such other acts
as may be proper to conduct the election or vote with fairness to all Holders.
If there are three Inspectors of Election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. On request of the chairman, if any, of the meeting, or of any Holder or his
proxy, the Inspectors of Election shall make a report
<PAGE>
in writing of any challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.
1.4 Proxies; Voting. No proxy shall be valid after one year from the
date of its execution, unless a longer period is expressly stated in such proxy.
1.5 Series Holders Meetings. Whenever a matter is required to be voted
by Holders of the Trust in the aggregate under Section 9.1 and 9.2 of the
Declaration, the Trust may either hold a meeting of Holders of all series to
vote on such matter, or hold separate meetings of Holders of each of the
individual series to vote on such matter, provided that (i) such separate
meetings shall be held within one year of each other, (ii) a quorum of the
individual series entitled to vote in person or by proxy shall be present at
each such separate meeting, and (iii) a quorum shall be present in the aggregate
at such separate meetings, and the votes of Holders at all such separate
meetings shall be aggregated in order to determine if sufficient votes have been
cast for such matter to be voted.
When separate meetings are held for Holders of each of the individual
series to vote on a matter required to be voted on by Holders of the Trust in
the aggregate, the record date of each such separate meeting shall be determined
in the manner described above in Section 1.1.
ARTICLE II
MEETINGS OF TRUSTEES
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places either within or without the State of New
York and at such times as the Trustees may from time to time determine, provided
that notice of the first regular meeting following any such determination shall
be given to absent Trustees.
2.2 Notice. Notice of a meeting shall be given by mail, by telegram
(which term shall include a cablegram), by telecopier, by facsimile or delivered
personally (which term shall include by telephone). Neither the business to be
transacted at, nor the purpose of, any meeting of the Trustees need be stated in
the notice or waiver of notice of such meeting, and no notice need be given of
action proposed to be taken by written consent.
ARTICLE III
OFFICERS
3.1 Officers of the Trust. The officers of the Trust may consist of a
Chairman, if any, a President, a Secretary, a Treasurer and such other officers
or assistant officers, including Vice Presidents, as may be elected by the
Trustees. Any two or more of the offices may be held by the same person. The
Trustees may designate a Vice President as an Executive Vice President
2
<PAGE>
and may designate the order in which the other Vice Presidents may act. The
Chairman shall be a Trustee, but no other officer of the Trust, including the
President, need be a Trustee.
3.2 Election. The officers of the Trust shall be elected at such time,
and at such intervals, as the Board of Trustees, in its sole discretion, may
determine to be appropriate or necessary. Vacancies in any office may be filled
at any time. Such officers shall hold office until until their successors have
been duly elected and qualified. The Trustees may fill any vacancy in office or
add any additional officer at any time.
3.3 Removal of Officers. Any officer may be removed at any time, with
or without cause, by action of a majority of the Trustees. This provision shall
not prevent the making of a contract of employment for a definite term with any
officer and shall have no effect upon any cause of action which any officer may
have as a result of removal in breach of a contract of employment. Any officer
may resign at any time by notice in writing signed by such officer and delivered
or mailed to the Chairman, if any, the President or the Secretary, and such
resignation shall take effect immediately, or at a later date according to the
terms of such notice in writing.
3.4 Bonds and Surety. Any officer may be required by the Trustees to be
bonded for the faithful performance of his duties in such amount and with such
sureties as the Trustees may determine.
3.5 Chairman, President and Vice Presidents. The Chairman, if any,
shall, if present, preside at all meetings of the Holders and of the Trustees
and shall exercise and perform such other powers and duties as may be from time
to time assigned to him by the Trustees. Subject to such supervisory powers, if
any, as may be given by the Trustees to the Chairman, if any, the President
shall be the chief executive officer of the Trust and, subject to the control of
the Trustees, shall have general supervision, direction and control of the
business of the Trust and of its employees and shall exercise such general
powers of management as are usually vested in the office of President of a
corporation. In the absence of the Chairman, if any, the President shall preside
at all meetings of the Holders and, in the absence of the Chairman, the
President shall preside at all meetings of the Trustees. The President shall be,
ex officio, a member of all standing committees of Trustees. Subject to the
direction of the Trustees, the President shall have the power, in the name and
on behalf of the Trust, to execute any and all loan documents, contracts,
agreements, deeds, mortgages and other instruments in writing, and to employ and
discharge employees and agents of the Trust. Unless otherwise directed by the
Trustees, the President shall have full authority and power to attend, to act
and to vote, on behalf of the Trust, at any meeting of any business organization
in which the Trust holds an interest, or to confer such powers upon any other
person, by executing any proxies duly authorizing such person. The President
shall have such further authorities and duties as the Trustees shall from time
to time determine. In the absence or disability of the President, the Vice
Presidents in order of their rank or the Vice President designated by the
Trustees, shall perform all of the duties of the President, and when so acting
shall have all the powers of and be subject to all of the restrictions upon the
President. Subject to the direction of the President, each Vice President shall
have the power in the name and on behalf of the Trust to execute any and all
loan documents, contracts, agreements,
3
<PAGE>
deeds, mortgages and other instruments in writing, and, in addition, shall have
such other duties and powers as shall be designated from time to time by the
Trustees or by the President.
3.6 Secretary. The Secretary shall keep the minutes of all meetings of,
and record all votes of, Holders, Trustees and the Executive Committee, if any.
The results of all actions taken at a meeting of the Trustees, or by written
consent of the Trustees, shall be recorded by the Secretary. The Secretary shall
be custodian of the seal of the Trust, if any, and (and any other person so
authorized by the Trustees) shall affix the seal or, if permitted, a facsimile
thereof, to any instrument executed by the Trust which would be sealed by a New
York corporation executing the same or a similar instrument and shall attest the
seal and the signature or signatures of the officer or officers executing such
instrument on behalf of the Trust. The Secretary shall also perform any other
duties commonly incident to such office in a New York corporation, and shall
have such other authorities and duties as the Trustees shall from time to time
determine.
3.7 Treasurer. Except as otherwise directed by the Trustees, the
Treasurer shall have the general supervision of the monies, funds, securities,
notes receivable and other valuable papers and documents of the Trust, and shall
have and exercise under the supervision of the Trustees and of the President all
powers and duties normally incident to his office. The Treasurer may endorse for
deposit or collection all notes, checks and other instruments payable to the
Trust or to its order and shall deposit all funds of the Trust as may be ordered
by the Trustees or the President. The Treasurer shall keep accurate account of
the books of the Trust's transactions which shall be the property of the Trust,
and which together with all other property of the Trust in his possession, shall
be subject at all times to the inspection and control of the Trustees. Unless
the Trustees shall otherwise determine, the Treasurer shall be the principal
accounting officer of the Trust and shall also be the principal financial
officer of the Trust. The Treasurer shall have such other duties and authorities
as the Trustees shall from time to time determine. Notwithstanding anything to
the contrary herein contained, the Trustees may authorize the Investment Manager
and Administrator to maintain bank accounts and deposit and disburse funds on
behalf of the Trust.
3.8 Other Officers and Duties. The Trustees may elect such other
officers and assistant officers as they shall from time to time determine to be
necessary or desirable in order to conduct the business of the Trust. Assistant
officers shall act generally in the absence of the officer whom they assist and
shall assist that officer in the duties of his office. Each officer, employee
and agent of the Trust shall have such other duties and authorities as may be
conferred upon him by the Trustees or delegated to him by the President.
ARTICLE IV
MISCELLANEOUS
4.1 Depositories. The funds of the Trust shall be deposited in such
depositories as the Trustees shall designate and shall be drawn out on checks,
drafts or other orders signed by such officer, officers, agent or agents
(including the Investment Manager and Administrator) as the Trustees may from
time to time authorize.
4
<PAGE>
4.2 Signatures. All contracts and other instruments shall be executed
on behalf of the Trust by such officer, officers, agent or agents as provided in
these By-Laws or as the Trustees may from time to time by resolution provide.
4.3 Seal. The seal of the Trust, if any, may be affixed to any
document, and the seal and its attestation may be lithographed, engraved or
otherwise printed on any document with the same force and effect as if it had
been imprinted and attested manually in the same manner and with the same effect
as if done by a New York corporation.
4.4 Indemnification. Insofar as the conditional advancing of
indemnification monies under Section 5.4 of the Declaration for actions based
upon the 1940 Act may be concerned, such payments will be made only on the
following conditions: (i) the advances must be limited to amounts used, or to be
used, for the preparation or presentation of a defense to the action, including
costs connected with the preparation of a settlement; (ii) advances may be made
only upon receipt of a written promise by, or on behalf of, the recipient to
repay the amount of the advance which exceeds the amount to which it is
ultimately determined that he is entitled to receive from the Trust by reason of
indemnification; and (iii) (a) such promise must be secured by a surety bond,
other suitable insurance or an equivalent form of security which assures that
any repayment may be obtained by the Trust without delay or litigation, which
bond, insurance or other form of security must be provided by the recipient of
the advance, or (b) a majority of a quorum of the Trust's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.
4.5 Distribution Disbursing Agents and the Like. The Trustees shall
have the power to employ and compensate such distribution disbursing agents,
warrant agents and agents for the reinvestment of distributions as they shall
deem necessary or desirable. Any of such agents shall have such power and
authority as is delegated to any of them by the Trustees.
ARTICLE V
REGULATIONS; AMENDMENT OF BY-LAWS
5.1 Regulations. The Trustees may make such additional rules and
regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the sale and purchase of Interests of the Trust.
5.2 Amendment and Repeal of By-Laws. In accordance with Section 2.7 of
the Declaration, the Trustees shall have the power to alter, amend or repeal the
By-Laws or adopt new By-Laws at any time. Action by the Trustees with respect to
the By-Laws shall be taken by an affirmative vote of a majority of the Trustees.
The Trustees shall in no event adopt By-Laws which are in conflict with the
Declaration.
5
<PAGE>
The Declaration refers to the Trustees as Trustees, but not as
individuals or personally; and no Trustee, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust.
Adopted: October 30, 1996
----------------
6
Exhibit 5(a)
INVESTMENT ADVISER AGREEMENT
Agreement made as of this 30th day of October, 1996, by and between
Merrimac Master Portfolio, a New York Trust (the "Trust") and Investors Bank and
Trust Company (the "Adviser"), a Massachusetts banking corporation.
WHEREAS, the Merrimac Cash Portfolio (the "Portfolio") is a series of
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");
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 Trust, on behalf of the Portfolio, desires to appoint the
Adviser to render, or contract to obtain as hereinafter provided, investment
advisory services to the Portfolio and to administer the Portfolio's day to day
business affairs and the 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 Trust, on behalf of the Portfolio, and the
Adviser, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Appointment
-----------
(a) The Trust, on behalf of the Portfolio, hereby appoints the Adviser
as the investment adviser of the Portfolio to administer its business affairs
and to perform for the Portfolio such other duties and functions as are
hereinafter set forth. The Adviser hereby accepts such appointment and agrees to
give the Portfolio and the Trust's Board of Trustees (the "Trustees"), the
benefit of the Adviser's best judgment, effort, advice and recommendations in
respect of its duties as defined in Section 2.
(b) The Trust 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.
(c) The Adviser hereby represents and warrants to the Trust, 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.
<PAGE>
2. Adviser Duties
--------------
(a) The Adviser shall, subject to the direction and control of the
Trustees 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 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 provision of Section 4 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 Trust in such detail as the Trust may reasonably deem to be appropriate in
order to permit the Trust to determine the adherence by the Adviser to the
investment policies and legal requirements of the Portfolio; and (v) make its
officers and employees available to the Trust's officers at reasonable times to
review the investment policies of the Portfolio and to consult with the Trust's
officers regarding the investment affairs of the Portfolio.
(b) The Adviser is further authorized to enter into a sub-adviser
arrangement for the investment advisory services outlined in Section 2 (a) of
this Agreement in connection with the management of the Portfolio, provided that
no such arrangement shall be made until a sub-adviser agreement has been
approved by the Trustees. Should the Adviser enter into such a sub-adviser
agreement, the Adviser shall, nevertheless, retain supervisory responsibility
for all investment advisory services furnished pursuant to any such sub-advisory
arrangements and the Adviser's duties shall then include: (i) supervise and
monitor continuously the investment advisory services furnished pursuant to any
such sub-adviser arrangements; (ii) review the performance of the sub-adviser,
and make recommendations to the Trustees with respect to the retention and
renewal of such sub-adviser arrangements; (iii) provide reports on the foregoing
to the Trustees for each Board meeting; (iv) make its officers and employees
available to review the investment policies of the Portfolio and to consult with
the sub-adviser regarding the investment affairs of the Portfolio; (v) supervise
relationships with and monitor the performance of the custodian, depositories,
transfer agent, accountants, attorneys, insurers and other persons in any
capacity deemed to be necessary or desirable; and (vi) make recommendations to
the Trustees with respect to Portfolio policies and carry out such policies as
are adopted by the Trustees.
3. Compensation of the Adviser
---------------------------
The Portfolio will pay to the Adviser as compensation for the Adviser's
services rendered and for the expenses borne by the Adviser, including personnel
expenses, a fee, determined as described in Schedule A which is attached hereto
and made a part hereof.
4. Portfolio Transactions and Brokerage
------------------------------------
The 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 Adviser, which may include
2
<PAGE>
where permissible under the 1940 Act, brokers or dealers affiliated with the
Adviser. In the selection of such brokers or dealers and the placing of such
orders, the Adviser always shall seek best execution, which is to place
transactions where the Portfolio can obtain the most favorable combination of
price and execution services in particular transactions or provided on a
continuing basis by a broker or dealer, and to deal directly with a principal
market in connection with over-the-counter transactions, except when it is
believed that best execution is obtainable elsewhere.
5. Interested Trustees or Parties
------------------------------
It is understood that Trustees, officers, and shareholders of the Trust
may be or become interested in the Adviser as directors, officers or employees
and that directors, officers and stockholders of the Adviser may be or become
similarly interested in the Trust, and that the Adviser may be or become
interested in the Trust as a shareholder or otherwise.
6. Services Not Exclusive
----------------------
The services of the Adviser to the Portfolio are not to be deemed
exclusive, the 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 Adviser's ability to meet all of its obligations hereunder.
7. Compliance; Books and Records
-----------------------------
(a) The 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 Adviser shall furnish to the Portfolio, at the Portfolio's
expense, copies of all records prepared in connection with the performance of
this Agreement and the maintenance of compliance procedures pursuant to this
Section 7 as the Portfolio may reasonably request.
(c) The Adviser agrees to provide upon reasonable request of the
Portfolio, information regarding the Adviser, including but not limited to,
background information about the Adviser and its personnel, 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 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 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 Adviser
will treat confidentially and as proprietary information of the Trust all
records and other information
3
<PAGE>
relative to the Fund and prior, present or potential shareholders, except as
otherwise required by law.
8. Limitation of Liability of Adviser
----------------------------------
In consideration of the Adviser's undertaking to render the services
described in this Agreement, the Trust, on behalf of the Portfolio, agrees that
the Adviser shall not be liable under this Agreement for any loss suffered by
the Trust in connection with the performance of this Agreement, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Trust or its shareholders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or negligence in the performance of its duties under this Agreement.
9. Duration, Amendment and Termination
-----------------------------------
(a) Subject to prior termination as provided in sub-section (d) of this
Section 9, 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 Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio and the Fund.
(b) This Agreement may be modified by the written Agreement of the
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 party 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 9, the terms of any continuance or modification 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 or the Portfolio may, at any time on sixty (60)
days' prior written notice to the other party, terminate this Agreement, without
payment of any penalty, and in the case of the Portfolio, by action of its
Trustees, or by vote of a majority of its outstanding voting securities.
(e) This Agreement shall terminate automatically in the event of its
assignment.
(f) Termination of this Agreement shall not relieve the Adviser nor the
Trust 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 Adviser
shall be returned to the Portfolio as soon as reasonably practicable after the
termination of this Agreement.
4
<PAGE>
10. Disclaimer of Liability; Several Obligations
--------------------------------------------
The Adviser understands 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.
This Agreement is an agreement entered into between the Adviser and the
Trust on behalf of the Portfolio. With respect to any obligation of the Trust on
behalf of any other Portfolio arising out of this Agreement, the Adviser shall
look for payment or satisfaction of such obligation solely to the assets of the
Portfolio to which such obligation relates as though the Adviser had separately
contracted with the Trust by separate written instrument with respect to each
Portfolio.
11. 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) The Adviser's duties and responsibilities are solely those set
forth herein and no other covenant or obligation shall be implied against the
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.
(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.
5
<PAGE>
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.
Merrimac Master Portfolio ("TRUST") on behalf of
the Merrimac Cash Portfolio ("PORTFOLIO")
By: /s/ Sean P. Brennan
--------------------------------------------
Title: President
-----------------------------------------
INVESTORS BANK & TRUST COMPANY
("ADVISER")
By: /s/ Kevin J. Sheehan
--------------------------------------------
Title: President & CEO
-----------------------------------------
6
<PAGE>
MERRIMAC CASH PORTFOLIO
FEE SCHEDULE
OCTOBER 30, 1996
================================================================================
INVESTMENT ADVISER
================================================================================
17 Basis Points Annually on Net Assets of Portfolio
Investment Adviser will pay from its fees the cost of Sub-Adviser fees,
portfolio custody, fund accounting, transfer agency and fund administration
(excluding transaction costs and out-of-pocket charges related to these services
as detailed below).
================================================================================
TRANSACTION COSTS
================================================================================
Per Transaction
---------------
DTC/Fed Book Entry $12.00
Non-DTC, Boston Settlements $20.00**
Non-DTC, New York Settlement $35.00
Non-DTC, New York Maturities $10.00
GNMA Securities $40.00
Government Paydown $5.00
Futures $18.00
Incoming Wires $6.00
Outgoing Wires $8.00
** There is no charge for maturities of these items.
================================================================================
OUT-OF-POCKET & BALANCE CREDITS
================================================================================
Out-of-Pocket
- - -------------
These charges consist of:
-Pricing & Verification Services
-Systems Customization (if required)
-Ad hoc Reports
-All local duties, script fees and any other market standard fee levied in
accordance with local market practices.
Balance Credits
- - ---------------
We allow balance credits against fees (excluding out-of-pocket charges) for
collected fund balances arising out of the custody relationship. The monthly
earnings allowance will equal 75% of the 90 day Treasury Bill rate.
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
-----------
(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.
<PAGE>
(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
---------------------
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
------------------
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
2
<PAGE>
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.
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).
3
<PAGE>
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.
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
4
<PAGE>
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
-------------------------------------------------------
(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
5
<PAGE>
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.
6
<PAGE>
(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
-------------
(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.
7
<PAGE>
(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/ Kevin J. Sheehan
--------------------------
Title: President and C.E.O.
-----------------------
THE BANK OF NEW YORK
("SUB-ADVISER")
By: /s/ Thomas Price
--------------------------
Title: Senior Vice President
-----------------------
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/ Sean P. Brennan
-------------------------
Title: President
----------------------
8
<PAGE>
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.
9
Exhibit 5(c)
INVESTMENT SUB-ADVISER AGREEMENT
Agreement made as of this 24th day of February, 1997, between Investors
Bank and Trust Company (the "Adviser"), a Massachusetts banking corporation, and
Aeltus Investment Management, Inc. (the "Sub-Adviser"), a Connecticut
corporation.
WHEREAS, Merrimac Treasury 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");
WHEREAS, the Merrimac Treasury 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
-----------
(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.
<PAGE>
(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
---------------------
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 ;
(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, 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.
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
2
<PAGE>
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.
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). 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.
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
3
<PAGE>
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 Investor Offering
Documents 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 other information 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 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 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.
4
<PAGE>
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.
(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.
5
<PAGE>
(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.
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/ Kevin J. Sheehan
------------------------------
Title: President
---------------------------
AELTUS INVESTMENT MANAGEMENT, INC.
("SUB-ADVISER")
By: /s/ John Y. Kim
------------------------------
Title: President
---------------------------
The Merrimac Master Portfolio
on behalf of the Merrimac Treasury
Portfolio hereby acknowledges
the execution of this Agreement
Merrimac Master Portfolio
("THE TRUST")
By: /s/ Sean P. Brennan
--------------------------------
Title: President
-----------------------------
6
<PAGE>
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 0.08% 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.
7
Exhibit 8
CUSTODIAN AGREEMENT
BETWEEN
MERRIMAC MASTER PORTFOLIO
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
1. Bank Appointed Custodian....................................................................... 1
2. Definitions.................................................................................... 1
2.1 Authorized Person............................................................ 1
2.2 Board .................................................................... 1
2.3 Security .................................................................... 1
2.4 Portfolio Security........................................................... 1
2.5 Officers' Certificate........................................................ 1
2.6 Book-Entry System............................................................ 2
2.7 Depository................................................................... 2
2.8 Proper Instructions.......................................................... 2
3. Separate Accounts ............................................................................. 2
4. Certification as to Authorized Persons......................................................... 2
5. Custody of Cash ............................................................................. 3
5.1 Purchase of Securities....................................................... 3
5.2 Redemptions ............................................................ 3
5.3 Distributions and Expenses of Fund........................................... 3
5.4 Payment in Respect of Securities............................................. 3
5.5 Repayment of Loans........................................................... 3
5.6 Repayment of Cash............................................................ 3
5.7 Foreign Exchange Transactions................................................ 4
5.8 Other Authorized Payments.................................................... 4
5.9 Termination.................................................................. 4
6. Securities..................................................................................... 4
6.1 Segregation and Registration................................................. 4
6.2 Voting and Proxies........................................................... 5
6.3 Corporate Action ............................................................ 5
6.4 Book-Entry System............................................................ 6
6.5 Use of a Depository.......................................................... 6
6.6 Use of Book-Entry System for Commercial Paper................................ 7
6.7 Use of Immobilization Programs............................................... 8
6.8 Eurodollar CDs ............................................................ 8
6.9 Options and Futures Transactions............................................. 8
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter............................................. 8
(b) Puts, Calls, and Futures Traded
on Commodities Exchanges............................................... 9
6.10 Segregated Account........................................................... 9
<PAGE>
Page
----
<S> <C>
6.11 Interest Bearing Call or Time Deposits....................................... 10
6.12 Transfer of Securities....................................................... 10
7. Redemptions .................................................................................. 12
8. Merger, Dissolution, etc. of Fund ............................................................ 12
9. Actions of Bank Without Prior Authorization.................................................... 12
10. Collection and Defaults........................................................................ 13
11. Maintenance of Records and Accounting Services................................................. 13
12. [Reserved]
13. Additional Services .......................................................................... 15
14. Duties of the Bank ........................................................................... 15
14.1 Performance of Duties and
Standard of Care ............................................................ 15
14.2 Agents and Subcustodians with Respect to Property
of the Fund Held in the United States........................................ 15
14.3 Duties of the Bank with Respect to Property
Held Outside of the United States............................................ 16
14.4 Insurance.................................................................... 18
14.5 Fees and Expenses of Bank.................................................... 18
14.6 Advances by Bank............................................................ 18
15. Limitation of Liability........................................................................ 19
16. Termination.................................................................................... 20
17. Confidentiality................................................................................ 21
18. Notices ....................................................................................... 21
19. Amendments..................................................................................... 21
20. Parties ...................................................................................... 21
21. Governing Law.................................................................................. 22
<PAGE>
Page
----
<S> <C>
22. Counterparts................................................................................... 22
23. Entire Agreement............................................................................... 22
24. Limitation of Liability........................................................................ 22
35. Several Obligations of the Portfolios.......................................................... 22
</TABLE>
<TABLE>
<CAPTION>
APPENDICES
<S> <C>
Appendix A ................................... Fee Schedule
Appendix B ................................... Portfolios
Appendix C ................................... Additional Services
Appendix D ................................... Select Foreign Sub-Custodians
Appendix E ................................... Reports
</TABLE>
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 1st day of November, 1996, between MERRIMAC
MASTER PORTFOLIO, a company organized under the laws of the state of New York
(the "Fund") and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust company
(the "Bank").
The Fund, an open-end management investment company, on behalf of the
portfolios listed on Appendix B hereto, as such Appendix B may be amended from
time to time (each a "Portfolio" and collectively the "Portfolios"), desires to
place and maintain all of its portfolio securities and cash in the custody of
the Bank. The Bank has at least the minimum qualifications required by Section
17(f)(1) of the Investment Company Act of 1940 (the "1940 Act") to act as
custodian of the portfolio securities and cash of the Fund, and has indicated
its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth. For the services rendered pursuant to this
Agreement the Fund agrees to pay to the Bank the fees set forth on Appendix A
hereto.
2. Definitions. Whenever used herein, the terms listed below will have
the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of its Board, and set forth in a
certificate as required by Section 4 hereof.
2.2 Board. Board will mean the Board of Directors or the Board of
Trustees of the Fund, as the case may be.
2.3 Security. The term security as used herein will have the same
meaning assigned to such term in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.4 Portfolio Security. Portfolio Security will mean any security
owned by the Fund.
<PAGE>
2.5 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
2.6 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.7 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.8 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
The Fund shall cause all oral instructions to be promptly confirmed in writing.
The Bank shall act upon and comply with any subsequent Proper Instruction which
modifies a prior instruction and the sole obligation of the Bank with respect to
any follow-up or confirmatory instruction shall be to make reasonable efforts to
detect any discrepancy between the original instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
the Fund's expense, for taking any action, including any reprocessing, necessary
to correct any such discrepancy or error, and to the extent such action requires
the Bank to act, the Fund shall give the Bank specific Proper Instructions as to
the action required. Upon receipt by the Bank of an Officers' Certificate as to
the authorization by the Board accompanied by a detailed description of
procedures approved by the Fund, Proper Instructions may include communication
effected directly between electro-mechanical or electronic devices provided that
the Board and the Bank agree in writing that such procedures afford adequate
safeguards for the Fund's assets.
3. Separate Accounts. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon). Unless the context otherwise requires, any reference in this
Agreement to any actions to be taken by the Fund shall be deemed to refer to the
Fund acting on behalf of one or more of its series, any reference in this
Agreement to any assets of the Fund, including, without limitation, any
portfolio securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable series, any duty or obligation of the Bank
hereunder to the Fund shall be deemed to refer to duties and obligations with
respect to such individual series and any obligation or liability of the Fund
hereunder shall be binding only with respect to such individual series, and
shall be discharged only out of the assets of such series.
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information
2
<PAGE>
set forth in the most recent certification on file (including without limitation
any person named in the most recent certification who is no longer an Authorized
Person as designated therein), the Secretary or Assistant Secretary of the Fund
will sign a new or amended certification setting forth the change and the new,
additional or omitted names or signatures. The Bank will be entitled to rely and
act upon any Officers' Certificate given to it by the Fund which has been signed
by Authorized Persons named in the most recent certification received by the
Bank.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Sections 14.2 or 14.3 hereof, including borrowed funds,
delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Pursuant to the Bank's internal
policies regarding the management of cash accounts, the Bank may segregate
certain portions of the cash of the Fund into a separate savings deposit account
upon which the Bank reserves the right to require seven (7) days notice prior to
withdrawal of cash from such an account. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of common stock of the
Fund, notification from the Fund's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank or against
delivery of such securities to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs registered in the name of the Fund or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper (as
that term is defined in Section 6.6 hereof)) of purchase of the securities
received by the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Fund offered for repurchase or
redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the
account of the Fund of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, fees of the Bank for its services hereunder
and reimbursement of the expenses and liabilities of the Bank as provided
hereunder, fees of any transfer agent, fees for legal, accounting, and auditing
services, or other operating expenses of the Fund.
5.4 Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
3
<PAGE>
5.5 Repayment of Loans. To repay loans of money made to the Fund,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions.
(a) For payments in connection with foreign exchange contracts
or options to purchase and sell foreign currencies for spot and future delivery
(collectively, "Foreign Exchange Agreements") which may be entered into by the
Bank on behalf of the Fund upon the receipt of Proper Instructions, such Proper
Instructions to specify the currency broker or banking institution (which may be
the Bank, or any other subcustodian or agent hereunder, acting as principal)
with which the contract or option is made, and the Bank shall have no duty with
respect to the selection of such currency brokers or banking institutions with
which the Fund deals or for their failure to comply with the terms of any
contract or option.
(b) In order to secure any payments in connection with Foreign
Exchange Agreements which may be entered into by the Bank pursuant to Proper
Instructions, the Fund agrees that the Bank shall have a continuing lien and
security interest, to the extent of any payment due under any Foreign Exchange
Agreement, in and to any property at any time held by the Bank for the Fund's
benefit or in which the Fund has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Fund authorizes the Bank, in the Bank's sole
discretion, at any time to charge any such payment due under any Foreign
Exchange Agreement against any balance of account standing to the credit of the
Fund on the Bank's books.
5.8 Other Authorized Payments. For other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 Termination: Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 16 of this Agreement.
In connection with transfers or orders made by the Bank pursuant to
this Section 5, and otherwise under this Agreement, the Fund and the Bank shall
enter into a Wire Transfer Agreement substantially in the form attached as
Appendix B hereto.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to Sections 14.2 or 14.3 hereof, the Bank as custodian will receive and
hold pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio
4
<PAGE>
Securities which may now or hereafter be delivered to it by or for the account
of the Fund. All such Portfolio Securities will be held or disposed of by the
Bank for, and subject at all times to, the instructions of the Fund pursuant to
the terms of this Agreement. Subject to the specific provisions herein relating
to Portfolio Securities that are not physically held by the Bank, the Bank will
register all Portfolio Securities (unless otherwise directed by Proper
Instructions or an Officers' Certificate), in the name of a registered nominee
of the Bank as defined in the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, and will execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Fund all notices, proxies
and proxy soliciting materials delivered to the Bank with respect to such
Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
6.3 Corporate Action. If at any time the Bank is notified that an
issuer of any Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of a Portfolio Security, including without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the Fund promptly of the Corporate Action, the Response required in
connection with the Corporate Action and the Bank's deadline for receipt from
the Fund of Proper Instructions regarding the Response (the "Response
Deadline"). The Bank shall forward to the Fund via telecopier and/or overnight
courier all notices, information statements or other materials relating to the
Corporate Action within twenty-four (24) hours of receipt of such materials by
the Bank.
(a) The Bank shall act upon a required Response only
after receipt by the Bank of Proper Instructions from the Fund no later than
5:00 p.m. on the date specified as the Response Deadline and only if the Bank
(or its agent or subcustodian hereunder) has actual possession of all necessary
Securities, consents and other materials no later than 5:00 p.m. on the date
specified as the Response Deadline.
(b) The Bank shall have no duty to act upon a required
Response if Proper Instructions relating to such Response and all necessary
Securities, consents and other materials are not received by and in the
possession of the Bank no later than 5:00 p.m. on the date specified as the
Response Deadline. Notwithstanding, the Bank may, in its sole discretion, use
its best efforts to act upon a Response for which Proper Instructions and/or
necessary Securities, consents or other materials are received by the Bank after
5:00 p.m. on the date specified as the Response Deadline, it being acknowledged
and agreed by the parties that any undertaking by the Bank to use its best
efforts in such circumstances shall in no way create any duty upon the Bank to
complete such Response prior to its expiration.
(c) In the event that the Fund notifies the Bank of a
Corporate Action requiring a Response and the Bank has received no other notice
of such Corporate Action, the Response Deadline
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shall be 48 hours prior to the Response expiration time set by the depository
processing such Corporate Action.
(d) Section 14.3(g) of this Agreement shall govern any
Corporate Action involving Foreign Portfolio Securities held by a Selected
Foreign Sub-Custodian.
6.4 Book-Entry System. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Fund assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the
Book-Entry System provided that such Portfolio Securities are represented in an
account ("Account") of the Bank (or its agent) in such System which shall not
include any assets of the Bank (or such agent) other than assets held as a
fiduciary, custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with
respect to the Fund's participation in the Book-Entry System through the Bank
(or any such agent) will identify by book entry the Portfolio Securities which
are included with other securities deposited in the Account and shall at all
times during the regular business hours of the Bank (or such agent) be open for
inspection by duly authorized officers, employees or agents of the Fund. Where
securities are transferred to the Fund's account, the Bank shall also, by book
entry or otherwise, identify as belonging to the Fund a quantity of securities
in a fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities
purchased for the account of the Fund or shall pay cash collateral against the
return of Portfolio Securities loaned by the Fund upon (i) receipt of advice
from the Book-Entry System that such Securities have been transferred to the
Account, and (ii) the making of an entry on the records of the Bank (or its
agent) to reflect such payment and transfer for the account of the Fund. The
Bank (or its agent) shall transfer securities sold or loaned for the account of
the Fund upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Fund has been transferred to the
Account; and
(ii) the making of an entry on the records of the Bank
(or its agent) to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Book-Entry System of transfers of securities for
the account of the Fund shall identify the Fund, be maintained for the Fund by
the Bank and shall be provided to the Fund at its request. The Bank shall send
the Fund a confirmation, as defined by Rule 17f-4 of the 1940 Act, of any
transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any
report obtained by the Bank or its agent on the Book-Entry System's accounting
system, internal accounting control and procedures for safeguarding securities
deposited in the Book-Entry System;
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6.5 Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive,
exchange, release, lend, deliver and otherwise deal with Portfolio Securities
including stock dividends, rights and other items of like nature, and to receive
and remit to the Bank on behalf of the Fund all income and other payments
thereon and to take all steps necessary and proper in connection with the
collection thereof;
(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Fund and the Fund shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund only upon delivery of the Securities to
or for the account of the Fund; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment therefor or, in the
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Fund; and
(d) The Bank shall use its best efforts to provide that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;
(ii) Proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Bank for prompt transmittal to the Fund;
(iii) Such Depository promptly forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Fund's account;
(iv) Such Depository prepares and delivers to the Bank
such records with respect to the performance of the Bank's obligations and
duties hereunder as may be necessary for the Fund to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Fund may reasonably request in
order to verify the Portfolio Securities held by such Depository.
6.6 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of
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Proper Instructions and upon receipt of confirmation from an Issuer (as defined
below) that the Fund has purchased such Issuer's Book-Entry Paper, the Bank
shall issue and hold in book-entry form, on behalf of the Fund, commercial paper
issued by issuers with whom the Bank has entered into a book-entry agreement
(the "Issuers"). In maintaining procedures for Book-Entry Paper, the Bank agrees
that:
(a) The Bank will maintain all Book-Entry Paper held by
the Fund in an account of the Bank that includes only assets held by it for
customers;
(b) The records of the Bank with respect to the Fund's
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
commercial paper belonging to the Fund which is included in the Book-Entry
System and shall at all times during the regular business hours of the Bank be
open for inspection by duly authorized officers, employees or agents of the
Fund;
(c) The Bank shall pay for Book-Entry Paper purchased for
the account of the Fund upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii) the making
of an entry on the records of the Bank to reflect such payment and transfer for
the account of the Fund;
(d) The Bank shall cancel such Book-Entry Paper obligation
upon the maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Book-Entry Paper has been transferred to the Fund, and (ii) the
making of an entry on the records of the Bank to reflect such payment for the
account of the Fund; and
(e) The Bank will send to the Fund such reports on its
system of internal accounting control with respect to the Book-Entry Paper as
the Fund may reasonably request from time to time.
6.7 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.8 Eurodollar CDs. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Portfolio Securities are identified on the books of the Bank
as belonging to the Fund and that the books of the Bank identify the European
Branch holding such Portfolio Securities. Notwithstanding any other provision of
this Agreement to the contrary, except as stated in the first sentence of this
subsection 6.8, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund.
6.9 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
(i) The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions among the Bank,
any broker-dealer registered with the National Association of Securities
Dealers, Inc. (the
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"NASD"), and, if necessary, the Fund, relating to the compliance with the rules
of the Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations.
(ii) Unless another agreement requires it to do so, the
Bank shall be under no duty or obligation to see that the Fund has deposited or
is maintaining adequate margin, if required, with any broker in connection with
any option, nor shall the Bank be under duty or obligation to present such
option to the broker for exercise unless it receives Proper Instructions from
the Fund. The Bank shall have no responsibility for the legality of any put or
call purchased or sold on behalf of the Fund, the propriety of any such purchase
or sale, or the adequacy of any collateral delivered to a broker in connection
with an option or deposited to or withdrawn from a Segregated Account (as
defined in subsection 6.10 below). The Bank specifically, but not by way of
limitation, shall not be under any duty or obligation to: (i) periodically check
or notify the Fund that the amount of such collateral held by a broker or held
in a Segregated Account is sufficient to protect such broker or the Fund against
any loss; (ii) effect the return of any collateral delivered to a broker; or
(iii) advise the Fund that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action as to puts, calls and
futures contracts ("Futures") purchased or sold by the Fund in accordance with
the provisions of any agreement entered into upon the receipt of Proper
Instructions among the Fund, the Bank and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Fund.
(ii) The responsibilities of the Bank as to futures,
puts and calls traded on commodities exchanges, any Futures Commission Merchant
account and the Segregated Account shall be limited as set forth in subparagraph
(a)(2) of this Section 6.8 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts and calls thereon
instead of options.
6.10 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund.
(a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account upon receipt of Proper Instructions in the following
circumstances:
(i) in accordance with the provisions of any agreement
among the Fund, the Bank and a broker-dealer registered under the Exchange Act
and a member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Fund;
(ii) for the purpose of segregating cash or securities
in connection with options purchased or written by the Fund or commodity futures
purchased or written by the Fund;
(iii) for the deposit of liquid assets, such as cash,
U.S. Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all
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times equal to not less than the aggregate purchase price due on the settlement
dates of all the Fund's then outstanding forward commitment or "when-issued"
agreements relating to the purchase of Portfolio Securities and all the Fund's
then outstanding commitments under reverse repurchase agreements entered into
with broker-dealer firms;
(iv) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(v) for other proper corporate purposes, but only, in
the case of this clause (e), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board, or of the executive
committee of the Board signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such Segregated Account and declaring such purposes to be proper corporate
purposes.
(b) Cash and/or Portfolio Securities may be withdrawn from a
Segregated Account pursuant to Proper Instructions in the following
circumstances:
(i) with respect to assets deposited in accordance with
the provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to
(a)(iii) or (a)(iv) above, for sale or delivery to meet the Fund's obligations
under outstanding forward commitment or when-issued agreements for the purchase
of Portfolio Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward
commitment or when-issued agreements for the purchase of portfolio securities or
reverse repurchase agreements are sold to other parties or the Fund's
obligations thereunder are met from assets of the Fund other than those in the
Segregated Account;
(v) for delivery upon settlement of a forward commitment
or when-issued agreement for the sale of Portfolio Securities; or
(vi) with respect to assets deposited pursuant to (e)
above, in accordance with the purposes of such account as set forth in Proper
Instructions.
6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.
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6.12 Transfer of Securities. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section only upon receipt of
Proper Instructions. The Proper Instructions shall state that such transfer,
exchange or delivery is for a purpose permitted under the terms of this Section
6.11, and shall specify the applicable subsection, or describe the purpose of
the transaction with sufficient particularity to permit the Bank to ascertain
the applicable subsection. After receipt of such Proper Instructions, the Bank
will transfer, exchange, deliver or release Portfolio Securities only in the
following circumstances:
(a) Upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
or against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale received by the Bank before such payment is made,
as confirmed in the Proper Instructions received by the Bank before such payment
is made;
(b) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided, however, that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;
(c) Upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) For the purpose of redeeming in-kind shares of the Fund
upon authorization from the Fund;
(e) In the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) When such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) For the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Fund by
any bank, including the Bank; provided, however, that such Portfolio Securities
will be released only upon payment to the Bank for the account of the Fund of
the moneys borrowed, provided further, however, that in cases where additional
collateral is required to secure a borrowing already made, and such fact is made
to appear in the Proper Instructions, Portfolio Securities may be released for
that purpose without any such payment. In the event that any pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Fund from the lender in accordance with the
normal procedures of the lender and any loan agreement between the fund and the
lender that an event of deficiency or default on the loan has occurred, the Bank
may deliver such pledged Portfolio Securities to or for the account of the
lender;
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(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Fund
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 16 of this Agreement.
As to any deliveries made by the Bank pursuant to this Section 6.12,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. Redemptions. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles of Incorporation or Declaration of Trust
and By-laws of the Fund (the "Articles"), from assets available for said
purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate and the
Bank shall be released from any and all obligations hereunder.
9. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, the Bank will take the following actions without
prior authorization or instruction of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name
of the Fund all checks, drafts, or other negotiable or transferable instruments
or other orders for the payment of money received
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by it for the account of the Fund and hold for the account of the Fund all
income, dividends, interest and other payments or distributions of cash with
respect to the Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by
it for the account of the Fund which call for payment upon presentation and hold
the cash received by it upon such payment for the account of the Fund;
9.3 Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the laws of
any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Bank will use reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal.
11. Maintenance of Records and Accounting Services. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act. The Bank will furnish to
the Fund such reports at such times as are set forth on Appendix E hereto. The
books and records of the Bank pertaining to its actions under this Agreement and
reports by the Bank or its independent accountants concerning its accounting
system, procedures for safeguarding securities and internal accounting controls
will be open to inspection and audit at reasonable times by officers of or
auditors employed by the Fund and will be preserved by the Bank in the manner
and in accordance with the applicable rules and regulations under the 1940 Act.
The Bank shall perform fund accounting and shall keep the books of
account and render statements or copies from time to time as reasonably
requested by the Treasurer or any executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
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12. [Reserved]
13. Additional Services. The Bank shall perform the additional services
for the Fund as are set forth on Appendix C hereto. Appendix C may be amended
from time to time upon agreement of the parties to include further additional
services to be provided by the Bank to the Fund, at which time the fees set
forth in Appendix A shall be appropriately increased.
14. Duties of the Bank.
14.1 Performance of Duties and Standard of Care. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Fund, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice.
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or
for the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of
the Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the
Fund or the legality of the distribution of any Portfolio Securities as payment
in kind of such dividend; and
(f) any property or moneys of the Fund unless and until
received by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.
14.2 Agents and Subcustodians with Respect to Property of the Fund
Held in the United States. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder. Without limiting the foregoing,
certain duties of the Bank hereunder may be performed by one or more affiliates
of the Bank.
Upon receipt of Proper Instructions, the Bank may employ
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Fund's assets with respect to property of the Fund held in the
United States. The Bank shall have no liability to the Fund or any other person
by reason of any act or omission
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of any subcustodian and the Fund shall indemnify the Bank and hold it harmless
from and against any and all actions, suits and claims, arising directly or
indirectly out of the performance of any subcustodian. Upon request of the Bank,
the Fund shall assume the entire defense of any action, suit, or claim subject
to the foregoing indemnity. The Fund shall pay all fees and expenses of any
subcustodian.
14.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Bank to employ as sub-custodians for the Fund's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated on
the Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Fund's Board of Trustees, the Bank and the Fund may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Fund may instruct the Bank to cease the employment of any one
or more such Selected Foreign Sub-Custodians for maintaining custody of the
Fund's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise
be agreed upon in writing by the Bank and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign
Sub-Custodians pursuant to the terms hereof. Where possible, such arrangements
shall include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may otherwise
be agreed upon in writing by the Bank and the Fund, the Fund authorizes the
deposit in Euro-clear, the securities clearance and depository facilities
operated by Morgan Guaranty Trust Company of New York in Brussels, Belgium, of
Foreign Portfolio Securities eligible for deposit therein and the use of
Euro-clear in connection with settlements of purchases and sales of securities
and deliveries and returns of securities, until notified to the contrary
pursuant to subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its
books as belonging to the Fund the Foreign Portfolio Securities held by each
Selected Foreign Sub-Custodian. Each agreement pursuant to which the Bank
employs a foreign banking institution shall require that such institution
establish a custody account for the Bank and hold in that account Foreign
Portfolio Securities and other assets of the Fund, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub-Custodian Agreement") shall be substantially in the
form attached as Appendix D hereto and shall provide that: (a) the Fund's assets
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or administration (including,
without limitation, any fees or taxes payable upon transfers or reregistration
of securities); (b) beneficial ownership of the Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (c) adequate records will be
maintained identifying the assets as belonging to the Bank; (d) officers of or
auditors employed by, or other representatives of the Bank, including to the
extent permitted under applicable law, the
15
<PAGE>
independent public accountants for the Fund, will be given access to the books
and records of the foreign banking institution relating to its actions under its
agreement with the Bank; and (e) assets of the Fund held by the Selected Foreign
Sub-Custodian will be subject only to the instructions of the Bank or its
agents.
(e) Access of Independent Accountants of the Fund. Upon
request of the Fund, the Bank will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books and
records of any foreign banking institution employed as a Selected Foreign
Sub-Custodian insofar as such books and records relate to the performance of
such foreign banking institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the securities
and other assets of the Fund held by Selected Foreign Sub-Custodians, including
but not limited to an identification of entities having possession of the
Foreign Portfolio Securities and other assets of the Fund.
(g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian shall
be effected pursuant to Proper Instructions from the Fund to the Bank and shall
be effected in accordance with the applicable Foreign Sub-Custodian Agreement.
If at any time any Foreign Portfolio Securities shall be registered in the name
of the nominee of the Selected Foreign Sub-Custodian, the Fund agrees to hold
any such nominee harmless from any liability by reason of the registration of
such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for Foreign Portfolio Securities received for
the account of the Fund and delivery of Foreign Portfolio Securities maintained
for the account of the Fund may be effected in accordance with the customary
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such securities from such
purchaser or dealer.
In connection with any action to be taken with respect to
the Foreign Portfolio Securities held hereunder, including, without limitation,
the exercise of any voting rights, subscription rights, redemption rights,
exchange rights, conversion rights or tender rights, or any other action in
connection with any other right, interest or privilege with respect to such
Securities (collectively, the "Rights"), the Bank shall promptly transmit to the
Fund such information in connection therewith as is made available to the Bank
by the Foreign Sub-Custodian, and shall promptly forward to the applicable
Foreign Sub-Custodian any instructions, forms or certifications with respect to
such Rights, and any instructions relating to the actions to be taken in
connection therewith, as the Bank shall receive from the Fund pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Fund from and
16
<PAGE>
against certain losses, damages, costs, expenses, liabilities or claims arising
out of or in connection with the institution's performance of such obligations,
all as set forth in the applicable Foreign Sub-Custodian Agreement. The Fund
acknowledges that the Bank, as a participant in Euro-clear, is subject to the
Terms and Conditions Governing the Euro-Clear System, a copy of which has been
made available to the Fund. The Fund acknowledges that pursuant to such Terms
and Conditions, Morgan Guaranty Brussels shall have the sole right to exercise
or assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's securities and
other assets.
(i) Monitoring Responsibilities. The Bank shall furnish
annually to the Fund information concerning the Selected Foreign Sub-Custodians
employed hereunder for use by the Fund in evaluating such Selected Foreign
Sub-Custodians to ensure compliance with the requirements of Rule 17f-5 of the
Act. In addition, the Bank will promptly inform the Fund in the event that the
Bank is notified by a Selected Foreign Sub-Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below US$200
million (or the equivalent thereof) or that its shareholders' equity has
declined below US$200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Fund held by a Foreign Sub-Custodian.
(j) Tax Law. The Bank shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund or the Bank
as custodian of the Fund by the tax laws of any jurisdiction, and it shall be
the responsibility of the Fund to notify the Bank of the obligations imposed on
the Fund or the Bank as the custodian of the Fund by the tax law of any non-U.S.
jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Selected Foreign Sub-custodian with
regard to such tax law shall be to use reasonable efforts to assist the Fund
with respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
14.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Fund.
14.5. Fees and Expenses of the Bank. The Fund will pay or reimburse
the Bank from time to time for any transfer taxes payable upon transfer of
Portfolio Securities made hereunder, and for all necessary proper disbursements,
expenses and charges made or incurred by the Bank in the performance of this
Agreement (including any duties listed on any Schedule hereto, if any) including
any indemnities for any loss, liabilities or expense to the Bank as provided
above. For the services rendered by the Bank hereunder, the Fund will pay to the
Bank such compensation or fees at such rate and at such times as shall be agreed
upon in writing by the parties from time to time. The Bank will also be entitled
to reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement.
14.6 Advances by the Bank. The Bank may, in its sole discretion,
advance funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by the Fund. Should such a payment or payments, with advanced
funds, result in an overdraft (due to insufficiencies of the Fund's account with
the Bank, or for any other reason) this Agreement deems any such overdraft or
related indebtedness a loan made by the Bank to the Fund payable on demand. Such
overdraft shall bear interest at the current rate charged by
17
<PAGE>
the Bank for such loans unless the Fund shall provide the Bank with agreed upon
compensating balances. The Fund agrees that the Bank shall have a continuing
lien and security interest to the extent of any overdraft or indebtedness, in
and to any property at any time held by it for the Fund's benefit or in which
the Fund has an interest and which is then in the Bank's possession or control
(or in the possession or control of any third party acting on the Bank's
behalf). The Fund authorizes the Bank, in the Bank's sole discretion, at any
time to charge any overdraft or indebtedness, together with interest due
thereon, against any balance of account standing to the credit of the Fund on
the Bank's books.
15. Limitation of Liability.
15.1 Notwithstanding anything in this Agreement to the contrary, in
no event shall the Bank or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold the Bank and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including legal fees, (a "Claim") arising as
a result of any act or omission of the Bank or any Indemnified Party under this
Agreement, except for any Claim resulting solely from the negligence, willful
misfeasance or bad faith of the Bank or any Indemnified Party. Without limiting
the foregoing, neither the Bank nor the Indemnified Parties shall be liable for,
and the Bank and the Indemnified Parties shall be indemnified against, any Claim
arising as a result of:
(a) Any act or omission by the Bank or any Indemnified Party
in good faith reliance upon the terms of this Agreement, any Officer's
Certificate, Proper Instructions, resolution of the Board, telegram, telecopier,
notice, request, certificate or other instrument reasonably believed by the Bank
to genuine;
(b) Any act or omission of any subcustodian selected by or at
the direction of the Fund;
(c) Any act or omission of a Selected Foreign Sub-Custodian to
the extent which such Selected Foreign Sub-Custodian is not liable to the Bank;
(d) Any Corporate Action requiring a Response for which the
Bank has not received Proper Instructions or obtained actual possession of all
necessary Securities, consents or other materials by 5:00 p.m. on the date
specified as the Response Deadline;
(e) Any act or omission of any European Branch of a U.S.
banking institution that is the issuer of Eurodollar CDs in connection with any
Eurodollar CDs held by such European Branch; or
(f) Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers (hardware or software) and
computer facilities, the unavailability of energy sources and other similar
happenings or events.
15.2 Notwithstanding anything to the contrary in this Agreement, in
no event shall the Bank or the Indemnified Parties be liable to the Fund or any
third party for lost profits or lost revenues or any special, consequential,
punitive or incidental damages of any kind whatsoever in connection with this
Agreement or any activities hereunder.
18
<PAGE>
16. Termination.
16.1 The term of this Agreement shall be three years commencing upon
the effective date of the Fund's registration under the 1940 Act (the "Initial
Term"), unless earlier terminated as provided herein. After the expiration of
the Initial Term, the term of this Agreement shall automatically renew for
successive one-year terms (each a "Renewal Term") unless notice of non-renewal
is delivered by the non-renewing party to the other party no later than sixty
days prior to the expiration of the Initial Term or any Renewal Term, as the
case may be.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.
(b) Either party may terminate this Agreement during any
Renewal Term upon sixty days written notice to the other party. Any termination
pursuant to this paragraph 16.1(b) shall be effective upon expiration of such
sixty days, provided, however, that the effective date of such termination may
be postponed to a date not more than ninety days after delivery of the written
notice: (i) at the request of the Bank, in order to prepare for the transfer by
the Bank of all of the assets of the Fund held hereunder; or (ii) at the request
of the Fund, in order to give the Fund an opportunity to make suitable
arrangements for a successor custodian.
16.2 In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (16.3), deliver the Portfolio Securities and cash of
the Fund held by the Bank to a bank or trust company of the Bank's own selection
which meets the requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Fund under terms similar to those
on which they were held by the Bank, whereupon such bank or trust company so
selected by the Bank will become the successor custodian of such assets of the
Fund with the same effect as though selected by the Board. Thereafter, the Bank
shall be released from any and all obligations under this Agreement.
16.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank. Thereafter,
the Bank shall be released from any and all obligations under this Agreement.
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<PAGE>
16.4 The Fund shall reimburse the Bank for any reasonable expenses
incurred by the Bank in connection with the termination of this Agreement.
16.5 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of the Bank
relating to its performance of its duties as custodian.
17. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency. The
parties further agree that a breach of this provision would irreparably damage
the other party and accordingly agree that each of them is entitled, in addition
to all other remedies at low or in equal to an injunction or injunctions without
bond or other security to prevent breaches of this provision.
18. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (I) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) had delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
Merrimac Master Portfolio
P.O. Box 501
Cardinal Avenue
Georgetown, Grand Cayman
Cayman Island, B.W.I.
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, Massachusetts 022205-1537
Attention: John E. Henry, General Counsel
or at such other place as such party may from time to time
designate in writing.
19. Amendments. This Agreement may not be altered or amended, except
by an instrument in writing, executed by both parties.
20. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 16 hereof will not be deemed to
be an assignment within the meaning of this provision.
21. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
20
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22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
23. Entire Agreement. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
24. Limitation of Liability. The Bank is hereby expressly put on notice
of the limitation of liability set forth in the Declaration of Trust of the Fund
and agrees that the obligations assumed by the Fund hereunder shall be limited
in all cases to the assets of the Fund and that the Bank shall not seek
satisfaction of any such obligation from the officers, agents, employees,
trustees, or shareholders of the Fund.
25. Several Obligations of the Portfolios. This Agreement is an
agreement entered into between the Bank and the Fund with respect to each
Portfolio. With respect to any obligation of the Fund on behalf of any Portfolio
arising out of this Agreement, the Bank shall look for payment or satisfaction
of such obligation solely to the assets of the Portfolio to which such
obligation relates as though the Bank had separately contracted with the Fund by
separate written instrument with respect to each Portfolio.
[Remainder of Page Intentionally Left Blank]
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
MERRIMAC MASTER PORTFOLIO
By: /s/ Sean P. Brennan
----------------------------------
Name:
Title:
INVESTORS BANK & TRUST COMPANY
By: /s/ Kevin J. Sheehan
----------------------------------
Name: Kevin J. Sheehan
Title: President & C.E.O.
22
Exhibit 9(a)
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of this 1st day of November, 1996, between Merrimac
Master Portfolio, a company organized under the laws of the state of New York
(the "Fund") and IBT Fund Services (Canada) Inc. ("IBT").
The Fund, an open-end management investment company, on behalf of the
portfolios listed on Appendix A hereto, desires to retain IBT to perform certain
fund accounting services for the Fund, and IBT has indicated its willingness to
so act, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Definitions. Whenever used herein, the terms listed below will
have the following meaning:
1.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of its Board, and set forth in a
certificate as required by Section 4 hereof.
1.2 Board. Board will mean the Board of Trustees of the Fund, as
the case may be.
1.3 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
1.4 Proper Instructions. Proper Instructions shall mean instructions
(which may be continuing instructions) regarding matters signed or initialed by
an Authorized Person. Oral instructions will be considered Proper Instructions
if IBT reasonably believes them to have been given by an Authorized Person. The
Fund shall cause all oral instructions to be promptly confirmed in writing. IBT
shall act upon and comply with any subsequent Proper Instruction which modifies
a prior instruction and the sole obligation of IBT with respect to any follow-up
or confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires IBT to
act, the Fund shall give IBT specific Proper Instructions as to the action
required. Upon receipt by IBT of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and IBT agree in writing that such procedures afford adequate safeguards
for the Fund's assets.
2. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with IBT his or her
certification to IBT, in such form as may be acceptable to IBT, of (i) the names
and signatures of the Authorized Persons and (ii) the names of the members of
the Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. IBT will be
entitled to rely and act upon any Officers'
<PAGE>
Certificate given to it by the Fund which has been signed by Authorized Persons
named in the most recent certification received by IBT.
3. Fund Evaluation and Yield Calculation
3.1 Fund Evaluation. IBT shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board, the net asset value and the public offering price of a share of capital
stock of the Fund, such determination to be made in accordance with the
provisions of the Articles and By-laws of the Fund and Confidential Offering
Circular relating to the Fund, as they may from time to time be amended, and any
applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, IBT may rely in good
faith upon information furnished to it by any Authorized Person in respect of
(i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by IBT, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and IBT shall
not be responsible for any loss occasioned by such reliance or for any good
faith reliance on any quotations received from a source pursuant to (iii) above.
3.2. Yield Calculation. IBT will compute the performance results of
the Fund (the "Yield Calculation") in accordance with the provisions of Release
No. 33-6753 and Release No. IC-16245 (February 2, 1988) (the "Releases")
promulgated by the Securities and Exchange Commission, and any subsequent
amendments to, published interpretations of or general conventions accepted by
the staff of the Securities and Exchange Commission with respect to such
releases or the subject matter thereof ("Subsequent Staff Positions"), subject
to the terms set forth below:
(a) IBT shall compute the Yield Calculation for the Fund for
the stated periods of time as shall be mutually agreed upon, and communicate in
a timely manner the result of such computation to the Fund.
(b) In performing the Yield Calculation, IBT will derive the
items of data necessary for the computation from the records it generates and
maintains for the Fund pursuant Section 11 hereof. IBT shall have no
responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by
the Fund, any of the Fund's designated agents or any of the Fund's designated
third party providers.
(c) At the request of IBT, the Fund shall provide, and IBT
shall be entitled to rely on, written standards and guidelines to be followed by
IBT in interpreting and applying the computation methods set forth in the
Releases or any Subsequent Staff Positions as they specifically apply to the
Fund. In the event that the computation methods in the Releases or the
Subsequent Staff Positions or the application to the Fund of a standard or
guideline is not free from doubt or in the event there is any question of
interpretation as to the characterization of a particular security or any aspect
of a security or a payment with respect thereto (e.g., original issue discount,
participating debt security, income or return of capital, etc.) or otherwise or
as to any other element of the computation which is pertinent to the Fund, the
Fund or its designated agent shall have the full responsibility for making the
determination of how the security or payment is to be treated for purposes of
the computation and how the computation is to be
2
<PAGE>
made and shall inform IBT thereof on a timely basis. IBT shall have no
responsibility to make independent determinations with respect to any item which
is covered by this Section, and shall not be responsible for its computations
made in accordance with such determinations so long as such computations are
mathematically correct.
(d) The Fund shall keep IBT informed of all publicly available
information and of any non-public advice, or information obtained by the Fund
from its independent auditors or by its personnel or the personnel of its
investment adviser, or Subsequent Staff Positions related to the computations to
be undertaken by IBT pursuant to this Agreement and IBT shall not be deemed to
have knowledge of such information (except as contained in the Releases) unless
it has been furnished to IBT in writing.
4. Fees. For the services rendered pursuant to this Agreement, the Fund
agrees to pay IBT the fees set forth on Appendix B hereto.
5. Additional Services. IBT shall perform the additional services for
the Fund as are set forth on Appendix C hereto. Appendix C may be amended from
time to time upon agreement of the parties to include further additional
services to be provided by IBT to the Fund, at which time the fees set forth in
Appendix B shall be appropriately increased.
6. Limitation of Liability.
6.1 Notwithstanding anything in this Agreement to the contrary, in
no event shall IBT or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold IBT and the Indemnified Parties
harmless from and against any and all loss, damage, liability, actions, suits,
claims, costs and expenses, including legal fees, (a "Claim") arising as a
result of any act or omission of IBT or any Indemnified Party under this
Agreement, except for any Claim resulting solely from the negligence, willful
misfeasance or bad faith of IBT or any Indemnified Party. Without limiting the
foregoing, neither IBT nor the Indemnified Parties shall be liable for, and IBT
and the Indemnified Parties shall be indemnified against, any Claim arising as a
result of:
(a) Any act or omission by IBT or any Indemnified Party in
good faith reliance upon the terms of this Agreement, any Officer's Certificate,
Proper Instructions, resolution of the Board, telegram, telecopier, notice,
request, certificate or other instrument reasonably believed by IBT to genuine;
(b) Information relied on in good faith by IBT and supplied by
any Authorized Person in connection with the calculation of (i) the net asset
value and public offering price of the shares of capital stock of the Fund or
(ii) the Yield Calculation; or
(c) Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers (hardware or software) and
computer facilities, the unavailability of energy sources and other similar
happenings or events.
6.2 Notwithstanding anything to the contrary in this Agreement, in
no event shall IBT or the Indemnified Parties be liable to the Fund or any third
party for lost profits or lost revenues or any special,
3
<PAGE>
consequential, punitive or incidental damages of any kind whatsoever in
connection with this Agreement or any activities hereunder.
7. Termination.
7.1 The term of this Agreement shall be three years commencing upon
November 1, 1996 (the "Initial Term"), unless earlier terminated as provided
herein. After the expiration of the Initial Term, the term of this Agreement
shall automatically renew for successive one-year terms (each a "Renewal Term")
unless notice of non-renewal is delivered by the non-renewing party to the other
party no later than sixty days prior to the expiration of the Initial Term or
any Renewal Term, as the case may be.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.
(b) Either party may terminate this Agreement during any
Renewal Term upon sixty days written notice to the other party. Any termination
pursuant to this paragraph 7.1(b) shall be effective upon expiration of such
sixty days, provided, however, that the effective date of such termination may
be postponed to a date not more than ninety days after delivery of the written
notice: (i) at the request of IBT, in order to prepare for the transfer by IBT
of all necessary records of the Fund held hereunder; or (ii) at the request of
the Fund, in order to give the Fund an opportunity to make suitable arrangements
for a successor fund accountant.
7.2 The Fund shall reimburse IBT for any reasonable expenses
incurred by IBT in connection with the termination of this Agreement.
7.3 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of IBT relating
to its performance of its duties as hereunder.
8. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency. The
parties further agree that a breach of this provision would irreparably damage
the other party and accordingly agree that each of them is entitled, in addition
to all other remedies at low or in equal to an injunction or injunctions without
bond or other security to prevent breaches of this provision.
9. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (I) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) had delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
Merrimac Master Portfolio
Cardinal Avenue
P.O. Box 501
Georgetown, Grand Cayman
Cayman Island, B.W.I.
4
<PAGE>
(b) In the case of notices sent to IBT to:
IBT Fund Services (Canada) Inc.
1 First Canadian, King Street West
Suite 2800
P.O. Box 231
Toronto, Canada M5X1C8
With a copy to:
John E. Henry, General Counsel
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
or at such other place as such party may from time to time
designate in writing.
10. Amendments. This Agreement may not be altered or amended, except
by an instrument in writing, executed by both parties.
11. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of IBT or by IBT without the written consent of the
Fund, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Section 16 hereof will not be deemed to be
an assignment within the meaning of this provision.
12. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the State of New York, without regard to conflict of
laws provisions.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
14. Entire Agreement. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
15. Limitation of Liability. IBT is hereby expressly put on notice of
the limitation of liability set forth in the Declaration of Trust of the Fund
and agrees that the obligations assumed by the Fund hereunder shall be limited
in all cases to the assets of the Fund and that IBT shall not seek satisfaction
of any such obligation from the officers, agents, employees, trustees, or
shareholders of the Fund.
16. Several Obligations of the Portfolios. This Agreement is an
agreement entered into between IBT and the Fund with respect to each Portfolio.
With respect to any obligation of the Fund on behalf of any Portfolio arising
out of this Agreement, IBT shall look for payment or satisfaction of such
obligation solely to the assets of the Portfolio to which such obligation
relates as though IBT had separately contracted with the Fund by separate
written instrument with respect to each Portfolio.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
MERRIMAC MASTER PORTFOLIO
By: /s/ Sean P. Brennan
----------------------------------
Name:
Title:
IBT FUND SERVICES (CANADA) INC.
By: /s/ Kevin J. Sheehan
----------------------------------
Name: Kevin J. Sheehan
Title: President & C.E.O.
6
<PAGE>
Appendix A
----------
Portfolios
----------
Merrimac Cash Portfolio
7
Exhibit 9(b)
ADMINISTRATION AGREEMENT
Between
MERRIMAC MASTER PORTFOLIO
and
IBT FUND SERVICES (IRELAND) LIMITED
<PAGE>
2
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of November 1, 1996 by and
between Merrimac Master Portfolio, a corporation organized under the laws of the
state of New York (the "Fund"), and IBT Fund Services (Ireland) Limited, a
limited liability company incorporated under the laws of Ireland.
WHEREAS, the Fund is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act") and is
entering into this Agreement on behalf of the portfolios listed on Appendix 3
hereto, as such Appendix 3 may be amended from time to time (each a "Portfolio"
and collectively, the "Portfolios"); and
WHEREAS, the Fund desires to retain IBT to render certain
administrative services to the Fund and IBT is willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints IBT to act as Administrator of
the Fund on the terms set forth in this Agreement. IBT accepts such appointment
and agrees to render the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Fund has furnished IBT with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing
the appointment of IBT to provide certain administrative services to the Fund
and approving this Agreement;
(b) The Fund's incorporating documents and all amendments
thereto (the "Articles");
(c) The Fund's by-laws and all amendments thereto (the
"By-Laws");
(d) The Fund's agreements with all service providers which
include any investment advisory agreements, sub-investment advisory agreements,
custody agreements, distribution agreements and transfer agency agreements
(collectively, the "Agreements");
(e) The Fund's most recent Registration Statement under the
1940 Act and all amendments thereto; and
(f) The Fund's most recent Confidential Offering Circular (the
"Offering Circular"); and
(g) Such other certificates, documents or opinions as may
mutually be deemed necessary or appropriate for IBT in the proper performance of
its duties hereunder.
The Fund will immediately furnish IBT with copies of all
amendments of or supplements to the foregoing. Furthermore, the Fund will notify
IBT as soon as possible of any matter which may materially affect the
performance by IBT of its services under this Agreement.
3. Duties of Administrator. Subject to the supervision and direction of
the Board of Directors of the Fund, IBT, as Administrator, will assist in
conducting various aspects of the Fund's administrative operations and
undertakes to perform the services described in Appendix 1 hereto. IBT may, from
time
<PAGE>
3
to time, perform additional duties and functions which shall be set forth in an
amendment to such Appendix 1 executed by both parties. At such time, the fee
schedule included in Appendix 2 hereto shall be appropriately amended.
In performing all services under this Agreement, IBT shall act
in conformity with the Fund's Articles and By-Laws and the 1940 Act, as the same
may be amended from time to time, and the investment objectives, investment
policies and other practices and policies set forth in the Fund's Registration
Statement, as the same may be amended from time to time. Notwithstanding any
item discussed herein, IBT has no discretion over the Fund's assets or choice of
investments and cannot be held liable for any problem relating to such
investments.
4. Duties of the Fund.
(a) The Fund is solely responsible (through its transfer agent
or otherwise) for (i) providing timely and accurate reports ("Daily Sales
Reports") which will enable IBT as Administrator to monitor the total number of
shares sold in each state on a daily basis and (ii) identifying any exempt
transactions ("Exempt Transactions") which are to be excluded from the Daily
Sales Reports.
(b) The Fund agrees to make its legal counsel available to IBT
for instruction with respect to any matter of law arising in connection with
IBT's duties hereunder, and the Fund further agrees that IBT shall be entitled
to rely on such instruction without further investigation on the part of IBT.
5. Fees and Expenses.
(a) For the services to be rendered and the facilities to be
furnished by IBT, as provided for in this Agreement, the Fund will compensate
IBT in accordance with the fee schedule attached as Appendix 2 hereto. Such fees
do not include out-of-pocket disbursements (as delineated on the fee schedule or
other expenses with the prior approval of the Fund's management) of IBT for
which IBT shall be entitled to bill the Fund separately and for which the Fund
shall reimburse IBT.
(b) IBT shall not be required to pay any expenses incurred by
the Fund.
6. Limitation of Liability.
(a) IBT, its directors, officers, employees and agents shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of its obligations and
duties under this Agreement, except a loss resulting from willful misfeasance,
bad faith or negligence in the performance of such obligations and duties, or by
reason of its reckless disregard thereof. The Fund will indemnify IBT, its
directors, officers, employees and agents against and hold it and them harmless
from any and all losses, claims, damages, liabilities or expenses (including
legal fees and expenses) resulting from any claim, demand, action or suit (i)
arising out of the actions or omissions of the Fund, including, but not limited
to, inaccurate Daily Sales Reports and misidentification of Exempt Transactions;
(ii) arising out of the offer or sale of any securities of the Fund in violation
of (x) any requirement under the federal securities laws or regulations, (y) any
requirement under the securities laws or regulations of any state, or (z) any
stop order or other determination or ruling by any federal or state agency with
respect to the offer or sale of such securities; or (iii) not resulting from the
willful misfeasance, bad faith or negligence of IBT in the performance of such
obligations and duties or by reason of its reckless disregard thereof.
(b) IBT may apply to the Fund at any time for instructions and
may consult counsel for the Fund, or its own counsel, and with accountants and
other experts with respect to any matter arising in connection with its duties
hereunder, and IBT shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instruction, or with the
opinion of such counsel,
<PAGE>
4
accountants, or other experts. IBT shall not be liable for any act or omission
taken or not taken in reliance upon any document, certificate or instrument
which it reasonably believes to be genuine and to be signed or presented by the
proper person or persons. IBT shall not be held to have notice of any change of
authority of any officers, employees, or agents of the Fund until receipt of
written notice thereof has been received by IBT from the Fund.
(c) In the event IBT is unable to perform, or is delayed in
performing, its obligations under the terms of this Agreement because of acts of
God, strikes, legal constraint, government actions, war, emergency conditions,
interruption of electrical power or other utilities, equipment or transmission
failure or damage reasonably beyond its control or other causes reasonably
beyond its control, IBT shall not be liable to the Fund for any damages
resulting from such failure to perform, delay in performance, or otherwise from
such causes.
(d) In no event shall IBT be liable for special, incidental or
consequential damages, even if advised of the possibility of such damages.
7. Termination of Agreement.
(a) The term of this Agreement shall be three years commencing
upon the date hereof (the "Initial Term"), unless earlier terminated as provided
herein. After the expiration of the Initial Term, the term of this Agreement
shall automatically renew for successive one-year terms (each a "Renewal Term")
unless notice of non-renewal is delivered by the non-renewing party to the other
party no later than sixty days prior to the expiration of the Initial Term or
any Renewal Term, as the case may be.
(i) Either party hereto may terminate this Agreement
prior to the expiration of the Initial Term in the event the other party
violates any material provision of this Agreement, provided that the violating
party does not cure such violation within 90 days of receipt of written notice
from the non-violating party of such violation.
(ii) Either party may terminate this Agreement during
any Renewal Term upon sixty days written notice to the other party. Any
termination pursuant to this paragraph 7(a)(ii) shall be effective upon
expiration of such sixty days, provided, however, that the effective date of
such termination may be postponed, at the request of the Fund, to a date not
more than ninety days after delivery of the written notice in order to give the
Fund an opportunity to make suitable arrangements for a successor administrator.
(b) At any time after the termination of this Agreement, the
Fund may, upon written request, have reasonable access to the records of IBT
relating to its performance of its duties as Administrator.
8. Miscellaneous.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Fund or IBT shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund: Merrimac Master Portfolio
P.O. Box 501
Cardinal Avenue
Georgetown, Grand Cayman
Cayman Island, B.W.I.
<PAGE>
5
To IBT: IBT Fund Services (Ireland) Limited
Deloitte & Touche House
29 Earlsfort Terrace
Dublin 2, Ireland
Attention: Raymond A. O'Neill
With a copy to: John E. Henry
General Counsel
Investors Bank & Trust Company
89 South Street, P.O. Box 1537
Boston, MA 02205-1537
(b) This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable without the written consent
of the other party.
(c) This Agreement shall be construed in accordance with the
laws of the state of New York, without regard to its conflict of laws
provisions.
(d) This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original and which
collectively shall be deemed to constitute only one instrument.
(e) The captions of 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.
9. Confidentiality. All books, records, information and data pertaining
to the business of the other party which are exchanged or received pursuant to
the negotiation or the carrying out of this Agreement shall remain confidential,
and shall not be voluntarily disclosed to any other person, except as may be
required in the performance of duties hereunder or as otherwise required by law.
10. Use of Name. The Fund shall not use the name of IBT or any of its
affiliates in any Offering Circular, sales literature or other material relating
to the Fund in a manner not approved by IBT prior thereto in writing; provided
however, that the approval of IBT shall not be required for any use of its name
which merely refers in accurate and factual terms to its appointment hereunder
or which is required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental or
judicial authority; provided further, that in no event shall such approval be
unreasonably withheld or delayed.
11. Limitation of Liability. IBT is hereby expressly put on notice of
the limitation of liability set forth in the Declaration of Trust of the Fund
and agrees that the obligations assumed by the Fund hereunder shall be limited
in all cases to the assets of the Fund and that IBT shall not seek satisfaction
of any such obligation from the officers, agents, employees, trustees, or
shareholders of the Fund.
12. Several Obligations of the Portfolios. This Agreement is an
agreement entered into between IBT and the Fund with respect to each Portfolio.
With respect to any obligation of the Fund on behalf of any Portfolio arising
out of this Agreement, IBT shall look for payment or satisfaction of such
obligation solely to the assets of the Portfolio to which such obligation
relates as though IBT had separately contracted with the Fund by separate
written instrument with respect to each Portfolio.
<PAGE>
6
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
MERRIMAC MASTER PORTFOLIO
By: /s/ Sean P. Brennan
----------------------------------
Name: Sean P. Brennan
Title: President
IBT FUND SERVICES (IRELAND) LIMITED
By: /s/ Kevin J. Sheehan
----------------------------------
Name: Kevin J. Sheehan
Title: President & C.E.O.
<PAGE>
Appendix 1
----------
Services to be Performed by IBT
<PAGE>
Appendix 2
----------
Fee Schedule
<PAGE>
Appendix 3
----------
Portfolios
Merrimac Cash Portfolio
Exhibit 9(c)
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
MERRIMAC MASTER PORTFOLIO
and
IBT FUND SERVICES (IRELAND) LIMITED
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT effective as of the 1st day of November, 1996 by and between
Merrimac Master Portfolio, a corporation organized under the laws of the state
of New York (the "Company"), and IBT Fund Services (Ireland) Limited, an Irish
limited liability company ("IBT").
WHEREAS, the Company desires to appoint IBT as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and IBT desires to accept such appointment;
WHEREAS, IBT is duly registered as a transfer agent as provided in
Section 17A(c) of the Securities Exchange Act of 1934, as amended, (the "1934
Act");
WHEREAS, the Company is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Company intends to initially offer shares in one series,
the Merrimac Cash Portfolio, and one class, (such series and class, together
with all other series and classes subsequently established by the Company and
made subject to this Agreement in accordance with Article 17, being herein
referred to as the "Fund(s)");
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the Company and IBT agree as follows:
ARTICLE 1. Terms of Appointment; Duties of IBT
- - -----------------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement,
the Company on behalf of the Funds hereby employs and appoints IBT to act, and
IBT agrees to act, as transfer agent for each of the Fund(s)' authorized and
issued shares of beneficial interest ("Shares"), dividend disbursing agent and
agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of the Company ("Shareholders") and set out in the
most recent Confidential Offering Circular, as such may be amended from time to
time, (the "Offering Circular") of the Company, including without limitation any
periodic investment plan or periodic withdrawal program.
1.02 IBT agrees that it will perform the following services:
(a) In connection with procedures established from time to
time by agreement between the Company and IBT, IBT shall:
(i) Receive for acceptance orders for the purchase of
Shares and promptly deliver payment and appropriate documentation therefor to
the custodian of the Company appointed by the Board of Directors of the Company
(the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate documentation therefor to the
Custodian;
<PAGE>
(iv) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as instructed by the
redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Company on behalf of a Fund;
(vii) Create and maintain all necessary records
including those specified in Article 10 hereof, in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the Investment Company Act of 1940, as amended (the
"1940 Act"), and those records pertaining to the various functions performed by
it hereunder. All records shall be available for inspection and use by the
Company. Where applicable, such records shall be maintained by IBT for the
periods and in the places required by Rule 31a-2 under the 1940 Act;
(viii) Make available during regular business hours all
records and other data created and maintained pursuant to this Agreement for
reasonable audit and inspection by the Company, or any person retained by the
Company. Upon reasonable notice by the Company, IBT shall make available during
regular business hours its facilities and premises employed in connection with
its performance of this Agreement for reasonable visitation by the Company, or
any person retained by the Company;
(ix) At the expense of and at the request of the
Company, maintain an adequate supply of blank share certificates for each Fund
providing for the issuance of certificates to meet IBT's requirements therefor.
Such share certificates shall be properly signed by facsimile. The Company
agrees that, notwithstanding the death, resignation, or removal of any officer
of the Company whose signature appears on such certificates, IBT may continue to
countersign certificates which bear such signatures until otherwise directed by
the Company. Share certificates may be issued and accounted for entirely by IBT
and do not require any third party registrar or other endorsing party;
(x) Issue replacement share certificates in lieu of
certificates which have been lost, stolen, mutilated or destroyed, without any
further action by the Board of Directors or any officer of the Company, upon
receipt by IBT of properly executed affidavits and lost certificate bonds, in
form satisfactory to IBT with the Company and IBT as obligees under the bond. At
the discretion of IBT, and at its sole risk, IBT may issue replacement
certificates without requiring the affidavits and lost certificate bonds
described above and the Company agrees to indemnify IBT against any and all
losses or claims which may arise by reason of the issuance of such new
certificates in the place of the ones allegedly lost, stolen or destroyed; and
(xi) Record the issuance of Shares of the Company and
maintain, pursuant to Rule 17Ad-10(e) under the 1934 Act, a record of the total
number of Shares of the Company which are authorized, based upon data provided
to it by the Company, and issued and outstanding. IBT shall also provide the
Company on a regular basis with the total number of Shares which are authorized
and issued and outstanding and shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares or to take cognizance
of any laws relating to the issue or sale of such Shares, which functions shall
be the sole responsibility of the Company.
2
<PAGE>
(b) In addition to and not in lieu of the services set forth
in the above paragraph (a) or in any Schedule hereto, IBT shall: (i) perform all
of the customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program); including but not limited to maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and offering memoranda to
current Shareholders, withholding taxes on all accounts, including nonresident
alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in Shareholder
accounts, responding to Shareholder telephone calls and Shareholder
correspondence, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information; and (ii) provide a system which will
enable the Company to monitor the total number of shares sold in each State. The
Company shall (i) identify to IBT in writing those transactions and assets to be
treated as exempt from blue sky reporting for each State and (ii) verify the
establishment of transactions for each State on the system prior to activation
and thereafter monitor the daily activity for each State. The responsibility of
IBT for a Fund's blue sky state registration status is solely limited to the
initial establishment of transactions subject to blue sky compliance by such
Fund(s) and the reporting of such transactions to the Fund(s) as provided above.
(c) Additionally, IBT shall utilize a system to identify all
share transactions which involve purchase and redemption orders that are
processed at a time other than the time of the computation of net asset value
per share next computed after receipt of such orders, and shall compute the net
effect upon the Fund(s) of such transactions so identified on a daily and
cumulative basis.
ARTICLE 2. Sale of Company Shares
- - ----------------------------------
2.01 Whenever the Company shall sell or cause to be sold any Shares of
a Fund, the Company shall deliver or cause to be delivered to IBT a document
duly specifying: (i) the name of the Fund whose Shares were sold; (ii) the
number of Shares sold, trade date, and price; (iii) the amount of money to be
delivered to the Custodian for the sale of such Shares and specifically
allocated to such Fund; and (iv) in the case of a new account, a new account
application or sufficient information to establish an account.
2.02 IBT will, upon receipt by it of a check or other payment
identified by it as an investment in Shares of one of the Funds and drawn or
endorsed to IBT as agent for, or identified as being for the account of, one of
the Funds, promptly deposit such check or other payment to the appropriate
account postings necessary to reflect the investment. IBT will notify the
Company, or its designee, and the Custodian of all purchases and related account
adjustments.
2.03 Under procedures as established by mutual agreement between the
Company and IBT, IBT shall issue to the purchaser or its authorized agent such
Shares, computed to the nearest three decimal points, as he is entitled to
receive, based on the appropriate net asset value of the Funds' Shares,
determined in accordance with the Offering Circular and any applicable federal
law or regulation. In issuing Shares to a purchaser or its authorized agent, IBT
shall be entitled to rely upon the latest directions, if any, previously
received by IBT from the purchaser or its authorized agent concerning the
delivery of such Shares.
3
<PAGE>
2.04 IBT shall not be required to issue any Shares of the Company where
it has received a written instruction from the Company or written notification
from any appropriate federal or state authority that the sale of the Shares of
the Fund(s) in question has been suspended or discontinued, and IBT shall be
entitled to rely upon such written instructions or written notification.
2.05 Upon the issuance of any Shares of any Fund(s) in accordance with
foregoing provisions of this Section, IBT shall not be responsible for the
payment of any original issue or other taxes, if any, required to be paid by the
Company in connection with such issuance.
2.06 IBT may establish such additional rules and regulations governing
the transfer or registration of Shares as it may deem advisable and consistent
with such rules and regulations generally adopted by transfer agents, or with
the written consent of the Company, any other rules and regulations.
ARTICLE 3. Returned Checks
- - --------------------------
3.01 In the event that any check or other order for the transfer of
money is returned unpaid for any reason, IBT will take such steps as IBT may, in
its discretion, deem appropriate to protect the Company from financial loss or
as the Company or its designee may instruct. Provided that the standard
procedures, as agreed upon from time to time, between the Company and IBT,
regarding purchases and redemptions of Shares, are adhered to by IBT, IBT shall
not be liable for any loss suffered by a Fund as a result of returned or unpaid
purchase or redemption transactions. Legal or other expenses incurred to collect
amounts owed to a Fund as a consequence of returned or unpaid purchase or
redemption transactions shall be an expense of that Fund.
ARTICLE 4. Redemptions
- - ----------------------
4.01 Shares of any Fund may be redeemed in accordance with the
procedures set forth in the Offering Circular of the Company and IBT will duly
process all redemption requests.
ARTICLE 5. Transfers and Exchanges
- - ----------------------------------
5.01 IBT is authorized to review and process transfers of Shares of
each Fund, exchanges between Funds on the records of the Funds maintained by
IBT, and exchanges between the Company and any other entity as may be permitted
by the Offering Circular of the Company. If Shares to be transferred are
represented by outstanding certificates, IBT will, upon surrender to it of the
certificates in proper form for transfer, and upon cancellation thereof,
countersign and issue new certificates for a like number of Shares and deliver
the same. If the Shares to be transferred are not represented by outstanding
certificates, IBT will, upon an order therefor by or on behalf of the registered
holder thereof in proper form, credit the same to the transferee on its books.
If Shares are to be exchanged for Shares of another Fund, IBT will process such
exchange in the same manner as a redemption and sale of Shares, except that it
may in its discretion waive requirements for information and documentation.
4
<PAGE>
ARTICLE 6. Right to Seek Assurances
- - -----------------------------------
6.01 IBT reserves the right to refuse to transfer or redeem Shares
until it is satisfied that the requested transfer or redemption is legally
authorized, and it shall incur no liability for the refusal, in good faith, to
make transfers or redemptions which IBT, in its judgment, deems improper or
unauthorized, or until it is satisfied that there is no basis for any claims
adverse to such transfer or redemption. IBT may, in effecting transfers, rely
upon the provisions of the Uniform Act for the Simplification of Fiduciary
Security Transfers or the Uniform Commercial Code, as the same may be amended
from time to time, which in the opinion of legal counsel for the Company or
IBT's own legal counsel, do not require certain documents in connection with the
transfer or redemption of Shares of any Fund, and the Company shall indemnify
IBT for any act done or omitted by it in reliance upon such laws or opinions of
counsel of the Company or of IBT.
ARTICLE 7. Distributions
- - ------------------------
7.01 The Company will promptly notify IBT of the declaration of any
dividend or distribution. The Company shall furnish to IBT a resolution of the
Board of Directors of the Company certified by the Secretary (a "Certificate"):
(i) authorizing the declaration of dividends on a specified periodic basis and
authorizing IBT to rely on oral instructions or a Certificate specifying the
date of the declaration of such dividend or distribution, the date of payment
thereof, the record date as of which Shareholders entitled to payment shall be
determined and the amount payable per share to Shareholders of record as of such
record date and the total amount payable to IBT on the payment date; or (ii)
setting forth the date of the declaration of any dividend or distribution by a
Fund, the date of payment thereof, the record date as of which Shareholders
entitled to payment shall be determined, and the amount payable per share to the
Shareholders of record as of that date and the total amount payable to IBT on
the payment date.
7.02 IBT, on behalf of the Company, shall instruct the Custodian to
place in a dividend disbursing account funds equal to the cash amount of any
dividend or distribution to be paid out. IBT will calculate, prepare and mail
checks to (at the address as it appears on the records of IBT), or (where
appropriate) credit such dividend or distribution to the account of, Fund
Shareholders, and maintain and safeguard all underlying records.
7.03 IBT will replace lost checks at its discretion and in conformity
with regular business practices.
7.04 IBT will maintain all records necessary to reflect the crediting
of dividends which are reinvested in Shares of the Company, including without
limitation daily dividends.
7.05 IBT shall not be liable for any improper payments made in
accordance with a resolution of the Board of Directors of the Company.
7.06 If IBT shall not receive from the Custodian sufficient cash to
make payment to all Shareholders of the Company as of the record date, IBT
shall, upon notifying the Company, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is provided to IBT and
shall not be liable for any claim arising out of such withholding.
5
<PAGE>
ARTICLE 8. Other Duties
- - -----------------------
8.01 In addition to the duties expressly provided for herein, IBT shall
perform such other duties and functions and shall be paid such amounts therefor
as may from time to time be agreed to in writing.
ARTICLE 9. Taxes
- - ----------------
9.01 It is understood that IBT shall file such appropriate information
returns concerning the payment of dividends and capital gain distributions and
tax withholding with the proper Federal, State and local authorities as are
required by law to be filed by the Company and shall withhold such sums as are
required to be withheld by applicable law.
ARTICLE 10. Books and Records
- - -----------------------------
10.01 IBT shall maintain confidential records showing for each
Shareholder's account the following: (i) names, addresses and tax identification
numbers; (ii) numbers of Shares held; (iii) historical information (as available
from prior transfer agents) regarding the account of each Shareholder, including
dividends paid and date and price of all transactions on a Shareholder's
account; (iv) any stop or restraining order placed against a Shareholder's
account; (v) information with respect to withholdings; (vi) any capital gain or
dividend reinvestment order, plan application, dividend address and
correspondence relating to the current maintenance of a Shareholder's account;
(vii) certificate numbers and denominations for any Shareholders holding
certificates; (viii) any information required in order for IBT to perform the
calculations contemplated or required by this Agreement; and (ix) such other
information and data as may be required by applicable law.
10.02 Any records required to be maintained by Rule 31a-1 under the
1940 Act will be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act. Such records may be inspected by the Company during regular business
hours upon reasonable notice. IBT may, at its option at any time, and shall
forthwith upon the Company's demand, turn over to the Company and cease to
retain in IBT's files, records and documents created and maintained by IBT in
performance of its service or for its protection. At the end of the six-year
retention period, such documents will either be turned over to the Company, or
destroyed in accordance with the Company's authorization.
10.03 Procedures applicable to the services to be performed hereunder
may be established from time to time by agreement between the Fund(s) and IBT.
IBT shall have the right to utilize any shareholder accounting and recordkeeping
systems which, in its opinion, qualifies to perform any services to be performed
hereunder. IBT shall keep records relating to the services performed hereunder,
in the form and manner as it may deem advisable.
ARTICLE 11. Fees and Expenses.
- - ------------------------------
11.01 For performance by IBT pursuant to this Agreement, the Fund(s)
agree to pay IBT an annual maintenance fee for each Shareholder account as set
out in the initial fee schedule attached as Appendix A hereto. Such fees and
out-of-pocket expenses and advances identified under Section 11.02 below may be
changed from time to time subject to mutual written agreement between the
Fund(s) and IBT.
11.02 In addition to the fee paid under Section 11.01 above, the
Fund(s) agree to reimburse IBT for out-of-pocket expenses or advances incurred
by IBT for the items set out in the fee schedule attached
6
<PAGE>
hereto. In addition, any other expenses incurred by IBT at the request or with
the consent of the Fund(s) including, without limitation, any equipment or
supplies which the Company specifically orders or requires IBT to purchase, will
be reimbursed by the Fund(s).
11.03 The Fund(s) agree to pay all fees and reimbursable expenses
within thirty days following the mailing of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all shareholder accounts shall be advanced to IBT by the Fund(s) at least seven
(7) days prior to the mailing date of such materials. Any waiver or extension by
IBT of the thirty and seven day time periods enumerated in this section 11.03
shall not constitute a dismissal of any monies due under this Agreement nor
shall such waiver or extension apply to any future monies due to IBT hereunder.
ARTICLE 12. Representations and Warranties of IBT
- - -------------------------------------------------
IBT represents and warrants to the Company that:
12.01 It is a private limited liability company duly organized and
existing and in good standing under the laws of Ireland.
12.02 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
12.03 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
12.04 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
ARTICLE 13. Representations and Warranties of the Company
- - ---------------------------------------------------------
The Company represents and warrants to IBT that:
13.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of its incorporation as set forth in the
preamble hereto.
13.02 It is empowered under applicable laws and by its charter
documents and by-laws to enter into and perform this Agreement.
13.03 All proceedings required by said charter documents and by-laws
have been taken to authorize it to enter into and perform this Agreement.
13.04 It is a open-end investment company registered under the 1940
Act.
13.05 Appropriate state securities law filings have been made and will
continue to be made, with respect to all Shares of the Company being offered for
sale.
13.06 When Shares are hereafter issued in accordance with the terms of
the Offering Circular, such Shares shall be validly issued, fully paid and
nonassessable by the Fund(s).
7
<PAGE>
ARTICLE 14. Indemnification
- - ---------------------------
14.01 Except as set forth in Section 14.02 hereof, IBT shall not be
responsible for, and the Company shall indemnify and hold IBT harmless from and
against, any and all losses, damages, costs, charges, legal fees, payments,
expenses and liability arising out of or attributable to:
(a) All actions taken or omitted to be taken by IBT or its
agents or subcontractors in good faith in reliance on or use by IBT or its
agents or subcontractors of information, records and documents which (i) are
received by IBT or its agents or subcontractors and furnished to such party by
or on behalf of the Fund(s), (ii) have been prepared and/or maintained by the
Fund(s) or any other person or firm on behalf of the Fund(s), or (iii) were
received by IBT or its agents or subcontractors from a prior transfer agent.
(b) Any action taken or omitted to be taken by IBT in good
faith reliance upon any law, act, regulation (a "Regulation") or interpretation
of a Regulation even though such Regulation may thereafter have been altered,
changed, amended or repealed.
(c) The Fund(s)' refusal or failure to comply with the terms
of this Agreement, or which arise out of the Funds' lack of good faith,
negligence or willful misconduct or which arise out of the breach of any
representation or warranty of the Fund(s) hereunder.
(d) The reliance on, or the carrying out by IBT or its agents
or subcontractors of any instructions or requests, whether written or oral, of
the Fund(s).
(e) The offer or sale of Shares by the Company in violation of
(i) any requirement under the federal securities laws or regulations; (ii) any
requirement under the securities laws or regulations of any state; or (iii) any
stop order or other determination or ruling by any federal or state agency with
respect to the offer or sale of such Shares.
14.02 IBT shall indemnify and hold the Fund(s) harmless from and
against any and all losses, damages, costs, charges, legal fees, payments,
expenses and liability arising out of or attributed to any action or failure or
omission to act by IBT as a result of IBT's lack of good faith, negligence,
willful misconduct, knowing violation of law or fraud.
14.03 At any time IBT may apply to any officer of the Company for
instructions, and may consult with legal counsel of IBT or the Company with
respect to any matter arising in connection with the services to be performed by
IBT under this Agreement, and IBT and its agents or subcontractors shall not be
liable and shall be indemnified by the Company for any action taken or omitted
by it in reliance upon such instructions or upon the opinion of such counsel
except for a knowing violation of law. IBT, its agents and subcontractors shall
be protected and indemnified in acting upon any paper or document furnished by
or on behalf of the Fund(s), reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction, information,
data, records or documents provided to IBT or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Fund(s), and IBT, its agents and subcontractors shall not be held to have
notice of any change of authority of any person, until receipt of written notice
thereof from the Fund(s). IBT, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of an officer of the
Company, and one proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
8
<PAGE>
14.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, interruption
of electrical power or other utilities, equipment or transmission failure or
damage reasonably beyond its control, or other causes reasonably beyond its
control, such party shall not be liable to the other for any damages resulting
from such failure to perform or otherwise from such causes.
14.05 Neither party to this Agreement shall be liable to the other
party for special, incidental or consequential damages, even if the other party
has been advised of the possibility of such damages, under any provision of this
Agreement or for any act or failure to act hereunder as contemplated by this
Agreement.
14.06 In order that the indemnification provisions contained in this
Article 14 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking the indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
seeking indemnification shall give the indemnifying party full and complete
authority, information and assistance to defend such claim or proceeding, and
the indemnifying party shall have, at its option, sole control of the defense of
such claim or proceeding and all negotiations for its compromise or settlement.
The party seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent, which consent shall not be
unreasonably withheld.
ARTICLE 15. Covenants of the Company and IBT
- - --------------------------------------------
15.01 The Company shall promptly furnish to IBT the following:
(a) A certified copy of the resolution of the Directors of the
Company authorizing the appointment of IBT and the execution and delivery of
this Agreement.
(b) A copy of the charter documents and by-laws of the Company
and all amendments thereto.
(c) Copies of each vote of the Directors designating
authorized persons to give instructions to IBT, and a Certificate providing
specimen signatures for such authorized persons.
(d) Certificates as to any change in any officer or Director
of the Company.
(e) If applicable a specimen of the certificate of Shares in
each Fund of the Company in the form approved by the Directors, with a
Certificate as to such approval.
(f) Specimens of all new certificates for Shares, accompanied
by the Directors' resolutions approving such forms.
(g) All account application forms and other documents relating
to shareholder accounts or relating to any plan, program or service offered by
the Company.
(h) A list of all Shareholders of the Fund(s) with the name,
address and tax identification number of each Shareholder, and the number of
Shares of the Fund(s) held by each, certificate numbers and denominations ( if
any certificates have been issued), lists of any account against
9
<PAGE>
which stops have been placed, together with the reasons for said stops, and the
number of Shares redeemed by the Fund(s).
(i) An opinion of counsel for the Company with respect to the
validity of the Shares and the status of such Shares under the Securities Act of
1933.
(j) Copies of the Fund(s) registration statement on Form N-1A
(if applicable) as amended and declared effective by the Securities and Exchange
Commission and all post-effective amendments thereto.
(k) Such other certificates, documents or opinions as IBT may
deem necessary or appropriate for IBT in the proper performance of its duties
hereunder.
15.02 IBT hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Company for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
15.03 IBT shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act and the Rules thereunder, IBT agrees that
all such records prepared or maintained by IBT relating to the services to be
performed by IBT hereunder are the confidential property of the Company and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered to the Company on and in accordance with its
request.
15.04 IBT and the Company agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
15.05 In case of any requests or demands for the inspection of the
Shareholder records of the Company, IBT will endeavor to notify the Company and
to secure instructions from an authorized officer of the Company as to such
request or demand. IBT reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be
subject to enforcement or other action by any court or regulatory body for the
failure to exhibit the Shareholder records to such person.
10
<PAGE>
ARTICLE 16. Term of Agreement
- - -----------------------------
16.01 Termination of Agreement. The term of this Agreement shall be
three years commencing upon the date first above written (the "Initial Term"),
unless earlier terminated as provided herein. After the expiration of the
Initial Term, the term of this Agreement shall automatically renew for
successive one-year terms (each a "Renewal Term") unless notice of non-renewal
is delivered by the non-renewing party to the other party no later than sixty
days prior to the expiration of the Initial Term or any Renewal Term, as the
case may be.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.
(b) Either party may terminate this Agreement during any
Renewal Term upon sixty days written notice to the other party. Any termination
pursuant to this paragraph 16.01(b) shall be effective upon expiration of such
sixty days, provided, however, that the effective date of such termination may
be postponed to a date not more than ninety days after delivery of the written
notice: (i) at the request of IBT, in order to prepare for the transfer by IBT
of its duties hereunder; or (ii) at the request of the Fund, in order to give
the Fund an opportunity to make suitable arrangements for a successor transfer
agent.
16.02 Should the Company exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Company. Additionally, IBT reserves the right to recover from
the Company any other reasonable expenses associated with such termination.
ARTICLE 17. Additional Funds
- - ----------------------------
17.01 In the event that the Company establishes one or more series of
Shares in addition to the initial series, or one or more classes in addition to
the initial classes, with respect to which it desires to have IBT render
services as transfer agent under the terms hereof, it shall so notify IBT in
writing, and if IBT agrees in writing to provide such services, such series or
classes of Shares shall become a Fund hereunder.
ARTICLE 18. Assignment
- - ----------------------
18.01 Except as provided in Section 18.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
18.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
18.03 IBT, may without further consent on the part of the Company,
subcontract for the performance of any of the services to be provided hereunder
to third parties, including any affiliate of IBT.
11
<PAGE>
ARTICLE 19. Amendment
- - ---------------------
19.01 This Agreement may be amended or modified only by a written
agreement executed by both parties.
ARTICLE 20. Governing Law
- - -------------------------
20.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York,
without regard to its conflict of laws provisions.
ARTICLE 21. Merger of Agreement and Severability
- - ------------------------------------------------
21.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
21.02 In the event any provision of this Agreement shall be held
unenforceable or invalid for any reason, the remainder of the Agreement shall
remain in full force and effect.
21.03 This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original; but such counterparts shall
together, constitute only one instrument.
ARTICLE 22. Notices
- - -------------------
22. 01 Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below:
For the Fund(s): Merrimac Master Portfolio
P.O. Box 501
Cardinal Avenue
Georgetown, Grand Cayman
Cayman Islands, B.W.I.
For IBT: IBT Fund Services (Ireland) Limited
Deloitte & Touche House
29 Earlsfort Terrace
Dublin 2, Ireland
Attention: Raymond A. O'Neil
With a copy to: John E. Henry
General Counsel
Investors Bank & Trust Company
89 South Street, P.O. Box 1537
Boston, MA 02205-1537
12
<PAGE>
ARTICLE 23. Regarding the Fund
- - ------------------------------
23.01 Limitation of Liability. IBT is hereby expressly put on notice of
the limitation of liability set forth in the Declaration of Trust of the Fund
and agrees that the obligations assumed by the Fund hereunder shall be limited
in all cases to the assets of the Fund and that IBT shall not seek satisfaction
of any such obligation from the officers, agents, employees, trustees, or
shareholders of the Fund.
23.03 Several Obligations of the Portfolios. This Agreement is an
agreement entered into between IBT and the Funds with respect to each Fund. With
respect to any obligation of the Funds on behalf of any Fund arising out of this
Agreement, IBT shall look for payment or satisfaction of such obligation solely
to the assets of the Fund to which such obligation relates as though IBT had
separately contracted with the Funds by separate written instrument with respect
to each Fund.
[Remainder of Page Intentionally Left Blank]
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and the year first above written.
MERRIMAC MASTER PORTFOLIO
By: /s/ Sean P. Brennan
-------------------------------
Name:
Title:
IBT FUND SERVICES (IRELAND) LIMITED
By: /s/ Kevin J. Sheehan
-------------------------------
Name: Kevin J. Sheehan
Title: President & C.E.O.
14
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from The Merrimac Cash Portfolio
form N-SAR for the period ended December 31, 1996
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,005,827,311
<INVESTMENTS-AT-VALUE> 1,005,827,311
<RECEIVABLES> 487,659
<ASSETS-OTHER> 58,652
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,006,373,622
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63,477
<TOTAL-LIABILITIES> 63,477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,006,310,145
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,006,310,145
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,572,665
<OTHER-INCOME> 0
<EXPENSES-NET> 78,760
<NET-INVESTMENT-INCOME> 3,493,905
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,493,905
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,006,310,145
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 108,913
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 136,420
<AVERAGE-NET-ASSETS> 571,907,587
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
