Exhibit No. EX-99.d.1
GAM FUNDS, INC.
December 14, 2004
GAM International Management Limited
00 Xx. Xxxxx'x Xxxxx
Xxxxxx XXXX 0XX
XXXXXXX
Second Amended and Restated Investment Advisory Agreement
Dear Sirs:
The undersigned, GAM Funds, Inc., a Maryland corporation (the "Fund"), is
an open-end diversified series investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). This Second Amended
and Restated Investment Advisory Agreement (the "Agreement") confirms your
engagement as investment adviser to the GAM International Fund (to be renamed
"GAM International Equity" effective February 28, 2005), GAM Pacific Basin Fund
(to be renamed "GAM Asia-Pacific Equity" effective February 28, 2005), GAM
Europe Fund (to be renamed "GAM European Equity" effective February 28, 2005),
and GAMerica Capital Fund (to be renamed "GAMerica" effective February 28, 2005)
(each fund, as such fund may be renamed from time to time, a "Covered Fund" and,
together, the "Covered Funds") series of the Fund's shares upon the terms and
subject to the conditions set forth herein. This Agreement amends and restates
in its entirety the Amended and Restated Investment Advisory Contract, dated
December 17, 1999, as amended, between you and the Fund.
SECTION 1. Investment Management Services
A. General
You shall conduct and maintain a continuous review of each Covered Fund's
portfolio of securities and investments and make all decisions regarding
purchases and sales of securities and other investments on behalf of each
Covered Fund. On behalf of each Covered Fund, such services shall include, among
others, determining the portion of the assets of each Covered Fund to be held in
U.S. and foreign issuers and entering into foreign exchange contracts in
connection therewith on behalf of each Covered Fund, as you deem advisable.
In all instances, you shall be guided by the investment objectives,
policies and restrictions of each Covered Fund as set forth in the Prospectus
and the Statement of Additional Information filed by the Fund with the U.S.
Securities and Exchange Commission, as such may be amended from time to time
(the "Disclosure Documents"), in accordance with such other policies or
limitations adopted by the Board of Directors of the Fund and the provisions of
the 1940 Act and the rules promulgated thereunder. We agree to supply you with
all such relevant documents and to notify you of any relevant changes in the
investment objectives, policies and restrictions of the Covered Funds.
In acting under this Agreement, you shall be an independent contractor and
shall not be an agent of the Fund.
B. Selection and Recommendations of Brokers
With respect to each Covered Fund, you shall be solely responsible for the
selection of members of securities exchanges, brokers and dealers for the
execution of the portfolio transactions of the Covered Funds, and, when
applicable, negotiating commissions in connection therewith. All such selections
and recommendations shall be made in accordance with the policies and
restrictions of the Covered Funds regarding brokerage allocation set forth in
the Disclosure Documents.
You may, in making such brokerage selections and recommendations and in
negotiating commissions, take into account any services or facilities provided
by a broker. You are authorized to select or recommend a member of a securities
exchange or any other securities broker or dealer that charges an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction if you determine in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services (as such services are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or your overall responsibility with respect to the accounts as to which you
exercise investment discretion (as that term is defined in Section 3(a)(35) of
the 1934 Act).
C. Reports and Summaries
You shall maintain a continuous record of all the investments and
securities that comprise the portfolio of each Covered Fund, and shall furnish
to the Fund or its designee such summaries of each Covered Fund's portfolio and
such other reports, evaluations, analyses and opinions, including statistical
reports, relating to your services as investment adviser hereunder as the Fund
may reasonably request at any time or from time to time or as you may deem
helpful to the Fund. All such records shall be the property of the Fund.
SECTION 2. Expenses
You shall assume and pay all of your own costs and expenses, including
those for furnishing such office space, office equipment, office personnel and
office services as you may require in the performance of your duties under this
Agreement.
The Fund shall bear all expenses of its organization, operations and
business of the Covered Funds not expressly assumed or agreed to be paid by you
under this Agreement. In particular, but without limiting the generality of the
foregoing, the Fund shall pay all interest, taxes, governmental charges or
duties, fees, brokerage and commissions of every kind arising hereunder or in
connection herewith, expenses of issue, repurchase or redemption of the Covered
Funds' shares, expenses of registering, qualifying and pricing the Covered
Funds' shares for sale, insurance, association membership dues, all charges of
custodians (including fees as custodian and for keeping books, performing
portfolio valuations and rendering other services to the Fund), transfer agents,
registrars, dividend disbursing agents, independent auditors and legal counsel,
expenses of preparing, printing and distributing all prospectuses, proxy
material, reports and notices to shareholders, all distribution expenses under
its Plan adopted in accordance with Rule 12b-1 under the 1940 Act, fees and
out-of-pocket expenses of directors, all overhead expenses of the Covered Funds'
operations, including office space, office equipment, office personnel and
office services and all other costs incident to the corporate existence of the
Covered Funds.
SECTION 3. Use of Services of Others
You may (at your expense except as set forth in Section 2 hereof) employ,
retain or otherwise avail yourself of the services or facilities of other
persons or organizations for the purpose of providing you or the Covered Funds
with such statistical or factual information, such advice regarding economic
factors and trends or such other information, advice or assistance as you may
deem necessary, appropriate or convenient for the discharge of your obligations
hereunder or otherwise helpful to the Covered Funds.
SECTION 4. Management Fees
In consideration of your services hereunder to each Covered Fund, you shall
be entitled to a management fee, payable quarterly, equal to 0.25% of the
average daily net assets of each Covered Fund during the quarter preceding each
payment (equivalent to an annual fee of 1.0% of the average daily net assets of
each Covered Fund during the year); provided, however, effective January 1,
2005, the management fee, payable quarterly, for each Covered Fund shall be
equal to: (i) 0.25% (equivalent to an annual fee of 1.0%) of the average daily
net assets up to and including $500 million (except for GAMerica Capital Fund
which shall be up to and including $250 million) during the quarter preceding
each payment; (ii) 0.225% (equivalent to an annual fee of 0.90%) of the average
daily net assets greater than $500 million and up to and including $1 billion
(except for GAMerica Capital Fund which shall be greater than $250 million and
up to and including $1 billion) during the quarter preceding each payment; and
(iii) 0.2125% (equivalent to an annual fee of 0.85%) of the average daily net
assets greater than $1 billion during the quarter preceding each payment. The
fee shall be accrued for each calendar day and the sum of the daily fee accruals
shall be paid quarterly to you on the first business day of the next succeeding
quarter. The daily fee accruals will be computed by multiplying the fraction of
one over the number of calendar days in the quarter by the applicable management
fee and multiplying this product by the net assets of each Covered Fund as
determined in accordance with the Fund's Prospectus as of the close of business
on the previous business day on which the Fund was open for business.
SECTION 5. Limitation of Liability of Investment Adviser
You shall be liable for losses resulting from your own acts or omissions
caused by your willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder or your reckless disregard of your duties
under this Agreement, and nothing herein shall protect you against any such
liability to the Covered Funds, the Fund or its shareholders. You shall not be
liable to the Covered Funds, the Fund or to any shareholder of the Fund for any
claim or loss arising out of any investment or other act or omission, in the
performance of your duties under this Agreement or for any loss or damage
resulting from the imposition by any government of exchange control restrictions
that might affect the liquidity of the assets of the Covered Funds maintained
with custodians or securities depositories in foreign countries or from any
political acts of any foreign governments to which such assets might be exposed.
SECTION 6. Services to Other Clients and the Fund
Nothing contained in this Agreement shall be deemed to prohibit you or any
of your affiliated persons from acting, and being separately compensated for
acting, in one or more capacities on behalf of the Fund. We understand that you
may act as investment manager or in other capacities on behalf of other
investment companies and customers. While information and recommendations you
supply to the Covered Funds and investments you make on behalf of the Covered
Funds shall in your judgment be appropriate under the circumstances in light of
the investment objectives and policies of the respective Covered Fund, it is
understood and agreed that they may be different from the information and
recommendations you or your affiliated persons supply to other clients. You and
your affiliated persons shall supply information, recommendations and any other
services, and shall allocate investment opportunities among each Covered Fund
and any other client, in an impartial and fair manner in order to seek good
results for all clients involved, but you shall not be required to give
preferential treatment to any Covered Fund as compared with the treatment given
to any other Covered Fund or to any other client. Whenever you shall act in
multiple capacities on behalf of the Fund, you shall maintain the appropriate
separate accounts and records for each such capacity. As used herein, the term
"affiliated person" shall have the meaning assigned to it in the 1940 Act.
On occasions when you deem the purchase or sale of a security to be in the
best interest of one or more of the Covered Funds as well as other clients, you
may, to the extent permitted by applicable law, aggregate the securities to be
sold or purchased in order to obtain the best execution or lower brokerage
commissions, if any. You may also on occasion purchase or sell a particular
security for one or more customers in different amounts. On either occasion, and
to the extent permitted by applicable law and regulations, allocation of the
securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by you in the manner you consider to be the most
equitable and consistent with your fiduciary obligations to each Covered Fund
and to such other clients.
SECTION 7. Reports to Investment Adviser
The Fund shall furnish to you solely for your use such prospectuses, proxy
statements, reports and other information relating to the business and affairs
of the Fund as you may, at any time or from time to time, reasonably require in
order to discharge your duties under this Agreement.
SECTION 8. Use of Investment Adviser's Name
The Fund may use the names "GAM Funds, Inc.", "GAM International Fund",
"GAM International Equity", "GAM Pacific Basin Fund", "GAM Asia-Pacific Equity",
"GAM Europe Fund", "GAM European Equity", "GAMerica Capital Fund", "GAMerica" or
any other name derived from the name "GAM" or "Global Asset Management" only for
so long as (i) this Agreement or any extension, renewal or amendment hereof
remains in effect, (ii) a majority of your equity interest shall continue to be
owned by your corporate parent, GAM Holding AG, or (iii) you shall specifically
consent in writing to such continued use. Any such use by the Fund shall in no
way prevent you or any of your successors or assigns from using or permitting
the use of the names GAM Funds, Inc., GAM International Fund, GAM International
Equity, GAM Pacific Basin Fund, GAM Asia-Pacific Equity, GAM Europe Fund, GAM
European Equity, GAMerica Capital Fund, GAMerica or any component or components
thereof, singly or in any combination, alone or with any other word or words,
for, by or in connection with any other entity or business, other than the Fund
or its businesses, whether or not the same directly or indirectly competes or
conflicts with the Fund or its business in any manner. To the extent permitted
by the 1940 Act and rules and regulations thereunder, and more particularly,
Investment Company Act Release No. 5510, dated October 8, 1968, in the event
that you shall cease to be the investment manager of the Fund or your corporate
parent shall no longer own a majority of your equity interest, the Fund, upon
your written request, shall submit to its shareholders for their vote a proposal
to amend its Charter to delete from its name the initials "GAM" and thereafter
(1) cease to use the names "GAM Funds, Inc.", "GAM International Fund", "GAM
International Equity", "GAM Pacific Basin Fund", "GAM Asia-Pacific Equity", "GAM
Europe Fund", "GAM European Equity", "GAMerica Capital Fund", "GAMerica" or any
component or components thereof, singly or in any combination, or any name
deceptively similar to "Global Asset Management" or "GAM Funds", "GAM
International", "GAM Pacific Basin", "GAM Asia-Pacific", "GAM Europe", "GAM
European", "GAMerica Capital Fund" or "GAMerica" in any way whatsoever, and (2)
for such period and in such manner as may reasonably be required by you, on all
letterheads and other material designed to be read or used by salesmen,
distributors or investors, state in a prominent position and prominent type that
GAM International Management Limited has ceased to be the investment manager of
the Covered Funds; provided, however, that if you make such request because your
parent corporation no longer owns a majority of your equity interest, the
question of continuing the investment management agreement between you and the
Fund must be submitted to a vote of the shareholders of each Covered Fund at the
time of submission of the proposal to amend the Fund's name.
SECTION 9. Term of Agreement
This Agreement shall be effective on December 14, 2004. This Agreement
shall continue in effect from year to year with respect to each Covered Fund,
subject to approval annually by the Board of Directors of the Fund or by vote of
a majority of the outstanding shares of each Covered Fund (as defined in the
1940 Act) and also, in either event, by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the
directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such person.
SECTION 10. Termination of Agreement; Assignment
This Agreement may be terminated with respect to each Covered Fund by
either party hereto, without the payment of any penalty, upon 60 days' prior
notice in writing to the other party; provided, that in the case of termination
by the Fund, such action shall have been authorized by resolution of a majority
of the directors of the Fund in office at the time or by vote of a majority of
the outstanding shares of such Covered Fund (as defined by the 1940 Act).
This Agreement shall automatically terminate in the event of its assignment
(as defined in the 1940 Act). Termination of this Agreement for any reason shall
not affect rights of the parties that have accrued prior thereto.
SECTION 11. Applicable Provisions of Law
This Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act, and to
the extent that any provisions herein contained conflict with any such
applicable provisions of law, the latter shall control.
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If the above terms and conditions are acceptable to you, please so indicate
by signing and returning to us the enclosed copy of this Agreement, whereupon
this Agreement shall constitute a binding contract between us.
Very truly yours,
GAM FUNDS, INC.
By: /s/Xxxxx Xxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxx
Title: Treasurer
By: /s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
Accepted and Agreed:
GAM INTERNATIONAL MANAGEMENT LIMITED
By: /s/Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Director
By: /s/Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Director
