Exhibit (d)(1)
FORM OF INVESTMENT ADVISORY AGREEMENT
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
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
(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 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) 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
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.
4. Compensation Of The Adviser
(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
(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 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.
6. Duration And Termination
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
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
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.
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:
____________________________
Name:
Title:
GABELLI FUNDS, LLC
By:
____________________________
Name:
Title:
