EXHIBITS
Exhibit (d)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of October 1, 1999, between The
Gabelli Xxxxxxx Fund (the "Fund"), a Delaware business trust, and Gabelli Funds,
LLC (the "Adviser"), a New York limited liability company.
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 Fund with respect to the investment of the assets
of 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-advisers or administrators, subject to the
approval of the Board of Trustees of the Fund. Such delegation shall not relieve
the Adviser of its duties and responsibilities hereunder.
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 Fund'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 Fund's right
to hire its own employees or to contract for administrative services to be
performed by third parties, 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 the Fund's 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 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 Fund's registration statement and the Fund's Prospectus (including its
Statement of Additional Information); (vii) supervising the calculation of the
net asset value of the Fund's shares; and (viii) preparing notices and agendas
for meetings of the Fund's shareholders and the Fund'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 Company Act of 1940, as amended (the "Act"), and of any rules or
regulations in force thereunder; (ii) any other applicable provision of law;
(iii) the provisions of the Declaration of Trust, as amended, and By-Laws of the
Fund, as such documents are amended from time to time; (iv) the investment
objectives, policies and restrictions applicable to the Fund as set forth in the
Fund's Registration Statement on Form N-1A and (v) any policies and
determinations of the Board of Trustees of 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 Fund who are affiliated persons (as
defined in the Act) of the Adviser. Subject to the foregoing, the Fund 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 Fund 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 Fund is a member; (x) the expenses
of printing, preparing and mailing proxies, stock certificates and reports,
including the Fund's prospectus and statement 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 Fund'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 Fund; 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 best judgment
and effort in rendering services hereunder, but neither the Adviser nor any of
its officers, directors, 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 Fund 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 directors, 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 Fund'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 the Fund's
portfolio transactions.
4. COMPENSATION OF THE ADVISER
(a) Subject to paragraph 2(b), the Fund 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 daily and
payable monthly in an amount equal on an annualized basis to 1.0% of the Fund's
daily average net asset value; provided, however, that the Advisor agrees that
it will waive a portion of such fees equal to 0.25% of the Fund's daily net
asset value during the period prior to the second anniversary of the date of
this Agreement on net assets of the Fund of $100 million or less. 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 Fund 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 Plans of Distribution (collectively, the "Plan")
adopted by the Fund pursuant to Rule 12b-1 under the Act as such Plan 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 Board Approval (as such terms are
defined in such Plan). The Fund reserves the right to modify or terminate such
Plan at any time as specified in the Plan and Rule 12b-1, 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 Plan shall provide to the Fund'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 Fund for calculating the net asset value of the Fund's shares.
5. INDEMNITY.
(a) The Fund hereby agrees to indemnify the Adviser and each of the
Adviser's directors, 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 with
respect to this Agreement 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 Fund 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 Fund or its shareholders or
any expense of such indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the duties
involved in the conduct of his position (the conduct referred to in such clauses
(i) through (v) 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 Fund 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 Fund 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 Fund. Notwithstanding the foregoing the Fund shall not
be obligated to provide any such indemnification to the extent such provision
would waive any right which the Fund cannot lawfully waive.
(b) The Fund shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Fund 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 Fund unless it is
subsequently determined that he is entitled to such indemnification and if the
trustees of the Fund 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 Fund shall be insured against losses arising by reason of any lawful
advances, or (C) a majority of a quorum of trustees of the Fund who are neither
"interested persons" of the Fund (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 Fund, 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 terminated by the Adviser at any time without
penalty upon giving the Fund sixty days written notice (which notice may be
waived by the Fund) and may be terminated by the Fund 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 Fund shall be directed or
approved by the vote of a majority of the Trustees of the Fund 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 Fund who
are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to the
Plan. This Agreement shall terminate automatically in the event of its
assignment (as "assignment" is defined in the Act and the rules thereunder.)
It is understood and hereby agreed that the word "Gabelli" is the
property of the Adviser for copyright and other purposes. The Fund further
agrees that the word "Gabelli" in its name is derived from the name of Xxxxx X.
Xxxxxxx and such name may freely be used by the Adviser for other investment
companies, entities or products. The Fund further agrees that, in the event that
the Adviser shall cease to act as investment adviser to the Fund and the Fund
shall promptly take all necessary and appropriate action to change its name to
names which do not include the word "Gabelli"; provided, however, that the Fund
may continue to use the word "Gabelli" if the Adviser consents in writing to
such use.
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.
THE GABELLI XXXXXXX FUND
By: /S/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President and Treasurer
GABELLI FUNDS, LLC
By: /S/ XXX XXXXXXXXXX
Name: Xxx Xxxxxxxxxx
Title: Vice President and Chief Financial Officer
