INTERIM SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN
ANDOVER ACQUISITION CO., LP
AND
MBIA CAPITAL MANAGEMENT CORP.
INTERIM SUB-INVESTMENT ADVISORY AGREEMENT (the "Agreement")
made this 13th day of May, 2004, by and between ANDOVER ACQUISITION CO., LP (the
"Investment Adviser") and MBIA CAPITAL MANAGEMENT CORP. (the "Sub-Adviser"),
which Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one instrument.
WITNESSETH:
WHEREAS, the Investment Advisor has selected the Sub-Adviser
to serve, effective May 13, 2004, as the interim sub-investment adviser for the
1838 Fixed Income Fund series (the "Fund") of 1838 Investment Advisors Funds
(the "Trust"); and
WHEREAS, pursuant to Rule 15a-4 promulgated under the
Investment Company Act of 1940, as amended (the "1940 Act"), a majority of the
members of the Board of Trustees of the Trust, including a majority of the
independent Trustees, at an in-person Board of Trustees meeting held on March
31, 2004, called for the purpose of voting on approval of this Agreement,
approved this interim sub-investment advisory agreement; and
WHEREAS, the Investment Adviser wishes to enter into a
contract with the Sub-Adviser to render to the Investment Adviser the following
services:
To furnish research, analysis, advice and recommendations with
respect to the purchase and sale of securities and the making of investment
commitments by the Investment Adviser regarding all of the assets of the Fund,
subject to oversight by the Board of Trustees of the Trust and the supervision
of the Investment Adviser; and
WHEREAS, the Sub-Adviser is willing to perform such services
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and intending to be bound, the parties agree as follows:
1. As compensation for all services, facilities furnished and
expenses borne by the Sub-Adviser under this Agreement, the Investment Adviser
shall pay to the Sub-Adviser a fee equal to zero. The compensation earned under
this Agreement will be held in an interest-bearing escrow account with the
Trust's custodian. If a majority of the Fund's outstanding voting securities
approve a contract between the Investment Adviser and the Sub-Adviser by the end
of the 150-day period described in paragraph 2 below, the amount in the escrow
account (including interest earned) will be paid to the Sub-Adviser.
If a majority of the Fund's outstanding voting securities do
not approve a contract between the Investment Adviser and Sub-Adviser, the
Sub-Adviser will be paid, out of the escrow account, the lesser of (i) any costs
incurred in performing under this Agreement (plus interest earned on that amount
while in escrow), or (ii) the total amount in the escrow account (plus interest
earned).
2. This Agreement shall be executed and become effective as of
the date first written above. It shall remain in effect no longer than 150 days
following the effective date. The Board of Trustees or a majority of the Fund's
outstanding voting securities may terminate this Agreement at any time, without
payment of any penalty, on 10 calendar days' written notice to the Investment
Adviser. This Agreement will terminate automatically in the event of its
assignment or on termination of the Investment Advisory Agreement between the
Investment Adviser and the Trust relating to the Fund. This Agreement may also
be terminated by the Sub-Adviser without penalty upon sixty days' written notice
to the Investment Adviser and the Trust.
3. Subject to the supervision of the Board of Trustees of the
Trust and the Investment Adviser, the Sub-Adviser will provide recommendations
for a continuous investment program for the Fund, including investment research
and management with respect to securities and investments, including cash and
cash equivalents in the Fund. The Sub-Adviser will recommend to the Investment
Adviser from time to time what securities and other investments should be
purchased, retained or sold by the Fund. The Sub-Adviser will provide the
services under this Agreement in accordance with (i) the Fund's investment
objective, policies and restrictions as stated in the then effective Prospectus
and Statement of Additional Information relating to the Fund (ii) any additional
policies or guidelines established by the Investment Adviser or by the Board of
Trustees that have been furnished to the Sub-Adviser, and (iii) the provisions
of the Internal Revenue Code, as amended, applicable to "regulated investment
companies" (as defined in Section 851 of the Internal Revenue Code). The
Sub-Adviser further agrees that it:
a. will conform with all applicable provisions of law,
including without limitation all applicable provisions of the 1940 Act and all
applicable rules and regulations of the Securities and Exchange Commission
("SEC") and will, in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal or State agencies which now has
or in the future will have jurisdiction over its activities;
b. (1) will recommend placement of orders, and may place
orders, pursuant to its investment determinations for the Fund either directly
with any broker or dealer, or with the issuer. In recommending placement of
orders with brokers or dealers, the Sub-Adviser will attempt to assist the
Investment Adviser to obtain the best net price and the most favorable execution
of its orders. In placing orders with brokers or dealers, the Sub-Adviser will
attempt to obtain the best net price and most favorable execution of its orders.
(2) Notwithstanding the provisions of paragraph 3(b)(1)
above and subject to the policies and procedures as may be adopted by the Board
of Trustees and officers of the Trust and notified to the Sub-Adviser, the
Sub-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 Sub-Adviser
2
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 Sub-Adviser's overall responsibilities with respect to the Fund and to
other funds for which the Sub-Adviser exercises investment discretion.
(3) In no instance will securities be purchased from or
sold to the Sub-Adviser or any affiliated person of the Sub-Adviser as
principal. Notwithstanding the foregoing sentence, the Sub-Adviser may arrange
for the execution of, or place, brokered transactions through an affiliated
broker-dealer in conformity with policies and procedures for such purpose if,
when, and as established by the Trustees of the Trust and notified to the
Sub-Adviser and provided that such transactions comply with Rule 17e-1 under the
1940 Act in all respects; and
c. will pay its own expenses incurred in furnishing the
services to be provided by it pursuant to this Agreement and will provide, at
its own cost, all office space and facilities necessary to furnish such
services.
4. The Investment Adviser shall be responsible for sending
shareholders any documents or other information required to be sent to
shareholders and otherwise acting as the contact person with the shareholders.
The Investment Adviser shall be responsible for maintaining accounting records
relating to the shareholders.
5. The Sub-Adviser shall furnish the Investment Adviser and
the administrator of the Fund (the "Administrator") monthly, quarterly and
annual reports concerning portfolio transactions and performance of the Fund in
such form as may be mutually agreed upon, and agrees to review the Fund and
discuss the management of the Fund with representatives or agents of the
Investment Adviser, the Administrator or the Trust at their reasonable request.
The Sub-Adviser shall permit all books and records with respect to the Fund to
be inspected and audited by the Investment Adviser and the Administrator at all
reasonable times during normal business hours, upon reasonable notice. The
Sub-Adviser shall also provide the Investment Adviser, the Administrator or the
Trust with such other information and reports as may reasonably be requested by
the Investment Adviser, the Administrator or the Trust from time to time,
including without limitation all material as reasonably may be requested by the
trustees of the Trust pursuant to Section 15(c) of the 1940 Act.
6. The Sub-Adviser shall provide to the Investment Adviser a
copy of the Sub-Adviser's Form ADV as filed with the SEC and as amended from
time to time and a list of the persons whom the Sub-Adviser wishes to have
authorized to give written and/or oral instructions to custodians of assets of
the Fund.
7. The Sub-Adviser shall maintain and be bound by a Code of
Ethics satisfying the requirements of Rule 17j-1 under the 1940 Act, and shall
provide to the Trust a current copy of such Code of Ethics, as amended from time
to time.
8. It is expressly understood and agreed that the services to
be rendered by the Sub-Adviser to the Investment Adviser under the provisions of
this Agreement are not to be deemed to be exclusive, and the Sub-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 materially
impaired thereby.
3
9. When the Sub-Adviser considers that the purchase or sale of
an investment is in the best interest of the Fund, as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but is not obligated to, aggregate the investments to be
bought or sold in order to obtain best execution under the circumstances. The
Sub-Adviser shall allocate the investments so bought or sold, and the expenses
incurred in the transactions, in the manner the Sub-Adviser considers to be most
equitable and consistent with its fiduciary obligations to the Fund and to such
other clients.
10. The Sub-Adviser is not obligated to buy or sell, or
recommend for purchase or sale, for the Fund any investment which it or its
officers, directors, affiliates or employees may buy or sell for the
Sub-Adviser, for such officer's, director's, affiliate's or employee's own
accounts or for the account of any of the Sub-Adviser's other clients, advisory
or otherwise.
11. The Sub-Adviser may give advice and take action with
respect to other clients or funds, or for its own account, that may differ from
the advice or the timing or nature of action taken with respect to the Fund.
12. The Investment Adviser agrees that it will furnish
currently to the Sub-Adviser all information reasonably necessary to permit the
Sub-Adviser to give the advice called for under this Agreement and such
information with reference to the Fund that is reasonably necessary to permit
the Sub-Adviser to carry out its responsibilities under this Agreement
(including, without limitation, the Fund's declaration of trust and bylaws, the
Investment Advisory Agreement, documents filed with the SEC relating to the
Fund, and resolutions, policies and procedures adopted by the Fund or the
Investment Adviser relating to the Fund, and any amendments of or supplements to
such documents). The Investment Adviser shall give the Sub-Adviser, prior to
use, copies of all reports to shareholders, sales literature, or other material
prepared for distribution to shareholders or to the public that refer to the
Sub-Adviser, and shall not use such material if the Sub-Adviser reasonably
objects in writing within five business days (or such other time period as may
be mutually agreed) after receipt. The Investment Adviser shall advise the
Sub-Adviser promptly of any transaction involving the portfolio securities of
the Fund or the Sub-Adviser's services under this Agreement of which the
Sub-Adviser would not otherwise have knowledge. The parties agree that they will
from time to time consult and make appropriate arrangements as to specific
information that is required under this paragraph and the frequency and manner
with which it shall be supplied.
13. The Sub-Adviser shall not be liable to the Investment
Adviser or the Fund for any error of judgment or mistake of law or for any loss
suffered by the Investment Adviser or the Fund in connection with any matters to
which this Agreement relates except that nothing herein contained shall be
construed to protect the Sub-Adviser against any liability by reason of the
Sub-Adviser's willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reckless disregard of its obligations or duties
under this Agreement.
14. The Sub-Adviser may use the "1838" name when referring to
the names of the Investment Adviser, the Trust and the Fund in connection with
4
its activities relating to this Agreement. The Sub-Adviser acknowledges that, as
between it and the Investment Adviser, and subject to this right, the Investment
Adviser retains all rights to the "1838" name.
15. Information and recommendations supplied by the
Sub-Adviser in performing its obligations under this Agreement are confidential
and for use only by the Investment Adviser, or such persons as the Investment
Adviser designates, in connection with the Fund. Information supplied to the
Sub-Adviser in connection with performing its obligations under this Agreement
is confidential and for use only by the Sub-Adviser in connection with the Fund.
The Sub-Adviser shall maintain and enforce adequate security procedures with
respect to the documents and data relating to its responsibilities under this
Agreement.
16. In performing its duties under this Agreement, the
Sub-Adviser is an independent contractor and, except as otherwise provided in
this Agreement or otherwise authorized in writing, has no authority to act for
or represent, or otherwise be an agent of, the Investment Adviser.
17. No provision of this Agreement may be changed or waived
except by an instrument in writing signed by the party against whom enforcement
of the change or waiver is sought. No amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom, SEC
no-action letter or SEC interpretive guidance.
18. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
applying the principles of conflicts of law thereunder.
19. Any notice to be given hereunder may be given by personal
notification or by first class mail, postage prepaid, to the party specified at
the address stated below:
a. To the Investment Adviser at:
Andover Acquisition Co., LP
0000 Xxxxxxxxxxx Xxxx.
Xxxxxx Xxxxx
Xxxx xx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
b. To the Sub-Adviser at:
MBIA Capital Management Corp.
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
5
c. To the Trust at:
1838 Investment Advisors Funds
0000 Xxxxxxxxxxx Xxxx.
Xxxxxx Xxxxx
Xxxx xx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
d. With copies to:
Xxxxxx X. Del Xxxx, Esquire
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
6
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized officers as of the day and year
first above written.
ANDOVER ACQUISITION CO., LP
By: Andover Management LLC
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx, Manager
MBIA CAPITAL MANAGEMENT CORP.
By: /s/
------------------------------
7
