For fiscal period ending (b) October 31, 1995
File number 811-6416
SUB-ITEM 77Q1
INVESTMENT ADVISORY
AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT,
dated as of November 1, 1995, by and between
DUFF & XXXXXX UTILITIES TAX-FREE INCOME INC. (the
"Fund"), a Maryland corporation, and DUFF &
XXXXXX INVESTMENT MANAGEMENT CO. (the "Adviser"),
an Illinois 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. Retention of Adviser by Fund
The Fund hereby employs the Adviser to
act as the investment adviser for, and to manage
the invest-
ment and reinvestment of assets of, the Fund in
accordance with the Fund's investment objective
and policies and
limitations, and to administer its affairs to the
extent requested by, and subject to the review and
supervision of,
the Board of Directors of the Fund for the period
and upon the terms set forth herein. The
investment of funds
shall be subject to all applicable restrictions of
applicable laws and of the Charter and By-laws of
the Fund, each
as amended, and resolutions of the Board of
Directors of the Fund as may from time to time be
in force and
delivered or made available to the Adviser.
2. Adviser's Acceptance of Employment;
Duties and Obligations of the Adviser.
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 Fund's assets and
to supervise and arrange the purchase of
securities for and the
sale of securities held in the investment
portfolio of the Fund.
(a) Subject to the succeeding
provisions of this section and subject to the
direction and
control of the Fund'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)
supervise continuously
the investment program of the Fund and the
composition of its investment portfolio; (iii)
supply investment re-
search and portfolio management of the Fund; (iv)
furnish offices and necessary facilities and
equipment to the
Fund; (v) render periodic reports to the Board of
Directors; (vi) permit any of its officers or
employees to serve
without compensation as director or officer of the
Fund if so elected; and (vii) arrange, subject to
the provisions
of Section 3 herein, for the purchase and sale of
securities and other assets held in the investment
portfolio of the
Fund.
(b) In the performance of its
duties under this Agreement, the Adviser shall at
all times
conform to, and act in accordance with, any
requirements imposed by (i) the provisions of the
Investment Company
Act of 1940, as amended (the "1940 Act"), and of
any rules or regulations in force thereunder; (ii)
any other appli-
cable provision of law; (iii) the provisions of
the Charter and By-Laws of the Fund, as such
documents are
amended from time to time; (iv) the investment
objective and policies of the Fund as set forth in
its Registration
Statement on Form N-2 (File Nos. 33-42963 and 811-
06416); and (v) any policies and determinations of
the Board
of Directors of the Fund.
(c) The Adviser will bear all
costs and expenses of its officers and employees
and any
overhead 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 Fund who are
affiliated persons (as defined in the 1940 Act) of
the Adviser
except that the Board of Directors of the Fund may
approve reimbursement to the Adviser of the pro
rata portion
of the salaries, bonuses, health insurance,
retirement benefits and all similar employment
costs for the time spent
on Fund operations (other than the provision of
investment advice) of all personnel employed by
the Adviser who
devote substantial time to Fund operations or the
operations of other investment companies advised
by the Adviser.
(d) The Adviser shall give the
Fund the benefit of its best judgment and effort
in rendering
services hereunder, but the Adviser shall not 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.
(e) The Adviser shall be deemed to
be an independent contractor under this Agreement
and,
unless otherwise expressly provided or authorized,
shall have no authority to act for or represent
the Fund in any
way or otherwise be deemed as agent of the Fund.
(f) Nothing in this Agreement
shall prevent the Adviser or any 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
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,
however, that the Adviser will undertake no
activities which, in its
judgment, will adversely affect the performance of
its obligations under this Agreement.
3. Portfolio Transaction and Brokerage
The Adviser is authorized, for the
purchase and sale of the Fund's portfolio
securities, to employ
such securities dealers as may, in the judgment of
the Adviser, implement the policy of the Fund to
obtain the best
net results taking into account such factors as
price, including dealer spread, the size, type and
difficulty of the
transaction involved, the firm's general execution
and operational facilities and the firm's risk in
positioning the
securities involved. Consistent with this policy,
the Adviser is authorized to direct the execution
of the Fund's
portfolio transactions to brokers and dealers
furnishing statistical information or research
deemed by the Adviser
to be useful or valuable to the performance of its
investment advisory functions for the Fund.
4. Compensation of the Adviser
(a) The Fund agrees to pay to the
Adviser and the Adviser agrees to accept as
compensation
for services and facilities described herein, a
fee computed and payable monthly in an amount
equal to an
annualized rate of .50% of the Fund's average
weekly managed net assets (which for purposes of
determining such
fee shall mean the average weekly value of the
Fund (as determined from time to time pursuant to
resolutions of
the Board of Directors) minus the sum of
liabilities other than the aggregate amount of any
borrowing undertaken
by the Fund). The liquidation preference of the
Preferred Stock is not considered a liability of
the Fund. The net
asset value of the Fund shall be calculated as of
5:00 P.M. Eastern time or as of such other time or
times as the
Directors may determine in accordance with the
provisions of applicable law and of the Charter
and By-Laws of
the Fund and with resolutions of the Board of
Directors as from time to time in force. The net
asset value for each
weekly period is determined by averaging the net
assets at the end of a week with the net assets at
the end of the
prior week. For purposes of the foregoing, the
end of a week shall mean the last business day of
such week. 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) In addition to the fee of the
Adviser, the Fund shall assume and pay any
expenses for
services rendered by a custodian for the
safekeeping of the Fund's securities or other
property, for keeping its
books of account, for any other charges of the
custodian and for calculating the net asset value
of the Fund as
provided above. The Adviser shall not be required
to pay, and the Fund shall assume and pay, the
charges and
expenses of its operations, including (i)
compensation of those non-interested persons of
the Adviser; (ii) charges
and expenses of independent accountants, of legal
counsel and of any transfer or dividend disbursing
agent; (iii)
costs of acquiring and disposing of portfolio
securities; (iv) costs of listing shares on the
New York Stock Ex-
change or other exchange interest; (v) costs on
obligations incurred by the Fund; (vi) costs of
share certificates;
(vii) costs of membership dues in the Investment
Company Institute or any similar organization;
(viii) costs of
reports and notices to stockholders; (ix) costs of
registering shares of the Fund under the federal
securities laws;
(x) miscellaneous expenses; and (xi) all taxes and
fees to federal, state or other governmental
agencies on account
of the registration of securities issued by the
Fund, filing of corporate documents or otherwise.
The Fund shall
not pay or incur any obligation for any management
or administrative expenses for which the Fund
intends to seek
reimbursement from the Adviser without first
obtaining the written approval of the Adviser.
The Adviser shall
arrange, if desired by the Fund, for officers or
employees of the Adviser to serve, without
compensation from the
Fund, as directors, officers or agents to the Fund
if duly elected or appointed to such positions and
subject to their
individual consent and to any limitations imposed
by law.
5. Interested Persons
Subject to applicable statutes and
regulations, it is understood that Directors,
officers, stockholders
and agents of the Fund are or may be interested in
the Adviser as directors, officers, stockholders,
agents or other-
wise and that the directors, officers,
shareholders and agents of the Adviser may be
interested in the Fund as
Directors, officers, shareholders, agents or
otherwise.
6. Liability
The Adviser shall not be liable for any
error of judgment or of law, or of any loss
suffered by the
Fund in connection with the matters to which this
Agreement relates, except a loss resulting from
willful mis-
feasance, bad faith or gross negligence on the
part of the Adviser in the performance of its
obligations and duties,
or by reason of its reckless disregard of its
obligations and duties under this Agreement.
7. Indemnity
(a) The Fund hereby agrees to
indemnify the Adviser and each of the Adviser's
directors,
officers, employees, agents, associates and
controlling persons and the directors, officers,
employees and agents
thereof (including any individual who serves at
the Adviser's request as director, officer,
partner or the like of
another corporation) (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
Section 7 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 Fund or its
shareholders for 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 the
Fund.
(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 Directors 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: (i)
the indemnitee shall
provide a security for his undertaking, (ii) the
Fund shall be insured against losses arising by
reason of any lawful
advances, or (iii) a majority of a quorum
consisting of Directors of the Fund who are
neither "interested persons"
of the Fund (as defined in Section 2(a)(19) of the
1940 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 avail-
able 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
(i) 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 (ii)
in the absence of such a decision, by (A) a
majority vote of a
quorum of the Disinterested Non-Party Directors of
the Fund, or (B) 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. All
determinations that advance payments in connection
with the expense of defending any proceeding shall
be autho-
rized and shall be made in accordance with the
immediately preceding clause (ii) above.
The rights accruing to any
indemnitee under these provisions shall not
exclude any other right
to which he may be lawfully entitled.
8. Duration and Termination
(a) This Agreement shall become
effective on the date hereof and shall remain in
full force
until the second anniversary of the date hereof
unless sooner terminated as hereinafter provided.
This Agreement
shall continue in effect from year to year
thereafter, but only so long as such continuation
is specifically approved
at least annually in accordance with the
requirements of the 1940 Act, as amended.
(b) This Agreement shall be
submitted to the holders of shares of the Fund for
approval at
the first meeting of shareholders and shall
automatically terminate if not approved by a
majority of the shares of
the Fund present and entitled to vote at such
meeting. This Agreement shall automatically
terminate in the event
of its assignment. 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 Directors
of the Fund in office at the time or by the vote
of the holders of a "majority" (as defined in the
1940 Act) of the
Fund's outstanding Common Stock and Preferred
Shares, voting together as a single class,
accompanied by
appropriate notice. This Agreement may be
terminated at any time without the payment of any
penalty and without
advance notice by the Board of Directors or by
vote of a majority of the outstanding shares of
the Fund in the
event that it shall have been established by a
court of competent jurisdiction that the Adviser
or any officer or
director of the Adviser has taken any action which
results in a breach of the covenants of the
Adviser set forth
herein.
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. Severability
If any provision of this Agreement shall
be held or made invalid by a court decision,
statute, rule
or otherwise, the remainder shall not be thereby
affected.
11. Governing Law
This Agreement shall be construed in
accordance with the laws of the State of New York
for con-
tracts to be performed entirely therein without
reference to choice of law principles thereof and
in accordance with
the applicable provisions of the 1940 Act.
12. Use of Name "Xxxx & Xxxxxx"
Pursuant to an agreement between the
Adviser and Duff & Xxxxxx Corporation, on behalf
of Duff
& Xxxxxx Corporation, the Adviser hereby consents
to the use by the Fund of the identifying words or
names "Duff
& Xxxxxx" or "D&P" in the name of the Fund. Such
consent is conditioned upon the employment of the
Adviser,
its successors or any affiliate thereof, as
investment adviser. If at any time the Fund
ceases to employ the Adviser,
any affiliate or successor as investment adviser
or distributor of the Fund, the Adviser may
require the Fund to
cease using the words or name "Duff & Xxxxxx" or
"D&P" in the name of the Fund as promptly as
practicable.
As between the Fund and the Adviser, the Adviser
(on behalf of Duff & Xxxxxx Corporation) retains
the right to
control the use of the name of the Fund insofar as
such name contains "Duff & Xxxxxx" or "D&P". The
identifying
words or names "Xxxx & Xxxxxx" or "D&P" may be
used from time to time in other connections and
for other
purposes by the Adviser or affiliated entities.
IN WITNESS WHEREOF, the parties hereto
have caused this Investment Advisory Agreement to
be executed by their duly authorized officers and
their respective seals to be hereunto affixed, all
as of the day and
the year first above written.
DUFF & XXXXXX UTILITIES TAX-FREE
INCOME INC.
[SEAL]
By: ______________________________
Name:
Title:
DUFF & XXXXXX INVESTMENT
MANAGEMENT CO.
[SEAL]
By: ______________________________
Name:
Title:
