INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 30th day of March, 1988 by and between
LEPERCQ-ISTEL TRUST, a Massachusetts Business Trust (the "Trust") and LEPERCQ,
DE NEUFLIZE & CO. INCORPORATED, a New York corporation (the "Adviser"), with
respect to the following recital of fact:
R E C I T A L
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
acting as an investment adviser; and
WHEREAS, the Trust offers its shares in several series; and
WHEREAS, the Trust and the Adviser desire to enter into an agreement to
provide for the management of the assets of Lepercq-Istel Fund (the "Fund") on
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 whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Investment Management. The Advisor shall act as investment adviser
for the Fund and shall, in such capacity, supervise the investment and
reinvestment of the cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the Trust's
Trustees. The Adviser shall give the Fund the benefit of its best judgment,
efforts and facilities in rendering its services as investment adviser.
2. Duties of Investment Adviser. In carrying out its obligation under
paragraph 1 hereof, the Adviser shall:
(a) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
portfolio of the Fund, and whether concerning the individual companies
whose securities are included in the Fund's portfolio or the activities
in which they engage, or with respect to
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securities which the Adviser considers desirable for inclusion in the
Fund's portfolio.
(b) determine what industries and companies shall be represented
in the Fund's portfolio and regularly report upon them to the Trust's
Trustees;
(c) formulate and implement continuing programs for the purchases
and sales of the securities of such companies and regularly report
thereon to the Trust's Trustees; and
(d) take, on behalf of the Fund, all actions which appear to the
Fund necessary to carry into effect such purchase and sale programs and
supervisory functions as aforesaid, including the placing of orders for
the purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Adviser is responsible for
decisions to buy and sell securities for the Fund, broker-dealer selection, and
negotiation of its brokerage commission rates. The Adviser may select Lepercq,
de Neuflize Securities Inc. as the broker- dealer to effect security
transactions which are effected on The New York Stock Exchange, Inc. or the
American Stock Exchange or which are listed on NASDAQ. The Adviser's primary
consideration in effecting a security transaction will be execution at a price
that is reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions including similar securities being purchased or sold on
a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular transaction,
the Adviser will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the
Trustees may determine, the Adviser shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Adviser for the Fund's use an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer 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 brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Fund. The Adviser is further authorized to allocate the orders placed by it
on behalf of the Fund to such
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brokers and dealers who also provide research or statistical material, or other
services to the Fund or the Adviser for the Fund's use. Such allocation shall be
in such amounts and proportions as the Adviser shall determine and the Adviser
will report on said allocations regularly to the Trustees of the Trust
indicating the brokers to whom such allocations have been made and the basis
therefor.
4. Control by Trustees. Any investment program undertaken by the
Adviser pursuant to this Agreement, as well as any other activities undertaken
by the Adviser on behalf of the Fund thereto, shall at all times be subject to
any directives of the Trustees of the Trust.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statements of the Trust
under the Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Declaration of Trust of the Trust, as
amended;
(d) the provisions of the By-laws of the Trust, as amended; and
(e) any other applicable provisions of state and Federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Adviser as follows:
(a) The Adviser shall furnish, at its expense and without cost to
the Fund, the services of a President, Secretary and one or more Vice
Presidents of the Trust, to the extent that such additional officers
may be required by the Trust for the proper conduct of its affairs.
(b) The Adviser shall further maintain, at its expense and without
cost to the Fund, a trading function in order to carry out its
obligations under subparagraph (d) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Fund.
(c) Nothing in subparagraph (a) hereof shall be construed to
require the Adviser to bear:
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(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal financial
officer of the Trust whose normal duties consist of maintaining
the financial accounts and books and records of the Fund;
including the reviewing of calculations of daily net asset value
and preparing tax returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the personnel
operating under the direction of such principal financial officer.
Notwithstanding the obligation of the Fund to bear the expense of
the functions referred to in clauses (i) and (ii) of this
subparagraph (c), the Adviser may pay the salaries, including any
applicable employment or payroll taxes and other salary costs, of
the principal financial officer and other personnel carrying out
such functions and the Fund shall reimburse the Adviser therefor
upon proper accounting.
(d) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be borne by
the Fund unless specifically provided otherwise in this paragraph 6.
These expenses include but are not limited to brokerage commissions,
legal, auditing, taxes or governmental fees, the cost of preparing
share certificates, custodian, transfer and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses
relating to trustee and shareholder meetings, the cost of preparing and
distributing reports and notices to shareholders, the fees and other
expenses incurred by the Fund in connection with membership in
investment company organizations and the cost of printing copies of
prospectuses and statements of additional information distributed to
shareholders.
7. Delegation of Responsibilities. Upon the request of the Trustees,
the Adviser may perform services on behalf of the Fund which are not required by
this Agreement. Such services will be performed on behalf of the Fund and the
Adviser's cost in rendering such services may be billed monthly to the Fund,
subject to examination by the Fund's independent accountants. Payment or
assumption by the Adviser of any Fund expense that the Adviser is not required
to pay or assume under this Agreement shall not relieve the Adviser of any of
its obligations to the Fund nor obligate the Adviser to pay or assume any
similar Fund expense on any subsequent occasions.
8. Compensation. The Fund shall pay the Adviser in full compensation
for services rendered hereunder an annual investment advisory fee, payable
quarterly, of 3/4 of 1% of the average daily net assets of the Fund. The average
daily net assets of the Fund shall be determined in the manner set forth in the
Declaration of Trust and prospectus of the Trust.
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9. Expense Limitation. If, for any fiscal year, the total of all
ordinary business expenses of the Fund, including all investment advisory fees
but excluding brokerage commissions and fees, taxes, interest and extraordinary
expenses such as litigation, would exceed the expense limitations applicable to
the Fund imposed by the securities laws or regulations thereunder of any state
in which the Fund's shares are qualified for sale, the aggregate of all such
investment advisory fees shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by the Adviser shall be deducted from
the quarterly investment advisory fee otherwise payable to the Adviser during
such fiscal year; and if such amount should exceed such quarterly fee, the
Adviser agrees to pay to the Fund such excess expenses no later than the last
day of the first month of the next succeeding fiscal year. For the purposes of
this paragraph, the term "fiscal year" shall exclude the portion of the current
fiscal year which shall have elapsed prior to the date hereof and shall include
the portion of the then current fiscal year which shall have elapsed at the date
of termination of this Agreement.
10. Non-Exclusivity. The services of the Adviser to the Fund are not
deemed to be exclusive, and the Adviser shall be free to render investment
advisory and corporate administrative or other services to others (including
other investment companies) and to engage in other activities. It is understood
and agreed that officers or directors of the Adviser may serve as officers or
trustees of the Trust, and that officers and trustees of the Trust may serve as
officers or directors of the Adviser to the extent permitted by law; and that
the officers and directors of the Adviser are not prohibited from engaging in
any other business activity or from rendering services to any other person, or
from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
11. Term and Approval. This Agreement shall become effective at the
close of business on the date set forth above (the "Effective Date") and shall,
unless terminated as hereinafter provided, continue in force and effect for two
years from the Effective Date and from year to year thereafter, provided that
such continuance is specifically approved at least annually:
(a) (i) by the Trustees or (ii) by the vote of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
1940 Act), and
(b) by the affirmative vote of a majority of the Trustees who are
not parties to this Agreement or interested persons of a party to this
Agreement (other than as Trustees), by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Trustees or by vote of a majority of
the Fund's
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outstanding voting securities, or by the Adviser, on sixty (60) days' written
notice to the other party. The notice provided for herein may be waived by
either party. This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the 1940 Act.
13. Liability of Adviser and Indemnification. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Adviser or any of its officers, directors or
employees, it shall not be subject to liability to the Fund or to any
shareholder of the Fund for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may, from time to
time, be sustained in the purchase, holding or sale of any security.
14. Liability of Fund Shareholders and Trustees. The Declaration of
Trust establishing the Trust, dated March 7, 1986, a copy of which, together
with the amendments thereto ("Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name
"Lepercq-Istel Trust" refers to the Trustees under the Declaration collectively
as Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Trust may be held to any personal liability,
nor may resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of the Fund but
the Fund's property only shall be liable.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and that of the Adviser shall be 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
16. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange Commission
issued pursuant to said Act. In addition, where the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is released by rules,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation and order.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
LEPERCQ-ISTEL TRUST
Attest: By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx, President
/s/ X.X. XxXxxxxx
------------------------------- LEPERCQ, DE NEUFLIZE & CO.
INCORPORATED
Attest: By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx, President
/s/ X.X. XxXxxxxx
-------------------------------
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