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 1838
INVESTMENT ADVISORS, LLC, a Delaware limited liability company (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
WHEREAS, the Investment Adviser has served as investment
adviser to the Fund since July 31, 1998, while operating as a Delaware
corporation under the name "1838 Investment Advisors, Inc.;" and
WHEREAS, the Investment Advisor changed its form of
organization from a Delaware corporation to a Delaware limited liability company
effective December 31, 2000, and changed its name to 1838 Investment Advisors,
LLC to reflect the change in form of organization; and
WHEREAS, the change in the Investment Adviser's form of
organization does not constitute a change in control of the Investment Adviser;
and
WHEREAS, a majority of the members of the Board of Directors
of the Fund, including a majority of the independent Directors, at an in-person
Board of Directors meeting held on December 14, 2000, called for the purpose of
voting on approval of this Agreement, approved the change in the Investment
Adviser's form of organization, the change in the Investment Adviser's name, and
this Agreement which reflects the Investment Adviser's new name, and contains
terms substantially identical to the terms of the Investment Advisory Agreement
between the Fund and the Investment Adviser dated July 31, 1998, such approval
of this Agreement to be effective as of December 31, 2000.
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-
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
and/or with broker-dealers who sell shares of the Fund or who sell shares of 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
-3-
compliance with the Rules of the Securities and Exchange Commission and the
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 on the last day in each
month on which the New York Stock Exchange is open for trading, a fee at the
rate of 5/96 of 1% of the first $40,000,000 of the net asset value of the Fund
on such day and 1/24 of 1% of the net asset value of the Fund on such day in
excess of $40,000,000. 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,
-4-
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, and shall be payable within 10 days after
the date of termination.
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 a 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. The Fund agrees that, in the event that the Investment
Adviser ceases to be the Fund's investment adviser for any reason, the Fund will
(unless the Investment Adviser otherwise agrees in writing) promptly take all
necessary steps to propose to the Fund's shareholders at the next regular
meeting that the Fund change to a name not including the word "1838." The Fund
agrees that the word "1838" in the Fund's name is derived from the name of the
Investment Adviser and is the property of the Investment Adviser for copyright
-5-
and all other purposes and that therefore such word may be freely used by the
Investment Adviser as to other investment activities or other investment
products.
9. This Agreement shall be executed and become effective as of
the date written below. It may be renewed thereafter only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Directors or by vote of a majority of the outstanding voting securities of
the Fund and only if the terms and the renewal hereof have been approved by the
vote of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. No amendment to this Agreement shall be
effective unless the terms thereof have been approved by the vote of a majority
of the outstanding voting securities of the Fund and 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.
-6-
10. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
11. 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 hereto have caused their
corporate seals to be affixed and duly attested and their presents to be signed
by their duly authorized officers as of December 31, 2000.
Attest: 1838 BOND-DEBENTURE TRADING FUND
By:
Xxxx X. Xxxxxxxxx
President
Attest: 1838 INVESTMENT ADVISORS, LLC
By:
X. Xxxxxxx Xxxxx
President and Director
-7-
