FORM OF
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT dated December __, 2003 between RMR Real
Estate Fund (the "Fund"), a Massachusetts business trust, and RMR Advisors, Inc.
(the "Advisor"), a Massachusetts corporation.
RECITALS
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end, non-diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisors Act of
1940, as amended (the "Advisors Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Fund desires to employ the Advisor for, and the Advisor
desires to provide, investment advisory services to the Fund upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
1. INVESTMENT DESCRIPTION, APPOINTMENT. The Fund desires to employ its
capital by investing and reinvesting in investments of the kind and in
accordance with the investment objectives, policies and limitations
specified in its Second Amended and Restated Declaration of Trust, as
amended from time to time ("Charter"), its prospectus ("Prospectus")
and statement of additional information ("Statement") filed with the
Securities and Exchange Commission ("SEC") as part of the Fund's
Registration Statement on Form N-2, as amended from time to time
("Registration Statement"), and in the manner and to the extent as may
from time to time be approved by the Board of Trustees of the Fund
(the "Board"). Copies of the Prospectus, the Statement and the Charter
have been or will be submitted to the Advisor. The Fund agrees to
provide copies of all amendments to the Registration Statement and the
Charter to the Advisor on an on-going basis. The Fund hereby appoints
the Advisor to act as the investment manager to the Fund. The Advisor
accepts the appointment and agrees to furnish the services for the
compensation set forth below.
2. SERVICES AS INVESTMENT ADVISOR. Subject to the supervision, direction
and approval of the Board, the Advisor will (a) manage the Fund's
holdings in accordance with the Fund's investment objectives and
policies as stated in the Charter and the Registration Statement; (b)
make investment decisions for the Fund; (c) place purchase and sale
orders for portfolio transactions for the Fund; and (d) provide
research services to the Fund. In providing those services, the
Advisor will conduct a continual program of investment, evaluation
and, if appropriate, sale and reinvestment of the Fund's assets. In
compliance with
applicable law, the Advisor is hereby authorized to retain third
parties and to delegate some or all of its duties and obligations
under this paragraph 2 to such persons provided that such persons
shall remain under the general supervision of the Advisor.
3. STANDARD OF CARE. The Advisor shall give the Fund the benefit of its
best judgment and effort in rendering services. The Advisor 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 those involving the Advisor's willful misfeasance, bad faith or
gross negligence in the performance of its duties, or the reckless
disregard of its obligations and duties under this Agreement.
4. SERVICES TO OTHER COMPANIES AND ACCOUNTS. The Fund understands that
the Advisor and its affiliates now act, will continue to act and may
in the future act as investment advisor or fiduciary to other managed
accounts and as investment advisor or property manager to other
investment companies or trusts. Nothing in this Agreement shall
prevent the Advisor or any director, officer, employee or other
affiliate of the Advisor from acting as investment advisor, property
manager, fiduciary or administrator for any other person, firm or
corporation, or from engaging in any lawful activity, and shall not in
any way limit or restrict the Advisor 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, however, that the Advisor
will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations under this Agreement and
further provided that that whenever the Fund and one or more other
clients advised by the Advisor have available funds for investment,
investments suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each client. The
Fund recognizes that in some cases this procedure may adversely affect
the size of the position obtainable for the Fund. In addition, the
Fund understands that the persons employed by the Advisor to assist in
the performance of the Advisor's duties under this Agreement will not
devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict the right of the
Advisor or any affiliate of the Advisor to engage in and devote time
and attention to other businesses or to render services of whatever
kind or nature.
5. PORTFOLIO TRANSACTIONS AND BROKERAGE. Subject to the supervision of
the Board, the Advisor is authorized, for the purchase and sale of the
Fund's portfolio securities, to employ such securities dealers and
brokers and to negotiate brokerage commissions on behalf of the Fund
as may, in the judgment of the Advisor, implement the policy of the
Fund to obtain the best net results taking into account such factors
as: the net price available; the reliability, integrity and financial
condition of the broker; the size of and difficulty in executing the
order; and the value of the expected contribution of the broker to the
Fund's investment performance on a continuing basis. The Fund
understands that the cost of the brokerage commissions in any
transaction may be greater than that available from
other brokers if the difference is reasonably justified by other
aspects of the services offered. Subject to such policies and
procedures as the Board may determine, the Advisor may cause the Fund
to pay a broker that provides research services to the Advisor an
amount of commission for effecting a portfolio investment transaction
in excess of the amount of commission another broker would have
charged for effecting that transaction, if the Advisor determines in
good faith that such amount of commission was reasonable in relation
to the value of the research service provided by such broker viewed in
terms of either that particular transaction or the Advisor's ongoing
responsibilities under this Agreement. The Fund understands that
research and investment information provided at no cost to the Advisor
by brokers that are paid by the Fund will be available to benefit
other accounts advised by the Advisor and its affiliates. In the
allocation of the Fund's brokerage business the Advisor is authorized
to consider (i) its use of statistical, research and other services
furnished by brokers; (ii) payments made by brokers effecting
transactions for the Fund to other persons on the Fund's behalf for
services (such as custodial or professional fees); and (iii) sales of
Fund shares.
6. COMPENSATION OF THE ADVISOR. In consideration of the advisory services
pursuant to this Agreement, the Fund agrees to pay to the Advisor, on
the first business day of each month a fee ("Advisory Fee") for the
previous month, and the Advisor agrees to accept as full compensation
for all services rendered by the Advisor, computed at the annual rate
of .85% of the sum of the Fund's net asset value attributable to the
Fund's outstanding common shares, plus the liquidation preference of
the Fund's outstanding preferred shares plus the principal amount of
any borrowings evidenced by notes, commercial paper or other similar
instruments issued by the Fund ("Average Daily Managed Assets") . The
value of the Fund's Average Daily Managed Assets shall be computed at
the times and in the manner specified by the Registration Statement.
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.
7. FEE WAIVER. Notwithstanding the provisions of the above Section 6,
during the five year period following the closing of the Fund's first
public offering of common shares, (i) the Advisor agrees to waive a
portion of its Advisory Fee equal to an annual rate of .25% of Average
Daily Total Assets.
8. DURATION AND TERMINATION. This Agreement shall become effective on the
date first set forth and above and continue for two (2) years.
Thereafter, this Agreement will continue from year to year, or for
such longer terms as may be approved by Board (including a majority of
the Trustees who are not "interested persons" of the Advisor, as
defined by the 0000 Xxx) and as may be permitted by the 1940 Act, but
only so long as such continuation is specifically approved at least as
often as required by the 1940 Act, as it may be amended from time to
time.
So long as the 1940 Act requires these provisions respectively: (i)
this Agreement may be terminated by the Fund at any time without
penalty upon giving the Advisor sixty days' notice and payment of any
unpaid compensation to the Advisor described in Section 6, above,
earned prior to such termination, 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" (as defined in the 0000 Xxx) of the voting
securities of the Fund at the time outstanding and entitled to vote;
(ii) this Agreement shall terminate automatically in the event of its
assignment (as "assignment" is defined in the 1940 Act).
9. AMENDMENT. No amendment of this Agreement shall be effective unless it
is in writing and signed by the party against which enforcement of the
amendment is sought.
10. NON-LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. The Charter is on file
with the Secretary of State of The Commonwealth of Massachusetts. This
Agreement is executed on behalf of the Fund, by the Trustees or by an
officer or officers of the Fund in their capacity as such and not
individually, and neither the shareholders nor the Fund's Trustees nor
any officers, employees or agents shall be liable thereunder and the
Advisor shall look solely to the Fund's estate for the payment of any
claim hereunder or for the performance of the Fund's duties created by
this Agreement.
11. EXPENSES. The Advisor will bear all the expenses in connection with
the performance of its advisory services under this agreement. The
Fund will bear all other expenses incurred in the operations of the
Fund including, but not limited to the fees payable under this
Agreement, brokerage commissions, taxes, interest, distributions,
legal, auditing, SEC, blue sky qualification or other governmental
fees, rating agency fees, the cost of preparing share certificates,
custodian, transfer and shareholder service agent costs, accounting
costs, administration services costs (including those fees charged by
any party under any administration or sub-administration agreements
approved by the Board) expenses of issue, sale, redemption and
repurchase of shares, dividend disbursing expenses, expenses of
registering and qualifying shares for sale, the Fund's and its Board
members' proportionate share of insurance premiums, fees of the Board
members of the Fund who are not "affiliated persons" (as defined in
the 0000 Xxx) of the Advisor or any affiliate of the Advisor, expenses
relating to Board and shareholder meetings, the cost of preparing and
distributing reports, notices and proxy statements to shareholders,
the fees and other expenses incurred related to the Fund's membership
in investment company organizations and the cost of printing copies of
prospectuses and statements of additional information for regulatory
purposes and for distribution to the Fund's shareholders and any
extraordinary expenses.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts for contracts to be
performed entirely
therein without reference to choice of law principles and in
accordance with the applicable provisions of the 1940 Act.
13. 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 notices 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.
14. LICENSE AGREEMENT. The Fund shall have the non-exclusive right to use
the name "RMR Real Estate Fund" to designate any current or future
series of shares and may use the term "RMR", including marks and
symbols containing such term or variations thereof as considered
appropriate, only so long as RMR Advisors, Inc. serves as investment
manager or advisor to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
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.
RMR REAL ESTATE FUND
By:
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Xxxxxx X. X'Xxxxx, President
RMR ADVISORS, INC.
By:
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Xxxx X. Xxxxx, Treasurer
