1838 INVESTMENT ADVISORS FUNDS
1838 FIXED INCOME FUND
INTERIM INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made by and between 1838 INVESTMENT ADVISORS FUNDS,
a Delaware business trust (hereinafter called the "Trust"), on behalf of its
1838 FIXED INCOME FUND series (the "Fund"), and Andover Acquisition Co., LP, a
Delaware limited partnership (hereinafter called the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Trust 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 assets of the Fund's former investment adviser,
1838 Investment Advisors, LLC (the "former adviser") were purchased in an asset
sale transaction, resulting in the automatic termination on May 13, 2004 of the
Fund's previous contract (as defined in Rule 15a-4) with the former adviser; and
WHEREAS, the Trust has selected the Investment Adviser to
serve, effective May 13, 2004, as the interim investment adviser for the Fund
pursuant to Rule 15a-4 under the 1940 Act; and
WHEREAS, pursuant to Rule 15a-4, 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 investment advisory agreement and determined that the scope and quality
of services to be provided to the Fund under this Agreement will be at least
equivalent to the scope and quality of services provided under the previous
contract.
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 Trust on behalf of 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
Trustees and officers of the Trust 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 Trust or the Fund in any way, or in any way be deemed an
agent of the Trust or 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
Trustees of the Trust with such information and reports regarding the Fund's
investments as the Investment Adviser deems appropriate or as the Trustees of
the Trust 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,
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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 trustees,
officers and/or employees of the Trust shall not receive any compensation from
the Trust 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 Trust 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
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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 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
Trustees and officers of the Trust, 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. (a) As compensation for the services to be rendered to the
Fund by the Investment Adviser under the provisions of this Agreement, the Trust
on behalf of the Fund shall pay to the Investment Adviser from the Fund's assets
an annual fee equal to 0.50% of the daily average net assets of the Fund,
payable on a monthly basis, subject to reduction to the extent necessary to
comply with the most stringent limits prescribed by any state in which the
Fund's shares are offered for sale.
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
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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.
(b) 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 with the
Investment Adviser by the end of the 150-day period described in paragraph 9
below, the amount in the escrow account (including interest earned) will be paid
to the Investment Adviser.
If a majority of the Fund's outstanding voting securities do
not approve a contract with the Investment Adviser, the Investment 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).
5. The services to be rendered by the Investment Adviser to
the Trust on behalf of 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 Trust on behalf of 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
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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 Trust agrees that, in the event that the Investment
Adviser ceases to be the Fund's investment adviser for any reason, the Trust
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 Trust
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
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 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.
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.
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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 May 13, 2004.
1838 INVESTMENT ADVISORS FUNDS
By:/s/ X. Xxxxxxx Xxxxx
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X. Xxxxxxx Xxxxx
President
ANDOVER ACQUISITION CO., LP
By: Andover Management LLC
its General Partner
By:/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Manager
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