EXHIBIT D(1)
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INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of May 22, 2000, between Gabelli
Xxxxxxxx Funds, Inc., a Maryland corporation (the "Company"), on behalf of the
Gabelli Xxxxxxxx Strategy Fund (the "Fund") 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
(a) The Company is an open-end investment company which, as of the date
hereof, consists of two series: the Gabelli Xxxxxxxx Strategy Fund and the Fund.
(b) 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 Directors of the Company. Such delegation shall not
relieve the Adviser of its duties and responsibilities hereunder.
2. Duties and obligations of the Adviser with respect to investment of assets of
the Fund
(a) Subject to the succeeding provisions of this paragraph and subject to
the direction and control of the Company's Board of Directors, 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
with such office space and facilities, utilities, office equipment and personnel
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 Company's registration
statement and the Fund's prospectus (including its statement of additional
information); (vii) arrange for 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 Company's Board of Directors and any committees
thereof as well as minutes of such meetings in all matters required by
applicable law to be acted upon by the Board of Directors.
(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 the Investment
Advisers Act of 1940, as
amended (the "Advisers Act"), and of any rules or regulations in force
thereunder; (ii) any other applicable provision of law; (iii) the provisions of
the Charter, as amended, and By-Laws, as amended, of the Company, 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 Company's
Registration Statement on Form N-1A (the "Registration Statement") and the
provisions of the Internal Revenue Code of 1986, as amended, relating to
regulated investment companies and (v) any policies and determinations of the
Board of Directors of the Company relating to the Fund.
(d) The Adviser will 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 directors fees of any officers or directors of the
Company who are affiliated persons (as defined in the Act) of the Adviser.
Subject to the foregoing, the Company, on behalf of 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 Company's officers and employees, and directors' 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 Company is a member; (x)
the expenses of printing, preparing and mailing proxies, stock certificates and
reports, including the prospectus and statement of additional information, and
notices to shareholders; (xi) filing fees for the registration or qualification
of the Fund as a separate portfolio of an open-end investment company 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
Company's directors, 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 pursuant to any 12b-1 plan or otherwise legally 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 Company with respect to
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 Company 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 so long as its services to the Fund are not impaired thereby, 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, provided that the Adviser shall seek to provide fair and equitable
treatment to the Fund in the selection of portfolio investments and the
allocation of investment opportunities as between the Fund and other advisory
clients of the Adviser.
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 Company's Board of Directors in the interest of its
shareholders and in 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 Company, on behalf of 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
0.85% of the Fund's daily average net assets; provided, however, that the
Adviser agrees that it will waive such fees during the period prior to the
second anniversary of the date of this Agreement on aggregate net assets of the
Fund at the time this Agreement becomes effective to the extent necessary to
ensure the total expense ratio of the Fund (other than extraordinary expenses)
during such period, is not greater than the total expense ratio of the Fund
(other than extraordinary expenses) for calendar year 1999. 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 in the manner required by 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 Directors, and the Directors 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 value of the net assets of the Fund
shall be calculated pursuant to the procedures adopted by resolutions of the
Directors of the Fund for calculating the net asset value of the Fund's shares.
5. Indemnity.
(a) The Company, on behalf of 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 (i) no indemnitee shall be indemnified hereunder against any liability to
the Company (including the Fund) or its shareholders or any expense of such
indemnitee arising by reason of (A) willful misfeasance, (B) bad faith, (C)
gross negligence or (D) reckless disregard of the duties involved in the conduct
of his position (the conduct referred to in such clauses (A) through (D) being
sometimes referred to herein as "disabling conduct"), (ii) 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 (iii) 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 Directors of
the Company. Notwithstanding the foregoing the Company shall not be obligated to
provide any such indemnification to the extent such provision would waive any
right which the Company cannot lawfully waive.
(b) The Company, on behalf of 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 Company receives a written
affirmation of the indemnitee's good faith belief that the standard of conduct
necessary for indemnification has been met, a written undertaking to reimburse
the Company if it is subsequently determined that the standard of conduct has
not been met and the directors of the Company determine that the facts then
known to them would not preclude indemnification. In addition, at least one of
the following conditions must be met: (i) the indemnitee shall provide a
security in form and amount acceptable to the Company for his undertaking, (ii)
the Company shall be insured against losses arising by reason of the advances or
(iii) a majority of a quorum of directors of the Company who are neither
"interested persons" of the Company (as defined in Section 2(a)(19) of the Act)
nor parties to the proceeding ("Disinterested Non-Party Directors") 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 only following (i) 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, (ii) in the absence of such a decision, a
reasonable determination based upon a review of the facts, that such indemnitee
was not liable by reason of disabling conduct, by (A) a majority vote of a
quorum of the Disinterested Non-Party Directors of the Company, or (B) an
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. Provision of Information to the Company
The Adviser shall keep the Company informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Company from
time to time with whatever information the Adviser believes is appropriate for
this purpose.
7. Effective Date; Duration; Modification; and Termination
(a) 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.
(b) The modification of any of the nonmaterial terms of this Agreement may
be approved by a vote of the majority of those Directors of the Company who are
not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
(c) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Company sixty days written notice (which notice may be
waived by the Company) and may be terminated by the Company, on behalf of the
Fund, at any time without penalty upon giving the Adviser sixty days written
notice (which notice may be waived by the Adviser), provided that such
termination by the Company shall be directed or approved by the vote of the
Board of Directors of the Company 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
Directors 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.)
8. Name
It is understood and hereby agreed that the word "Gabelli" is the property
of the Adviser for copyright and other purposes. The Company 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 Company further agrees that, in the event that the
Adviser shall cease to act as investment adviser to the Fund, the Company
(including the Fund) shall as soon as practicable thereafter take all necessary
and appropriate action to change its name to names which do not include the word
"Gabelli"; provided, however, that the Company (including the Fund) may continue
to use the word "Gabelli" if the Adviser consents in writing to such use.
9. 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.
10. 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 and the Advisers 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.
GABELLI XXXXXXXX FUNDS, INC., on behalf of
GABELLI XXXXXXXX STRATEGY FUND
By: Xxxxxxx X. Xxxxxx
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Name: /s/Xxxxxxx X. Xxxxxx
GABELLI FUNDS, LLC
By: Xxxxxxx X. Xxxxx
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Name: /s/Xxxxxxx X. Xxxxx
Title: Vice President
