1838 BOND-DEBENTURE TRADING FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made by and between 1838 BOND-DEBENTURE TRADING
FUND, a Delaware corporation (hereinafter called the "Fund"), and MBIA
Capital Management Corp., a Delaware corporation (hereinafter called the
"Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 (the "1940 Act") and
engages in the business of investing and reinvesting its assets in
securities, and the Investment Adviser is a registered Investment Adviser
under the Investment Advisers Act of 1940 (the "Advisers Act") and
engages in the business of providing investment management services; and
WHEREAS, the Fund has selected the Investment Adviser to serve as the
investment adviser for the Fund; and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound,
it is agreed as follows:
1. The Fund hereby employs the Investment Adviser to manage the
investment and reinvestment of the Fund's assets and to administer its
affairs, subject to the direction of the Board of Directors and officers of
the Fund for the period and on the terms hereinafter set forth. The
Investment Adviser hereby accepts such employment and agrees during
such period to render the services and assume the obligations herein set
forth for the compensation herein provided. The Investment Adviser shall,
for all purposes herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized, have no authority
to act for or to represent the Fund in any way, or in any way be deemed
an agent of the Fund. The Investment Adviser shall regularly make decisions
as to what securities to purchase and sell on behalf of the Fund and shall
record and implement such decisions and shall furnish the Board of Directors
of the Fund with such information and reports regarding the Fund's
investments as the Investment Adviser deems appropriate or as the
Directors of the Fund may reasonably request. Subject to compliance with
the requirements of the 1940 Act, the Investment Adviser may retain as a
sub-adviser to the Fund, at the Investment Adviser's own expense, any
investment adviser registered under the Advisers Act.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but
not in limitation of the foregoing, the costs incurred in: the maintenance
of its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders;
calling and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and accounting
fees; and taxes. Officers and employees of the Investment Adviser may
be trustees, directors, officers and employees of the funds of which the
Investment Adviser serves as investment adviser. Officers and employees
of the Investment Adviser who are directors, officers and/or employees of
the Fund shall not receive any compensation from the Fund for acting in
such dual capacity.
In the conduct of the respective businesses of the parties hereto and in the
performance of this Agreement, the Fund and Investment Adviser may
share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Investment Adviser shall place and execute Fund
orders for the purchase and sale of portfolio securities with broker-dealers.
Subject to the primary objective of obtaining the best available prices and
execution, the Investment Adviser will place orders for the purchase and
sale of portfolio securities for the Fund with such broker-dealers as it
may select from time to time, including brokers who provide statistical,
factual and financial information and services to the Fund, to the
Investment Adviser, or to any other fund for which the Investment
Adviser provides investment advisory services. Broker-dealers who
sell shares of the funds of which the Investment Adviser is investment
adviser shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance
with the Rules of the Securities and Exchange Commission and National
Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board
of Directors and officers of the Fund, the Investment Adviser is authorized
to pay a member of an exchange, broker or dealer an amount of
commission
for effecting a securities transaction in excess of the amount of
commission
another member of an exchange, broker or dealer would have charged for
effecting that transaction in such instances where the Investment Adviser
has determined in good faith that such amount of commission was
reasonable
in relation to the value of the brokerage and research services provided by
such member, broker or dealer, viewed in terms of either that particular
transaction or the Investment Adviser's overall responsibilities with
respect to the Fund and to other funds for which the Investment
Adviser exercises investment discretion.
4. As compensation for the services to be rendered to the Fund
by the Investment Adviser under the provisions of this Agreement,
the Fund shall pay to the Investment Adviser from the Fund's assets
each month an investment advisory fee at the annualized rate of 0.50%
of the first $100,000,000 of the net asset value of the Fund on the last
day of such month and 0.40% of the net asset value of the Fund on the
last day of such month in excess of $100,000,000. The net asset value
of the Fund shall be defined as the total assets of the Fund, less its
liabilities, and shall be determined in accordance with any instructions
of the Board of Directors.
If this Agreement shall become effective subsequent to the first day
of the month, or shall terminate before the last day of the month,
the Investment Adviser's compensation for such fraction of the month
shall be determined by applying the foregoing percentages to the average
of the weekly net asset values of the Fund during such fraction of a month
(or if none, to the net asset value of the Fund as calculated on the last
day of the preceding month on which the New York Stock Exchange
was open for trading) and in the proportion that such fraction of a
month bears to the entire month.
If this Agreement is terminated prior to the end of any calendar month,
the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which
the number of calendar days during which the Agreement is in effect
bears to the number of calendar days in the month.
5. The services to be rendered by the Investment Adviser to the
Fund under the provisions of this Agreement are not to be deemed to be
exclusive, and the Investment Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Adviser, its officers, employees, and agents
may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services
to the Fund or to any other investment company, corporation,
association, firm or individual.
7. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the performance of duties of the Investment
Adviser to the Fund, the Investment Adviser shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action
or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security, or otherwise.
8. This Agreement shall be executed and become effective as of the
date written below. The Agreement will continue in effect for an initial
term of two years and may continue thereafter from year to year if
specifically approved at least annually by the "vote of a majority of the
outstanding voting securities" of the Fund or by the Board and, in either
event, by the vote of a majority of the Directors who are not parties to the
Agreement or interested persons of any such party, cast in person at a
meeting called for such purpose. No amendment to this Agreement shall
be effective unless the terms thereof have been approved by the vote of a
majority of Directors of the Fund who are not parties to the Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Notwithstanding the foregoing,
this Agreement may be terminated by the Fund at any time, without the
payment of a penalty, on sixty days' written notice to the Investment
Adviser of the Fund's intention to do so, pursuant to action by the Board
of Directors of the Fund or pursuant to a vote of a majority of the
outstanding voting securities of the Fund. The Investment Adviser may
terminate this Agreement at any time, without the payment of penalty on
sixty days' written notice to the Fund of its intention to do so. Upon
termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for
any obligation to respond for a breach of this Agreement committed
prior to such termination, and except for the obligation of the Fund to
pay to the Investment Adviser the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
9. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
10. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed on their behalf by their respective officers thereunto duly
authorized all as of October 31, 2005.
1838 Bond-Debenture Trading Fund
By
President
MBIA Capital Management Corp.
By__________________________________
President
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