INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of August 31, 1999, between The
Gabelli Utilities 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.
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(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.
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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. 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
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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 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 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.
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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 UTILITIES FUND
BY: /S/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
GABELLI FUNDS, LLC
BY: /S/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: Vice President of Finance
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