EXHIBIT 99.5
SUBADVISORY AGREEMENT
THIS AGREEMENT made this 6th day of September, 1995, by and among The
Crabbe Huson Group, Inc., and Oregon corporation(the "Adviser"), Aldrich,
Eastman, & Waltch, L.P. a Delaware limited partnership (the "Subadviser"), and
The Crabbe Huson Real Estate Investment Fund, Inc. (the "Fund").
BACKGROUND
1. The Fund is engaged in business as a diversified open-end investment
company registered under the Investment Company Act of 1940, as amended
(hereinafter referred to as the "Investment Company Act").
2. The Adviser and the Subadviser are engaged in business as registered
investment advisers under the Investment Advisers Act of 1940, as amended.
3. The Adviser has entered into an Investment Advisory and Service
Contract with the Fund dated March 4, 1994 (the "Advisory Agreement").
4. The Subadviser is willing to provide investment advisory services to
the Adviser in connection with the Fund's operations on the terms and conditions
hereinafter set forth.
AGREEMENT
In consideration of the mutual covenants and agreements of the parties
hereto herein set forth, the parties covenant and agree as follows:
ARTICLE I
DUTIES OF THE SUBADVISER
Subject to the supervision of the Adviser, the Subadviser shall
continuously furnish an investment program for the Fund and shall determine from
time to time which securities shall be purchased, sold or exchanged and what
portion of the assets of the Fund shall be held in the various securities in
which the Fund invests or in cash, subject always to the restrictions of the
Articles of Incorporation and By-Laws of the Fund, as amended from time to
time, the provisions of the Investment Company act and the statements relating
to the Fund's investment objective, investment policies and investment
restrictions as the same are set forth in the currently effective prospectus and
statement of additional information relating to the shares of the Fund under the
Securities Act of 1933, as amended (the "Prospectus" and "Statement of
Additional Information," respectively). Subject to the supervision of the
Adviser, the Subadviser may make determinations as to the manner in which voting
rights, rights to consent to corporate action and any other rights pertaining to
the Fund's securities shall be exercised. Subject to the supervision of the
Adviser, the Subadviser shall take, on behalf of the Fund, all actions which it
deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Fund's account with brokers or dealers selected by
it, and to that end, the Subadviser is authorized as the agent
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of the Fund to give instructions to the Custodian of the Fund as to deliveries
of securities and payments of cash for the account of the Fund. In connection
with the selection of such brokers or dealers and the placing of such orders,
the Subadviser is directed at all times, subject to the supervision of the
Adviser, to seek to obtain executions and price within the policy guidelines
determined by the Board of Directors of the Fund and set forth in the Prospectus
and Statement of Additional Information. Subject to this requirement and the
provisions of the Investment Company Act, the Securities Exchange Act of 1934,
as amended, and other applicable provisions of law, the Subadviser may select
brokers or dealers with which the Adviser, the Subadviser of the Fund, is
affiliated.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Subadviser shall furnish, at its own expense, all administrative
services, office equipment and facilities, investment advisory, statistical and
research services, and executive, supervisory, compliance and clerical personnel
necessary to carry out its obligations under this Agreement. The Subadviser
shall not be responsible for any expenses other than those set forth in this
Article II.
ARTICLE III
COMPENSATION OF THE SUBADVISER
As compensation for its services, the Adviser will pay to the Subadviser at
the end of each calendar month, a fee equal to the greater of (a) 37.5% of one
percent of the average daily net asset value of the Fund (the "ADNAV") up to the
first $100 million of net asset value, 31.88% of one percent of the ADNAV for
the next $400 million of net asset value, and 22.5% of one percent of the ADNAV
for amounts in excess of $500 million of net asset value, or (b) 50% of the
actual fees paid by the Fund to Crabbe Huson Group.
ARTICLE IV
LIMITATION OF LIABILITY OF THE SUBADVISER
The Subadviser shall exercise its best judgment in rendering the services
provided by it under this Agreement. The Subadviser shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution and management of the
Fund, except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b) of the
Investment Company Act) or loss resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties, or from reckless
disregard by it of its obligations and duties hereunder. As used in this
Article IV, the term "Subadviser" shall include any partners, shareholders,
directors, officers, and employees of the Subadviser. The Subadviser shall be
protected with respect to actions which it takes or from which it forbears in
reliance on advice of any unaffiliated agent or counsel, if such agent or
counsel has been prudently selected.
The Fund shall indemnify the Subadviser and hold it harmless from and
against all damages, liabilities, costs and expenses (including reasonable
attorney's fees and amounts reasonably paid in settlement) incurred by the
Subadviser in or by reason of any pending,
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threatened or completed action, suit, investigation or other proceeding
(including and action or suit by or in the right of the Fund or its security
holders) arising out of or otherwise based upon any action actually or allegedly
taken or omitted to be taken by the Subadviser in connection with the
performance of any of its duties or obligations under this Agreement; provided,
however, that nothing contained herein shall protect or be deemed to protect the
Subadviser against or entitle or be deemed to entitle the Subadviser to
indemnification in respect of any liability to the Fund or its security holders
to which the Subadviser would otherwise be subject by reason of a breach of
fiduciary duty with respect to the receipt of compensation for services or of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its duties and obligations
under this Agreement.
ARTICLE V
COMPLIANCE WITH SECURITIES LAWS AND REGULATIONS
In rendering its services hereunder, the Subadviser shall comply in all
material respects with all applicable federal and State securities laws and
regulations. It shall (i) remain registered as an investment adviser with the
Securities and Exchange Commission and with regulatory agencies in each
jurisdiction in which, as subadviser of the Fund, such registration is required,
(ii) provide information and reports for the purpose of establishing that it is
complying with applicable laws, regulations and compliance procedures at such
intervals and in such detail as the Adviser may reasonably request, (iii)
provide information for the purpose of allowing the Adviser and the Fund to file
all regulatory and compliance reports it is required to file including any
filings required by the Securities and Exchange Commission, state regulatory
agencies, and the NASD, and (iv) notify the Adviser promptly of any event which
comes to the attention of the Subadviser or any of its officers, directors, or
employees which constitute a failure to comply with applicable laws, regulations
and compliance procedures. Adviser, on its own behalf and on behalf of the
Fund, acknowledges receipt from Subadviser (at least 48 hours prior to entering
into this Agreement) of Part II of Subadviser's Form ADV as filed with the
Securities and Exchange Commission.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This agreement shall become effective as of the date first above written
and shall remain in force for a period of more than two years only so long as
the Investment Advisory and Service Contract remains in force and provided that
such continuance is specifically approved at least annually by (i) the Board of
Directors of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund and (ii) a majority of those directors who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund, or by the Subadviser or the Adviser
on thirty days' written notice to the other party. This Agreement shall not be
assigned by the Subadviser without the prior consent of Adviser and the Fund.
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ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment, transfer, assignment, sale, hypothecation or pledge of
this Agreement shall be effective until approved by (i) the vote of a majority
of outstanding voting securities of the Fund, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party case in person at a meeting called for the purpose of voting on such
approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act of 1940 and the Rules and Regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange commission
under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Oregon without reference to choice of law principles thereof and in
accordance with the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Oregon, or any of the provisions
herein, conflict with the applicable provisions of the Investment Company Act,
the latter shall control.
ARTICLE X
MISCELLANEOUS
The Adviser, on its own behalf and on behalf of the Fund, acknowledges that
Subadviser, on behalf of other clients, on its own behalf, and/or on behalf of
any of its affiliates, may from time to time make or consider making investments
in real estate related companies, including, without limitation, real estate
investment trusts. Such investments may take the form of an acquisition of
publicly traded debt and/or equity securities of such companies or the
acquisition, through private placement, of an interest in such companies. In
connection with such investments, Subadviser may be in a position to participate
in or influence management of such companies, for example, through
representation on the Board of Directors. The Adviser acknowledges that certain
executive level employees of Subadviser currently serve as directors of the
following companies: Taubman Centers, Inc., Xxxxx Xxxxxxxxxx, Inc. and La
Quinta Motor Inns, Inc. Subadviser shall, in such circumstances, take
appropriate measures to preserve the integrity of any material, non-public
information which may be available to Subadviser and to prevent dissemination of
such information to any employees involved in trading securities of such
companies or making any recommendations regarding the purchase or sale of such
securities by any client of Subadviser.
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Subadviser shall assign such qualified personnel and shall devote such time
as it shall deem advisable or appropriate to enable Subadviser fully to perform
its obligations hereunder. It is understood that Subadviser provides investment
advisory services for other clients, both taxable and tax-exempt, including
private and public pension funds. It is further understood that Subadviser may
take investment action on behalf of such other clients that differs from
investment action taken on behalf of the Fund. If the purchase or sale of
assets for the Fund and for one or more such other clients is considered at or
about the same time, the transactions in such assets will be allocated among the
several clients in a manner deemed equitable by Subadviser.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THE CRABBE HUSON GROUP, INC.
By:
--------------------------------
Name:
Title:
ALDRICH, EASTMAN, & WALTCH, L.P.
By:
--------------------------------
Name:
Title:
THE CRABBE HUSON REAL ESTATE
INVESTMENT FUND, INC.
By:
--------------------------------
Name:
Title:
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