EXHIBIT (D)
ADVISORY AGREEMENT
AGREEMENT, dated September 29, 2006 between CHESTNUT STREET EXCHANGE
FUND ("Fund"), and BLACKROCK CAPITAL MANAGEMENT, INC. ("BlackRock").
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940 (the
"Act"); and
WHEREAS, the Fund desires to retain BlackRock to render investment
advisory and administrative services to the Fund, and BlackRock is willing to
render such services;
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DELIVERY OF DOCUMENTS. The Fund has previously furnished BlackRock
with copies properly certified or authenticated of each of the following:
(a) The Fund's Restated Certificate and Agreement of Limited
Partnership dated August 16, 1976 and recorded in California on August 16,
1976 and all subsequent restatements and amendments thereto. Such Restated
Certificates and Agreement of Limited Partnership, as presently in effect
and as it may hereinafter from time to time be restated or further amended,
is hereinafter referred to as the "Certificate of Limited Partnership";
(b) The Fund's Code of Regulations, as amended (such Code, as
presently in effect and as it may hereinafter from time to time be amended,
is hereinafter referred to as the "Code");
(c) Resolutions of the Managing General Partners of the Fund
authorizing the appointment of the Adviser and approving this Agreement;
and
(d) An Order of the Securities and Exchange Commission, dated November
9, 1976, exempting the Fund from certain provisions of Sections 2(a)(3),
2(a)(19), 18(f) and 22(e) of the Act, and exempting the Non-Managing
General Partner of the Fund from certain provisions of Section 17(a) of the
Act.
The Fund agrees to furnish BlackRock from time to time with copies,
properly certified or authenticated, of any amendments or supplements to the
foregoing.
2. APPOINTMENT. The Fund hereby appoints BlackRock to act as
investment adviser to the Fund for the period and on the terms set forth in this
Agreement. BlackRock is sometimes hereinafter referred to as "the Adviser." The
Adviser accepts such appointment and agrees that the services herein set forth
shall be rendered for the compensation herein provided.
3. SERVICES PROVIDED BY BLACKROCK. Subject to the supervision of the
Managing General Partners of the Fund, BlackRock will provide a continuous
investment program for the Fund's portfolio, including investment research and
management with respect to all securities and investments and cash and cash
equivalents in the portfolio. BlackRock will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Fund, and what portion of its assets will be invested or held uninvested in cash
or cash equivalents. BlackRock will provide the services rendered by it
hereunder in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus and as they may hereafter be amended.
BlackRock further agrees that it:
(a) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, BlackRock will attempt to obtain
the best net price and the most favorable execution of its orders.
Consistent with this obligation, when the execution and price offered by
two or more brokers or dealers are comparable, BlackRock may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Fund with research advice and other services. In no
instance will portfolio securities be purchased from or sold to BlackRock
or any affiliated person thereof;
(b) will conform with all applicable laws, rules and regulations
("Rules");
(c) will not invest its assets or the assets of any accounts advised
by it in Shares of the Fund, make loans for the purpose of purchasing or
carrying Shares, or make loans to the Fund; and
(d) will compute the net asset value and the net income of the Fund on
each business day as described in the Fund's Prospectus or as more
frequently requested by the Fund.
BlackRock may from time to time, in its sole discretion to the extent
permitted by applicable law, appoint one or more sub-advisers, including,
without limitation, affiliates of BlackRock, to perform investment advisory
services with respect to the Fund; provided, however, that the compensation of
such person or persons shall be paid by BlackRock and that BlackRock shall be as
fully responsible to the Fund for the acts and omissions of any sub-adviser as
it is for its own acts and omissions. BlackRock may terminate any or all
sub-advisers in its sole discretion at any time to the extent permitted by
applicable law.
4. SERVICES NOT EXCLUSIVE. The investment advisory services rendered
by BlackRock hereunder are not to be deemed exclusive, and BlackRock shall be
free to render similar services to others so long as its services under this
Agreement are not impaired thereby.
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5. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the Act, the Adviser hereby agrees that all records which it
maintains for the Fund are property of the Fund and further agrees to surrender
promptly to the Fund any of such records upon the Fund's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 the records
required to be maintained by Rule 31a-1 under the Act.
6. EXPENSES. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of (including brokerage commissions, if any)
securities purchased for the Fund.
7. COMPENSATION. For the services provided hereunder by BlackRock and
the expenses assumed pursuant to this Agreement, the Fund will pay BlackRock,
and BlackRock will accept as full compensation therefor, a fee computed daily
and paid monthly at the annual rate of 4/10 of 1% of the first $100,000,000 of
the Fund's net assets, plus 3/10 of 1% of net assets exceeding $100,000,000.
8. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates, except
a loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence by it in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement shall become effective on
September 29, 2006 or the date upon which it is approved by a majority of the
outstanding voting securities of the Fund at a meeting of Partners, whichever is
later. Unless sooner terminated as provided herein, this Agreement shall
continue for an initial two year period. Thereafter, if not terminated, this
Agreement shall continue for successive annual periods, provided, such
continuance for successive annual periods is specifically approved at least
annually (a) by the vote of a majority of those members of the Board of Managing
General Partners of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Managing General Partners of
the Fund or by vote of a majority of the outstanding voting securities of the
Fund, provided however, that this Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by the Managing General Partners of
the Fund or by vote of a majority of the outstanding voting securities of the
Fund, on 60 days' written notice to the Adviser, or the Adviser at any time,
without payment of any penalty, on 90 days' written notice to the Fund. This
Agreement will terminate automatically in the event of its assignment. (As used
in this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by
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the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by vote of the holders of a majority of the Fund's outstanding
voting securities.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. NO PERSONAL LIABILITY. The persons executing this Agreement on
behalf of the Fund have executed the Agreement as Managing General Partners or
officers of the Fund and not individually. The obligations of the Fund hereunder
and any liabilities or claims in connection therewith are not binding upon any
of the Limited Partners of the Fund individually, but are binding only upon the
assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Attest: BLACKROCK CAPITAL MANAGEMENT, INC.
/s/ Xxxxxx Xxxx By: /s/ Xxxx Xxxxxxxx
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Xxxxxx Xxxx Xxxx Xxxxxxxx
Attest: CHESTNUT STREET EXCHANGE FUND
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxx Xxxxxx X. Xxxxx
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