Investment Management Agreement Dated October 28, 2004

Exhibit 10.5


INVESTMENT MANAGER AGREEMENT


by and between


CENTURY BANK AND TRUST COMPANY


and


BLACKROCK FINANCIAL MANAGEMENT, INC.


October 28, 2004


INVESTMENT MANAGER AGREEMENT


THIS AGREEMENT, made as of the 28th day of October 2004, by and between Century Bank and Trust Company, a Massachusetts trust company, and its wholly-owned subsidiaries from time to time (hereinafter collectively called the "Company") and BlackRock Financial Management, Inc. (hereinafter called the "Manager").


WITNESSETH:


WHEREAS, the Company has all requisite authority to appoint one or more investment managers to supervise and direct the investment and reinvestment of a portion of all of the assets of the Company;


THEREFORE, for and in consideration of the premises and of the mutual covenants herein contained, the parties hereby agree as follows:


1. Appointment and Status as Investment Manager. The Company hereby appoints the Manager as an "Investment Manager." The Manager does hereby accept said appointment and by its execution of this Agreement the Manager represents and warrants that it is registered as an investment adviser under the Investment Advisers Act of 1940 (the "Advisers Act"). The Manager does also acknowledge that it is a fiduciary with respect to the assets under management and assumes the duties, responsibilities and obligations of a fiduciary with respect to the services described in Sections 3 through 5 below. The Manager represents and warrants that it will not under any circumstances take any action under this Agreement in which the Company will transact with any entity that the Office of Foreign Assets Control, U.S. Department of the Treasury ("OFAC") has found to be, or is for the benefit of, or contains assets issued by, owned, possessed by or in which there is an interest of, any person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by OFAC (each, an "SDN") or is a department, agency or instrumentality of, or otherwise controlled by or acting on behalf of, the government of any of country that is the target of any of the several economic sanctions programs administered by OFAC (31 C.F.R. Parts 500 through 598) (the "SDN List").


2. Representations by Company. The Company represents and warrants that (a) it has all requisite authority to appoint the Manager hereunder, (b) the terms of this Agreement do not conflict with any obligation by which the Company is bound, whether arising by contract, operation of law or otherwise, and (c) this Agreement has been duly authorized by appropriate corporate action.


3. Management Services.


(a) Securities. The Manager shall be responsible for the investment and reinvestment of those assets designated by the Company as subject to the Manager's management (which assets, together with all additions, substitutions and alterations thereto are hereinafter called the "Account" and sometimes referred to by the designation described in the next sentence). Currently, the Account is designated by the Company as the Available for Sale (AFS) portfolio, with an approximate book value of $470 million as of the date hereof. The Account may include all securities and instruments


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described in Exhibit A or appropriate to effect the strategies described therein. The Company does hereby delegate to the Manager all of its powers, duties and responsibilities with regard to such investment and reinvestment and hereby appoints the Manager as its agent in fact with full authority to buy, sell or otherwise effect investment transactions involving the assets in its name and for the Account, subject to such limitations as are set forth in Exhibit A, as the same shall be amended from time to time. Said powers, duties and responsibilities shall be exercised exclusively by the Manager pursuant to and in accordance with its fiduciary responsibilities and the provisions of this Agreement. In deciding on a proper investment of the Account, the Manager shall comply with the following (as communicated in writing to the Manager by the Company from time to time): a) the investment purposes of the Company, b) the Company's financial needs such as liquidity, c) applicable laws, d) the Company's investment policies and guidelines, and e) the Account's Investment Guidelines attached as Exhibit A. In addition, in accordance with the Manager's guidelines in effect from time to time, the Manager or its agent is authorized, to vote, tender or convert any securities in the Account; to execute waivers, consents and other instruments with respect to such securities; to endorse, transfer or deliver such securities or to consent to any class action, plan of reorganization, merger, combination, consolidation, liquidation or similar plan with reference to such securities; and the Manager shall not incur any liability to the Company by reason of any exercise of, or failure to exercise, any such discretion in the absence of gross negligence or bad faith.


(b) Financing. As part of the asset management services provided, the Manager will, at the direction of the Company, arrange for financing for certain securities in the Portfolio. In addition, the Manager may be called upon to arrange for financing for securities held outside the Portfolio. The Manager will utilize various financing instruments as identified by the Company in the Investment Guidelines. The Company understands that (i) the use of financing will significantly increase the sensitivity of the market value of the Portfolio to changes in interest rates, (ii) the extent to which the income, gains and losses of the Portfolio from financed investments are increased, will depend on the degree and cost of financing employed, (iii) maintaining compliance with the Investment Guidelines as they pertain to financing activities in the Portfolio and other accounts may, under some circumstances, require the Manager to dispose of some or all of the Portfolio investments under unfavorable market conditions, thus causing the Company to recognize a loss it might not have otherwise recognized and (iv) the degree of financing employed could limit the Manager's ability to respond to changing market conditions.


4. Investment Limitations; Compliance with Applicable Laws. The Manager shall not acquire for the account of the Company any asset or obligation from, or issued by, a company that is a Century Bancorp affiliate ("Century Bancorp Affiliate") as defined by Section 23A of the Federal Reserve Act ("Section 23A") and as identified in writing by the Company to the Manager, except with prior written approval by the Company. The Manager shall not acquire from any person for the account of the Company any obligation during the existence of an underwriting syndicate if, to the Manager's knowledge, after due inquiry, a Century Bancorp Affiliate is a member of the syndicate (or is otherwise acting as a "principal underwriter" as defined by Section 23B of the Federal Reserve Act ("Section 23B")), unless (1) the underwriting commitment of the Century Bancorp Affiliate (or affiliates) is 50% or less of the total and (2) the Manager obtains the advance approval of the Company's chief financial officer. The Manager may not engage in any transaction with any party if, to the Manager's knowledge, the proceeds of


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such purchase are to be transferred to a Century Bancorp Affiliate (such as the purchase of a debt security where the proceeds will be used to repay a loan made by a Century Bancorp Affiliate).


The Company agrees that it will be responsible for complying with all applicable requirements resulting from the Manager's acquisition of any obligation subject to Section 23A pursuant to the Company's approval.


The Manager agrees that it will take no action that would (a) cause Century Subsidiary Investments, Inc. II, and any other security corporation subsidiary, either now existing or formed hereafter and the assets of which may be made subject to investment by the Manager pursuant to this Agreement (collectively, the "Security Corporations") to fail to qualify for taxation as a security corporation pursuant to Mass. G.L. Ch. 63 Section 38B, (b) cause investments to be made with respect to the Account that would be unlawful investments for the Company or its subsidiaries under the Massachusetts General Laws or the Federal Deposit Insurance Act, (c) cause the amount of securities held by any of the Security Corporations to exceed the amount authorized for such subsidiary by the Massachusetts Commissioner of Banks, provided that the Company advises the Manager of any such authorized amount, (d) cause any of the Security Corporations to violate the terms of any Advances Agreement with the Federal Home Loan Bank of Boston, provided each such Advances Agreement is provided to the Manager or (e) cause the Company to trigger an adverse classification under Financial Accounting Standards Board Staff Position EITF Issue 03-1.


5. Transactions with Affiliates.


The Manager will not affect purchases or sales on behalf of the Company with a Century Bancorp Affiliate.


6. Accounting and Reports. The Manager shall furnish the Company with appraisals of the Account, performance tabulations, a summ ...