EXHIBIT 22(D)(1)
INVESTMENT ADVISORY AGREEMENT
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INVESTMENT ADVISORY AGREEMENT, dated March 21, 2003, between Xxx Xxxxx
Research Funds (the "Trust"), a Delaware statutory trust, and Gabelli Funds, LLC
(the "Adviser"), a New York limited liability corporation.
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties hereto as follows:
1. IN GENERAL
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The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Trust with respect to the investment of the assets of
the Trust allocated to Xxx Xxxxx Research Asset Allocation Fund (the "Fund") and
to supervise and arrange the purchase and sale of assets held in the investment
portfolio of the Fund. The Adviser may delegate any or all of its
responsibilities to one or more sub-advisors or administrators, subject to the
approval of the Board of Trustees and the shareholders of the Fund to the extent
required by the Investment Company Act of 1940, as amended.
2. Duties And Obligations Of The Adviser With Respect To Investments Of
ASSETS OF THE FUND
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(a) Subject to the succeeding provisions of this paragraph and subject
to the direction and control of the Trust's Board of Trustees, the Adviser shall
(i) act as investment adviser for and supervise and manage the investment and
reinvestment of the Fund's assets and in connection therewith have complete
discretion in purchasing and selling securities and other assets for the Fund
and in voting, exercising consents and exercising all other rights appertaining
to such securities and other assets on behalf of the Fund; (ii) arrange for the
purchase and sale of securities and other assets held in the investment
portfolio of the Fund and (iii) oversee the administration of all aspects of the
Fund's business and affairs and provide, or arrange for others whom it believes
to be competent to provide, certain services as specified in subparagraph (b)
below. Nothing contained herein shall be construed to restrict the Trust's right
to hire its own employees or to contract with the Adviser or other third parties
for any administrative service not specifically assumed by the Adviser under
this agreement, including but not limited to, the calculation of the net asset
value of the Fund's shares.
(b) The specific services to be provided or arranged for by the Adviser
for the Fund are (i) maintaining the Fund's books and records, such as journals,
ledger accounts and other records in accordance with applicable laws and
regulations to the extent not maintained by the Fund's custodian, transfer agent
and dividend disbursing agent; (ii) transmitting purchase and redemption orders
for Fund shares to the extent not transmitted
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by the Fund's distributor or others who purchase and redeem shares; (iii)
initiating all money transfers to the Fund's custodian and from the Fund's
custodian for the payment of the Fund's expenses, investments, dividends and
share redemptions; (iv) reconciling account information and balances among the
Fund's custodian, transfer agent, distributor, dividend disbursing agent and the
Adviser; (v) providing the Fund, upon request, with such office space and
facilities, utilities and office equipment as are adequate for the Fund's needs;
(vi) preparing, but not paying for, all reports by the Trust, on behalf of the
Fund, to its shareholders and all reports and filings required to maintain the
registration and qualification of the Fund's shares under federal and state law
including periodic updating of the Trust's registration statement and Prospectus
(including its Statement of Additional Information); (vii) supervising the
calculation of (but not calculating) the net asset value of the Fund's shares;
and (viii) preparing notices and agendas for meetings of the Fund's shareholders
and the Trust's Board of Trustees as well as minutes of such meetings in all
matters required by applicable law to be acted upon by the Board of Trustees.
(c) In the performance of its duties under this Agreement, the Adviser
shall at all times use all reasonable efforts to conform to, and act in
accordance with, any requirements imposed by (i) the provisions of the
Investment Trust Act of 1940 (the "Act"), and of any rules or regulations in
force thereunder; (ii) any other applicable provision of law; (iii) the
provisions of the Articles of Incorporation and By-Laws of the Trust, as such
documents are amended from time to time; (iv) the investment objective, policies
and restrictions applicable to the Fund as set forth in the Trust's Registration
Statement on Form N-lA and (v) any policies and determinations of the Board of
Trustees of the Trust with respect to the Fund.
(d) The Adviser will seek to provide qualified personnel to fulfill its
duties hereunder and will bear all costs and expenses (including any overhead
and personnel costs) incurred in connection with its duties hereunder and shall
bear the costs of any salaries or Trustees fees of any officers or Trustees of
the Trust who are affiliated persons (as defined in the Act) of the Adviser. The
Trust shall be responsible for the payment of all the Fund's other expenses,
including (i) payment of the fees payable to the Adviser under paragraph 4
hereof; (ii) organizational expenses; (iii) brokerage fees and commissions; (iv)
taxes; (v) interest charges on borrowings; (vi) the cost of liability insurance
or fidelity bond coverage for the Trust officers and employees, and Trustees'
and officers' errors and omissions insurance coverage; (vii) legal, auditing and
accounting fees and expenses; (viii) charges of the Fund's custodian, transfer
agent and dividend disbursing agent; (ix) the Fund's pro rata portion of dues,
fees and charges of any trade association of which the Trust is a member; (x)
the expenses of printing, preparing and mailing proxies, stock certificates and
reports, including the Fund's prospectuses and statements of additional
information, and notices to shareholders; (xi) filing fees for the registration
or qualification of the Fund and its shares under federal or state securities
laws; (xii) the fees and expenses involved in registering and maintaining
registration of the Fund's shares with the Securities and Exchange Commission;
(xiii) the expenses of holding shareholder meetings; (xiv) the compensation,
including fees, of any of the Trust's Trustees, officers or employees who are
not affiliated persons of the Adviser; (xv)
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all expenses of computing the Fund's net asset value per share,
including any equipment or services obtained solely for the purpose of pricing
shares or valuing the Fund's investment portfolio; (xvi) expenses of personnel
performing shareholder servicing functions and all other distribution expenses
payable by the Trust; and (xvii) litigation and other extraordinary or
non-recurring expenses and other expenses properly payable by the Fund.
(e) The Adviser shall give the Fund the benefit of its professional
judgment and effort in rendering services hereunder, but neither the Adviser nor
any of its officers, Trustees, employees, agents or controlling persons shall be
liable for any act or omission or for any loss sustained by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement; provided, however, that the
foregoing shall not constitute a waiver of any rights which the Trust may have
which may not be waived under applicable law.
(f) Nothing in this Agreement shall prevent the Adviser or any
director, officer, employee or other affiliate thereof from acting
as investment adviser for any other person, firm or corporation, or
from engaging in any other lawful activity, and shall not in any
way limit or restrict the Adviser or any of its Trustees, officers,
employees or agents from buying, selling or trading any securities
for its or their own accounts or for the accounts of others for
whom it or they may be acting.
3. PORTFOLIO TRANSACTIONS
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In the course of the Adviser's execution of portfolio transactions for
the Fund, it is agreed that the Adviser shall employ securities brokers and
dealers which, in its judgment, will be able to satisfy the policy of the Fund
to seek the best execution of its portfolio transactions at reasonable expenses.
For purposes of this agreement, "best execution" shall mean prompt, efficient
and reliable execution at the most favorable price obtainable. Under such
conditions as may be specified by the Trust's Board of Trustees in the interest
of its shareholders and to ensure compliance with applicable law and
regulations, the Adviser may (a) place orders for the purchase or sale of the
Fund's portfolio securities with its affiliate, Gabelli & Company Inc.; (b) pay
commissions to brokers other than its affiliate which are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
considered by the Adviser to be useful or desirable in the performance of its
duties hereunder and for the investment management of other advisory accounts
over which it or its affiliates exercise investment discretion; and (c) consider
sales by brokers (other than its affiliate distributor) of shares of the Fund
and any other mutual fund for which it or its affiliates act as investment
adviser, as a factor in its selection of brokers and dealers for Fund portfolio
transactions.
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4. COMPENSATION OF THE ADVISER
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(a) Subject to paragraph 2(b), the Trust agrees to pay to the Adviser
out of the Fund's assets and the Adviser agrees to accept as full compensation
for all services rendered by or through the Adviser (other than any amounts
payable to the Adviser pursuant to paragraph 4(b)) a fee computed and payable
monthly in an amount equal on an annualized basis to 1.0% of the Fund's daily
average net asset value. For any period less than a month during which this
Agreement is in effect, the fee shall be prorated according to the proportion
which such period bears to a full month of 28, 29, 30 or 31 days, as the case
may be.
(b) The Trust will pay the Adviser separately for any costs and
expenses incurred by the Adviser in connection with distribution of the Fund's
shares in accordance with the terms (including proration or nonpayment as a
result of allocations of payments) of one or more Plans of Distribution (the
"Plans") adopted for the Fund pursuant to Rule 12b-l under the Act as such Plans
may be in effect from time to time; provided, however, that no payments shall be
due or paid to the Adviser hereunder unless and until this Agreement shall have
been approved by Board Approval and Disinterested Director Approval (as such
terms are defined in such Plans). The Trust reserves the right to modify or
terminate such Plans at any time as specified in the Plans and Rule 12b-l, and
this subparagraph shall thereupon be modified or terminated to the same extent
without further action of the parties. The persons authorized to direct the
payment of the funds pursuant to this Agreement and the Plans shall provide to
the Trust's Board of Trustees, and the Trustees shall review, at least quarterly
a written report of the amount so paid and the purposes for which such
expenditures were made.
(c) For purposes of this Agreement, the net assets of the Fund shall be
calculated pursuant to the procedures adopted by resolutions of the Trustees of
the Trust for calculating the net asset value of the Fund's shares.
5. INDEMNITY
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(a) The Trust hereby agrees to indemnify the Adviser and each of the
Adviser's Trustees, officers, employees, and agents (including any individual
who serves at the Adviser's request as director, officer, partner, trustee or
the like of another corporation) and controlling persons (each such person being
an "indemnitee) against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees (all as provided in accordance with applicable corporate law) reasonably
incurred by such indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which he may be or may have been
involved as a party or otherwise or with which he may be or may have been
threatened, while acting in any capacity set forth above in this paragraph or
thereafter by reason of his having acted in any such capacity, except with
respect to any matter as to which he shall have been adjudicated not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the Trust and furthermore, in
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the case of any criminal proceeding, so long as he had no reasonable cause to
believe that the conduct was unlawful, provided, however, that (1) no indemnitee
shall be indemnified hereunder against any liability to the Trust or its
shareholders or any expense of such indemnitee arising by reason of (i) willful
misfeasance, (ii) bad faith, (iii) gross negligence (iv) reckless disregard of
the duties involved in the conduct of his position (the conduct referred to in
such clauses (i) through (iv) being sometimes referred to herein as "disabling
conduct"), (2) as to any matter disposed of by settlement or a compromise
payment by such indemnitee, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless there has been a determination that such settlement or
compromise is in the best interests of the Trust and that such indemnitee
appears to have acted in good faith in the reasonable belief that his action was
in the best interest of the Trust and did not involve disabling conduct by such
indemnitee and (3) with respect to any action, suit or other proceeding
voluntarily prosecuted by any indemnitee as plaintiff, indemnification shall be
mandatory only if the prosecution of such action, suit or other proceeding by
such indemnitee was authorized by a majority of the full Board of the Trust.
Notwithstanding the foregoing the Trust shall not be obligated to provide any
such indemnification to the extent such provision would waive any right which
the Trust cannot lawfully waive.
(b) The Trust shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that he is entitled to such indemnification and if the
Trustees of the Trust determine that the facts then known to them would not
preclude indemnification. In addition, at least one of the following conditions
must be met: (A) the indemnitee shall provide a security for his undertaking,
(B) the Trust shall be insured against losses arising by reason of any lawful
advances, or (C) a majority of a quorum of Trustees of the Trust who are neither
"interested persons" of the Trust (as defined in Section 2(a)(19) of the Act)
nor parties to the proceeding ("Disinterested Non-Party Trustees") or an
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall
be made (1) by a final decision on the merits by a court or other body before
whom the proceeding was brought that such indemnitee is not liable by reason of
disabling conduct or, (2) in the absence of such a decision, by (i) a majority
vote of a quorum of the Disinterested Non-party Trustees of the Trust, or (ii)
if such a quorum is not obtainable or even, if obtainable, if a majority vote of
such quorum so directs, independent legal counsel in a written opinion.
The rights accruing to any indemnitee under these provisions shall not
exclude any other right to which he may be lawfully entitled.
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6. DURATION AND TERMINATION
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This Agreement shall become effective upon on the date hereof and shall
continue in effect for a period of two years and thereafter from year to year,
but only so long as such continuation is specifically approved at least annually
in accordance with the requirements of the Act. This Agreement may be amended
upon approval by a majority of the Trustees of the Trust in office at the time
and by a majority of the Trustees of the Trust who are not "interested persons"
of the Trust and who have no financial interest in the operation of this
Agreement; provided, that any increase in the rate of compensation payable
pursuant to Section 4(a) must be approved by a "majority of the voting
securities" (as defined in the Act) of the Fund.
This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Trust sixty days written notice (which notice may be
waived by the Trust) and may be terminated by the Trust at any time without
penalty upon giving the Adviser sixty days notice (which notice may be waived by
the Adviser), provided that such termination by the Trust shall be directed or
approved by the vote of a majority of the Trustees of the Trust in office at the
time or by the vote of the holders of a "majority of the voting securities" (as
defined in the Act) of the Fund at the time outstanding and entitled to vote or,
with respect to paragraph 4(b), by a majority of the Trustees of the Trust who
are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to the
Plans. This Agreement shall terminate automatically in the event of its
assignment (as "assignment" is defined in the Act and the rules thereunder.)
7. NOTICES
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Any notice under this Agreement shall be in writing to the other party
at such address as the other party may designate from time to time for the
receipt of such notice and shall be deemed to be received on the earlier of the
date actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.
8. GOVERNING LAW
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This Agreement shall be construed in accordance with the laws of the
State of New York for contracts to be performed entirely therein and in
accordance with the applicable provisions of the Act.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
XXX XXXXX RESEARCH FUNDS
By:
/S/ XXXXX XXXXXX
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Name: Xxxxx Xxxxxx
Title: President
GABELLI FUNDS, LLC
By:
/S/XXXXX X. XXXXX
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Name: Xxxxx X. XxXxx
Title: Secretary
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